Critical raw materials: any successful EU strategy will need to involve international partners

It’s just like Madonna sang, back in the eighties: we are living in a material world. And here in Europe, securing access to those materials, and more specifically, to so-called ‘critical raw materials’ (CRMs), is vital if we are to meet our ambitious climate and digital objectives. Take copper, for example, which is used in all clean energy technologies and often for electric wiring. Or lithium, nickel, and cobalt, which are used to produce electric vehicle batteries. Meanwhile, exotic sounding ‘rare earth elements’ such as neodymium are crucial for the permanent magnets found in wind turbines, the engines of electric vehicles and computer hard drives.

Global demand for these and other CRMs is projected to grow rapidly. On the supply side, the extraction of CRMs is often dominated by a handful of countries and/or a few large mining companies. The refining of many CRMs is even more intensely concentrated, frequently in a single country – namely China. This implies considerable supply chain risks, including the possibility that CRMs are used as geopolitical leverage.

In response, the European Commission recently proposed a Critical Raw Materials Act. The act sets EU-level capacity benchmarks for the extraction, processing, and recycling of CRMs by 2030 – goals Europe intends to meet through the selection of strategic projects for which permit issuance procedures are streamlined and financing facilitated. The overall feasibility and ultimate effectiveness of Europe’s ambitious CRM-related policies remains unclear. Re-shoring CRM extraction and processing to Europe would be extremely challenging: this would take a substantial amount of time and is bound to be very costly. The continent may not be able to afford the required patience and resources.

Any successful European CRM strategy will have to be global. In line with the ‘open strategic autonomy’ mantra, the EU needs to remain open and cooperative without being naïve. The EU will need to back up strategic partnership agreements with CRM-producing countries with substantial amounts of financial support, while remaining sensitive to partners’ domestic ambitions and concerns. Wherever possible, synergies will need to be sought with other, like-minded CRM importers, to shoulder together the financial burden of investing in global CRM supply chains and to set common transparency, environmental, and social standards for CRM businesses.