The European Union’s Critical Raw Materials Act: How Effective In Addressing Supply Chains Risks?
By Cecilia Nota, PhD Candidate University of Turin
1. Introduction
In May 2024, Regulation (EU) 2024/1252, establishing a framework for ensuring a secure and sustainable supply of Critical Raw Materials, came into force. This contribution aims to assess how effectively this regulation addresses the current supply chain risks faced by the European Union (EU).
Firstly, the significance of Critical Raw Materials (CRMs) in ensuring economic security is examined, particularly considering the disruptions caused by recent geopolitical crises. The analysis highlights how CRMs are vital for various high-tech and green technologies, emphasising the EU’s dependency on these materials and the need for a resilient supply chain to maintain economic security. In the second section, the development of the EU’s CRM strategy is traced, and how the evolution of such strategy has shaped the current approach to securing a stable supply is explored, reflecting the EU’s growing recognition of their importance. The third section details the Regulation’s legislative framework, distinguishing between internal measures for enhancing extraction, processing, and recycling within the EU, and external measures for diversifying imports and establishing strategic partnerships with non-EU countries. Finally, this contribution poses the question: what are the potential challenges in implementing the CRMA, and how can the EU address them to ensure its effectiveness? The concluding section analyses the Regulation’s ambitious nature and solutions, emphasising the importance of EU-level coordination, effective monitoring, and sustainable practices, as well as the need for binding international agreements to enhance CRM supply chain resilience and ensure long-term effectiveness.
2. The Role of Energy and Raw Materials in Economic Security
For the European Union (EU), economic security is increasingly tied to the availability of energy and raw materials, particularly critical raw materials (CRMs), vital for various high-tech and green technologies. Economic security refers to the stable access to resources and markets necessary to maintain a nation’s economic stability and growth, which encompasses the ability to protect and sustain critical infrastructure, maintain employment levels, and ensure the availability of essential goods and services. Energy security is, thus, an essential component of economic security, as it involves reliable access to energy resources at affordable prices. For the EU, energy security has become more critical in light of recent geopolitical crises, such as the COVID-19 pandemic and the Russian invasion of Ukraine. These events highlighted vulnerabilities in global supply chains and the need to ensure a stable energy and raw materials supply.
CRMs are materials essential for producing various energy-related technologies, including renewable energy systems, digital devices, and defence equipment; thus, they are characterised by their economic importance and supply risk. The EU’s dependence on CRMs, often sourced from a limited number of regions (notably China), poses significant risks to its economic security. To address these vulnerabilities, the EU has adopted a strategy to secure a sustainable and resilient supply of CRMs. Resilience in this context refers to the ability to anticipate, prepare for, respond to, and recover from disruptions in supply chains. Enhancing resilience involves diversifying sources of raw materials, developing alternative technologies, and creating robust supply chains that can withstand geopolitical and economic shocks. The EU’s focus on resilience is evident in its efforts to diversify supply sources and establish strategic partnerships.
The interconnectedness of economic security, energy security, and resilience becomes particularly apparent when considering the EU’s transition to renewable energy. Renewable energy technologies, such as solar panels and wind turbines, require significant amounts of CRMs. Ensuring a secure and resilient supply of these materials is crucial for the EU to achieve its decarbonisation goals and maintain its strategic autonomy. As such, the EU’s strategy for CRMs is essential in navigating the complex geopolitical landscape and ensuring long-term economic security.
3. The Evolution of the EU’s Critical Raw Materials Strategy
The EU’s strategy for securing CRMs has evolved over recent years, driven by foresight studies, strategic communications, parliamentary resolutions, and responses to geopolitical events. This evolution reflects the EU’s growing recognition of the importance of CRMs for economic security, energy resilience, and strategic autonomy.
In 2020, the European Commission’s Joint Research Centre conducted a Foresight Study that examined demand scenarios for CRMs for 2030 and 2050. This study identified key supply risks and bottlenecks, such as import dependency and vulnerability to supply disruptions. The study’s findings highlighted the need for proactive measures to ensure a stable supply of CRMs essential for the EU’s industrial and technological sectors, particularly in the context of the green transition.
Following the Foresight Study, the European Commission issued the Communication of CRMs Resilience. This communication emphasised the necessity of enhancing the EU’s resilience against potential supply disruptions. It outlined an action plan to develop resilient value chains by reducing dependency on primary CRMs through circular resource use and sustainable innovation. Additionally, it aimed to strengthen domestic sourcing and processing by encouraging mining and processing of CRMs within the EU, thereby decreasing reliance on external sources. Finally, the plan focused on diversifying supply by promoting sustainable international trade practices and establishing strategic partnerships. The Communication also included the establishment of the European Raw Materials Alliance and sustainable financing criteria for CRM mining and extraction, emphasising a comprehensive approach to addressing the challenges within CRM supply chains.
In November 2021, the European Parliament adopted a Resolution on a European Strategy for CRMs. This resolution reinforced the importance of CRMs for the EU’s strategic autonomy and economic security, and it called for enhanced EU policies, sustainable practices, and strategic partnerships.
In March 2023, the European Commission announced a proposal for a Regulation, which was then adopted in April 2024, establishing a framework for ensuring a secure and sustainable supply of CRMs – the so-called CRMA.
4. The Contents of the Critical Raw Materials Act
The Critical Raw Materials Act (CRMA) is a comprehensive legislative framework designed to ensure a secure and sustainable supply of CRMs within the EU. The CRMA distinguishes between critical and strategic raw materials based on their importance to green and digital technologies, focusing on non-energy, non-agricultural raw materials.
The Act has two main internal and external dimensions: strengthening domestic supply and securing external supply. The CRMA was developed in response to the EU’s increasing dependency on imported raw materials and the need to support the green and digital transitions. The legal basis of the Regulation is Art. 114 TFEU, which deals with internal market regulation, and, as such, the CRMA aims mainly at regulating the CRMs entire lifecycle within the EU.
4.1. Strengthening domestic supply
The CRMA includes several measures to enhance the EU’s domestic raw materials supply chain, such as developing national exploration programs to assess extraction feasibility and circular economy initiatives. It establishes a framework to encourage investments in the extraction, processing, and recycling of CRMs within the EU.
The CRMA mandates strict adherence to environmental and sustainability standards for all CRM-related activities and sets criteria for designating strategic projects based on their contribution to the EU’s supply security and sustainability. Art. 6 of the Regulation elaborates on these criteria, which entail that: the project must make a meaningful contribution to the security of the Union’s supply of CRMs; it must be or become technically feasible within a reasonable timeframe, with expected production volume estimated with a sufficient level of confidence; and it must be implemented sustainably. Additionally, projects in the Union should offer cross-border benefits beyond the Member State concerned, and projects in third countries that are emerging markets or developing economies should mutually benefit both the Union and the third country by adding value locally.
Member States must streamline the permitting process for these projects and are encouraged to develop national exploration programs and report stock levels to the European Commission. Furthermore, Art. 5 of the Regulation lays out benchmarks for strengthening the different stages of the strategic raw materials value chain. These benchmarks include increasing the Union extraction capacity to at least 10% of the Union’s annual consumption of strategic raw materials by 2030, ensuring the Union processing capacity can produce at least 40% of the Union’s annual consumption, and recycling capacity can produce at least 25%.
4.2. Securing external supply
Given the EU’s reliance on imports and concentrated supply sources, the CRMA includes measures to secure external supply through international cooperation. Such measures also include benchmarks such as the one set by Art. 5 of the Regulation, stipulating that no single third country should supply more than 65% of the Union’s annual consumption of these materials by 2030. However, this benchmark raises concerns, as it seems overly permissive and still exposes the EU to the risk of weaponising economic interdependence. To achieve proper diversification, stricter benchmarks may be necessary to safeguard against potential vulnerabilities.
Nevertheless, the Regulation outlines a framework for establishing strategic partnerships with non-EU countries, focusing on mutually beneficial cooperation in the CRM value chain. The CRMA advocates for incorporating CRM provisions into trade agreements and fostering mineral-specific partnerships. Strategic partnerships are to be aligned with the Global Gateway investment projects, enhancing the resilience and sustainability of CRM supply chains. A CRM Board is established by Art. 35 of the Regulation and is mandated to evaluate the effectiveness of strategic partnerships in enhancing supply security and achieving dependency on reduction targets. The article specifies that the Board is established to provide advice to the Commission and that its tasks include discussing the implementation of permitting procedures for CRM projects, proposing guidelines for their implementation, advising on the joint purchasing system, and improving national programmes (Art. 36). Art. 37 further specifies that the Board shall periodically discuss the extent to which Strategic Partnerships concluded by the Union contribute towards improving the Union’s security of supply, cooperating along the critical raw materials value chain, and the economic and social development of partner countries. The Board also assesses the consistency of Member States’ bilateral cooperation with relevant third countries. It prioritises third countries for Strategic Partnerships based on their potential contributions to the security of supply, environmental and social practices, and existing cooperation agreements.
5. Concluding remarks: beyond the Critical Raw Materials Act
The CRMA is a significant step towards securing the EU’s supply of CRMs, but its future effectiveness depends on several factors.
The CRMA’s internal measures, such as increasing domestic extraction and processing capacities and achieving high recycling rates, are ambitious and long-term solutions. Achieving the targets set for 2030 (e.g., 10% of extraction and 40% of processing within the EU) will require substantial investments and coordinated efforts from Member States. The nature of these targets poses a challenge, as achieving them depends on the political will and administrative capabilities of individual Member States.
In contrast, external measures, such as diversifying imports and establishing strategic partnerships, offer more immediate solutions. These measures are pragmatic and essential for reducing the EU’s current vulnerabilities. However, their success hinges on the stability and reliability of partner countries, which geopolitical factors can influence. The reliance on non-binding instruments, such as Memoranda of Understanding, for these Strategic Partnerships also raises doubts about their enforceability and long-term sustainability.
Strengthened coordination at the EU level, coupled with financial and administrative support for Member States, is crucial for achieving domestic targets. Effective monitoring and evaluation mechanisms are needed to assess progress towards internal and external targets and to adapt strategies as necessary. Continued emphasis on sustainability and circularity in all CRM-related activities will ensure that the EU’s approach is environmentally responsible, while deepening international cooperation through binding agreements and robust partnerships will enhance the resilience of global CRM supply chains. The CRMA represents a comprehensive approach to addressing the EU’s supply risk. Still, the ultimate success of the Regulation will depend on the effective implementation of both its internal and external measures and the ability to adapt to evolving geopolitical and economic conditions.
