February 21. 2024. 7:46

The Daily

Read the World Today

Critical Raw Materials Act: Can Europe achieve its ambitious goals?

The newly presented Critical Raw Materials Act has received praise for its ambitious approach to securing the supply of much-needed raw materials but concerns remain that the proposal may be no more than a toothless tiger.

The long-awaited Act was presented on Thursday (16 March) by the European Commission. It includes a number of ambitious targets, like speeding up permitting procedures and boosting European strategic autonomy by meeting 25% of European demand for strategic raw materials on its home turf through mining and recycling.

“We very much welcome the Critical Raw Materials Act. Most of the ideas that we have put forward in the public consultation at the end of last year made it into the act. In fact, there is much more in there than what we have requested,” Rolf Kuby, director at the association Euromines, told EURACTIV.

“The new act underlines that we are finally taking care of an EU-wide issue that had previously been neglected,” he added.

A large majority of industry actors have welcomed the proposal as a tool to bring critical raw materials back to the EU’s centre stage.

Yet the nitty-gritty of how the new regulation would actually work, given that the European Commission has no mandate over industrial policy, raises a number of questions.

EU unveils Critical Raw Materials Act, aiming to lessen dependence on China

The European Commission unveiled the new regulation on Thursday (16 March), setting targets for the production, refining and recycling of key raw materials needed for the green and digital transitions.

Ambitious, yet voluntary targets

Several sources from the mining industry told EURACTIV that “what we see are ambitious benchmarks, but it is yet unclear how these targets should actually be met in practice”.

EU Commissioners Valdis Dombrovskis and Thierry Breton, who jointly lead on the file, recognise that all targets are only aspirational, though “it frees economic actors who want to aim for this goal too – not just the industry, but financial institutions too”, Breton told journalists on Thursday.

Kuby, however, pointed out that: “the EU doesn’t have the possibility to overrule national legislation. We need to see it in the context as it stands today: The Act is the description of an ambition”.

“It’s not going to be legally binding,” he added.

Why the EU needs bold and broad strategies for critical minerals

As the EU nurtures its clean energy manufacturing ambitions, the reliance on imports of critical materials remains a cause for concern in many Member States, write Fatih Birol and Pascal Canfin.

Permitting in limbo

One of the main pillars of the Critical Raw Materials Act is drastically speeding up permitting for projects classified as strategic. So far, permitting on average takes around 10 years for mines. The Commission’s plan outlines a maximum of two years to conclude the permitting of these projects.

But NGOs warned that these numbers are unlikely to be met.

“As far as the timetables of operators and authorities in Portugal are concerned, the ambitions of the Critical Raw Materials Act are simply unrealistic,” Nik Völker, EU policy researcher at MiningWatch Portugal, told EURACTIV.

WWF said in a press release that permitting should also come with “proper planning and appropriate environmental impact assessments”.

The Act, alongside the Net-Zero Industry Act, “undermines key provisions on nature protection and public participation […] by presuming that net zero priority projects and mining operations are in the ‘overriding public interest’”.

The industry was more upbeat about the Act’s effort to reduce permitting time.

“The Commission’s proposal to streamline the permitting process is crucial to prevent avoidable delays for strategic projects”, Eurometaux’s Guy Thiran said in a reaction piece.

The same goes for the Association of German Metal Traders (VDM), for whom fast approval procedures are critical for any functioning raw materials economy in the EU.

But that may clash with the reality on the ground.

“Previous experiences have shown that a two-year permitting process for an extractive operation is unheard of. Most major mining operations require much longer, up to 10 and more years,” Corina Hebestreit, secretary general of the European Carbon and Graphite Association, told EURACTIV.

Subscribe to The Economy Brief

Subscribe to EURACTIV’s Economy Brief, where you’ll find the latest roundup of news about the European economy and about a variety of policy issues from workers’ rights over trade agreements to financial regulation.
Brought to you by János Allenbach-Ammann (@JanosAllAmm). …

Recycling ambitions

While the EU aims to cover 10% of its demand for strategic raw materials through mining, 15% of total EU demand should be met through recycling, even though Commissioner Breton complained that the target “lacks ambition”.

Furthermore, 40% of the EU’s demand for raw materials will also be processed and refined within the EU.

Though targets are voluntary, the Commission is keen to press ahead and looks to speed up permitting processes even further, to under a year for key recycling projects.

“The time limit of 12 months envisaged for processing and recycling is likely to be very sporting in many cases. This could become one of the points of contention with the member states,” André Wolf, head of the technology, infrastructure and industrial development at the Centre for European Policy, told EURACTIV.

Meeting the 15% target for recycling will also prove challenging, and recyclers warn that Europe should not get its hopes too high.

For most strategic raw materials the market is heavily underdeveloped and most of the waste that would be eligible for recycling is currently being shipped to other countries, most notably China.

Critical minerals: recycling ‘not a silver bullet’, industry says

As the European Commission puts the finishing touches to its Critical Raw Materials Act ahead of publication next week, recyclers have issued a word of caution: Europe should not get its hopes too high on recycling, at least not in the short term.

China clause and dumping prices

One of the major concerns is the EU’s dependence on China, and its quasi-monopolistic position within the global market.

These dependencies already caused disruptions in 2021 when China reduced its export of magnesium, an essential element for aluminium. As the EU is about 87% dependent on Chinese magnesium imports, these supply shortages led to severe disruptions in Europe.

“It’s not because magnesium can only be found in China. It’s because they have monopolised the processing through dumping and killing the European industry and other actors in the world,” Kuby explained.

With its Critical Raw Materials Act, the EU aims to lessen these dependencies. In the plan, the Commission set a target ceiling of 65% of imports of any one strategic metal into the EU from a single country.

However, achieving this goal will likely prove challenging. One case in point is graphite, an essential part of batteries for e-vehicles. Around 60 to 80% of global demand is currently mined in China, which is dominant across the entire value chain.

“The 40% refining goal seems an unfortunate goal when it comes to natural graphite,” Corina Hebestreit from the ECGA said.

As the entire value chain – from mining to the construction of car batteries – currently sits in China, there is a high risk that “investment for this will not be available, simply because it is much easier to process the material there,” she added.

“Processing in Europe with all its legal requirements is just not going to be competitive unless the imports of the semi- or final products that are heavily subsidised in other parts of the world are stopped.”

EU dependency on China raw materials: Preparing for worst-case scenario

Since the onset of the war in Ukraine, the EU has been increasingly wary of dependency on China, especially regarding critical raw materials. According to MEP Hildegard Bentele, the EU should prepare for the eventuality of a Chinese attack on Taiwan and potential subsequent sanctions and supply shortages.