|Author (Corporate)||European Commission: DG Internal Market Industry Entrepreneurship and SMEs|
|Series Details||COM (2023) 160|
|Content Type||Blog & Commentary, News, Policy-making|
Legislative initiative tabled by the European Commission on 16 March 2023, establishing a framework for ensuring a secure and sustainable supply of critical raw materials. It introduces amendments to Regulation (EU) 168/2013, Regulation (EU) 2018/858, Regulation (EU) 2018/1724 and Regulation (EU) 2019/1020. This is a text with EEA relevance, and it is also known as the draft European Critical Raw Materials Act.
Raw materials are found at the beginning of all industrial value chains. The focus of this Regulation is on non-energy, non-agricultural raw materials that are important for the European Union's (EU) economy, the supplies of which are subject to a high level of supply risk. These critical raw materials (CRMs) are often indispensable inputs for a wide set of strategic sectors. At the same time, extraction and processing of CRMs can have negative environmental impacts, depending on the methods and processes used, as well as social impacts.
The EU relies almost exclusively on imports for many critical raw materials. Suppliers of those imports are often highly concentrated in a small number of third countries, both at the extraction and processing stage. This concentration exposes the EU to significant supply risks. There are precedents of countries leveraging their strong position as suppliers of CRMs against buyer countries, for instance through export restrictions.
With the global shift towards renewable energy and the digitalisation of economies and societies, demand for several critical raw materials is forecasted to rapidly increase going forward. Substituting materials and increasing material efficiency and circularity can mitigate the projected rise in demand to a certain extent, but these steps are not expected to reverse the trend. Against this background, many countries have adopted policies to actively secure their supply of critical raw materials, increasing resource competition.
The growing geopolitical tension and the COVID-19 (coronavirus) pandemic highlighted the EU's structural supply dependencies and their potentially damaging effects in times of crisis. The 2008 Raw Materials Initiative and the 2020 Action Plan on Critical Raw Materials provided a framework for initiatives assessing the criticality of different raw materials, the international diversification, research and innovation and the development of CRMs production capacity in the EU. However, non-regulatory actions have not been enough to ensure the EU’s access to a secure and sustainable supply of critical raw materials.
This draft law seeks to strengthen the different stages of the EU's critical raw materials value chain, diversify the EU's imports of CRM to reduce strategic dependencies, improve the EU's capacity to monitor and mitigate disruption risks to CRM supply, and ensure the free movement of CRMs on the single market while ensuring a high level of environmental protection.
The proposed Regulation was adopted by the European Commission on 16 March 2023, alongside a Communication setting out a common approach to ensuring the supply of critical raw materials.
|Subject Categories||Business and Industry, Internal Markets|
|Subject Tags||Industrial Policy|
|International Organisations||European Union [EU]|