The enactment of the Critical Raw Materials Act (CRMA) by the European Union marks a significant milestone in fortifying critical raw materials supply chains. However, according to a recent report from Adamas Intelligence, there are anticipated challenges on the horizon.
Although the EU initially listed Critical Raw Materials in 2011, comprising 14 items, it took over a decade to formulate, garner political backing, and finally unveil the CRMA in September 2022, as Adamas highlights.
The CRMA proposal was officially presented by the EU Commission in March 2023, as part of the Green Deal Industrial Plan for the Net-Zero Age. Subsequently, the EU Parliament endorsed it in December of the same year. In March 2024, the EU Council gave its approval, and in May, the act was ratified into law.
The CRMA aims to strengthen domestic supply chains while fostering economic and environmental sustainability within the region. It identifies 34 critical raw materials, with 16 designated as strategic. Notably, rare earth elements and lithium, vital for the transition to electromobility and renewable energy generation, are among these strategic materials.
These materials are pivotal for ensuring the economic success and competitiveness of domestic manufacturers, which rely on sustainable supplies predominantly imported, as noted in the report. The CRMA mandates EU member states to establish national mineral exploration programs for Critical Raw Materials, potentially boosting exploration and development activities on the continent significantly.
Furthermore, the EU Commission is tasked with projecting the expected annual consumption of each of the 34 CRMs for 2030, 2040, and 2050, with initial projections anticipated within 18 months of the act’s implementation.
Despite its noble intentions, the CRMA faces challenges, particularly regarding supply chain risks. Adamas analysts emphasize the need for the EU to mitigate risks associated with strategic dependencies to enhance economic resilience. The act stipulates that a portion of the EU’s annual consumption must be domestically sourced, processed, and recycled by 2030. Additionally, the EU cannot procure over 65% of any strategic raw material from a single nation.
European Commission President Ursula von der Leyen underscored the importance of lithium and rare earths, asserting that they would soon surpass oil and gas in significance. However, while the EU possesses adequate mineral resources to meet CRMA targets for rare earth elements and lithium, political and social obstacles, along with complacency from some end-users, have impeded necessary investments and developments.
For instance, the Wolfsberg lithium project in Austria is poised to become the EU’s sole producer of battery-grade lithium by 2027, owned by Critical Metals. Despite the EU’s lithium production in Portugal, primarily used in glassware and ceramics, endeavors like the proposed lithium mine in Serbia faced setbacks due to environmental concerns.
Adamas Intelligence also highlights the disproportionate focus on raw materials used in producing rare earth permanent magnets. Without expedited efforts from government and industry, the EU may struggle to meet extraction and processing targets for rare earths by 2030, presenting a significant challenge.
Moreover, streamlining permitting processes and facilitating offtake agreements, as outlined by the Commission, may not suffice amid competitive subsidies offered by other regions. Additionally, high energy costs and bureaucratic sluggishness pose further challenges to the EU’s competitiveness in this arena.
In summary, while the CRMA holds promise in bolstering critical raw materials supply chains, navigating the challenges ahead will require concerted efforts from policymakers, industry stakeholders, and the public to ensure its success.
