The European Union, the world’s largest trading bloc, aims to reduce its dependence on China and increase its domestic capacity for critical minerals through this legislation
The EU's Ursula von der Leyen during a meeting of the European Parliament in Strasbourg. Photo: @vonderleyen / X, formerly Twitter The Critical Raw Materials Act was voted on in the European Parliament during the September 11-14, 2023, plenary session in Strasbourg, France. It was approved with a large majority of 515 Members of the European Parliament (MEP) backing it.
While 34 MEPs did not vote in favour, 28 withheld their votes.
The European Union, the world’s largest trading bloc, aims to reduce its dependence on China and increase its domestic capacity for critical minerals through this legislation.
Metals and critical minerals are crucial for the green transition as they are used to manufacture solar panels, windmills, and electric car batteries.
German MEP Nicola Beer, the driving force behind the law, said in the parliament that the EU was 99 per cent dependent on China for rare earth metals.“We cannot allow that to be the case.”
Such dependencies create a high risk of supply disruptions and increase the Union’s vulnerability and security risks. To increase economic resilience and reduce the risks involved, the EU’s parliament on September 14 adopted a text that sets the framework for ensuring a secure and sustainable supply of critical raw materials.
The regulation aims to “diversify the Union’s imports of strategic raw materials with a view to ensure that, by 2030, the Union’s annual consumption of each strategic raw material at any relevant stage of processing can rely on imports from several third countries, none of which provide more than 65 per cent of the Union’s annual consumption”.
According to the legislation, by 2030, the Union extraction capacity should be such that the ores, minerals, or concentrates needed to produce at least 10 per cent of its annual consumption of strategic raw materials can be extracted.
The raw materials listed as critical include:
The Union, in addition, aims to increase its processing capacity along the value chain and be able to produce at least 40 per cent of its annual consumption of strategic raw materials. Inclusive of all intermediate processing steps, the aim is to manufacture at least 50 per cent annual consumption of strategic raw materials.
“Furthermore, a part of the Union’s new processing capacity might be developed under strategic partnerships in the Union lead strategic projects of mutual benefit in third countries, in particular in developing countries and emerging markets,” the document added.
For example, countries such as Australia and Chile with huge reserves such as cobalt, lithium, and manganese are potential strategic partners for diversifying the supply chain.
There is also an emphasis on increasing the share of secondary raw materials within the Union’s consumption of strategic raw materials.
The Union’s recycling capacity, including for all intermediate recycling steps is able to produce at least +10 per cent volume of recycling capacity based on the 2020-2022 baseline for each strategic raw material, the adopted text document stated.
The legislation talks about collecting, sorting, and processing 45 per cent of each strategic raw material contained in the Union’s waste, taking into account technical and economic feasibility.
Environmentalists are reportedly unhappy with the proposal for accelerating the issuing of permits without addressing the environmental standards that mining companies abide by.
The law was proposed earlier this year in March as demand for critical raw materials is projected to increase exponentially. Moreover, after the Ukraine war impacted the natural gas supply to the continent, the Union is trying to learn from its mistake and ensure there is no dearth of supply of critical minerals.
The first annual International Energy Agency (IEA) Critical Minerals Market Review, released in July, said rapid deployment of clean energy technologies has led to a huge demand for minerals such as lithium, cobalt, nickel, and copper.
Over a five-year period between 2017 and 2022, the energy sector contributed to a 70 per cent rise in demand for cobalt and a 40 per cent rise in demand for nickel. As a result of the mammoth demand in the energy sector, the demand for lithium tripled in the same period.
In 2021, China manufactured more than 80 per cent of different stages of solar panels (such as polysilicon, ingots, wafers, cells, and modules), more than double China’s global Photovoltaic demand, the IEA said.
Further discussions between the Council and the Parliament will finalise the law.
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