Refining Strategies for Raw Materials: The EU’s CRMs

While it is common for modern political analysis to advocate for advances in industrialisation, digitalisation, prosperity in developing countries or the transition to green economies and climate neutrality, to name a few, one oft-ignored limiting factor and consequence of all of these is the increasing pressure on the Earth’s resources. We have long been aware of the negative impacts of an over-reliance on limited supplies of fossil fuels, but there are other materials, minerals and metals that also need close attention paid to if countries in the Global North and South are to continue their development trajectories, whether towards industrialisation or carbon neutrality. Indeed the OECD forecasts that global materials demand will more than double in the coming decades, increasing from 79 billion tonnes in 2011 to 167 billion tonnes in 2060, and this could lead to increasingly common resource-driven conflicts in the future, whether geopolitical or physical in nature.

Supply Chained

To respond to this growing challenge, since 2011 the European Union (EU) has produced a list of critical raw materials (CRMs) as part of the Raw Materials Initiative, first started in 2008. This initiative has been designed to ensure that European manufacturing remains competitive on global markets, and to accelerate the transition towards a “resource efficient and sustainable society”, and as such the list undergoes triennial revisions. The 30 Critical Raw Materials that populate the 2020 revision of the list all share three common characteristics: they are strategically important for European industry and the economy; they have no natural or artificial substitutes; and there are high risks associated with securing their supply. Examples of CRMs include lithium and cobalt, used widely in rechargeable batteries for cars and technology; and indium which is used in the manufacture of touch screens. Generally, these materials are key in the production of digital technologies, renewable energy, electric mobility, and the defence and aerospace industries, and so securing their supply will be vital in ensuring future-oriented supply chains resistant to global and regional shocks, as well as the competitiveness of European companies in these sectors and industries.

Currently, the EU is heavily dependent on the import of these materials, and only 3 of the 30 CRMs are more than 50% sourced from within the EU. These materials are often highly concentrated, with the EU depending on China for 44% of its supply of all CRMs, and an incredible 98% of rare earth elements which are used in key aspects of the green transition strategy such as wind turbines and electric vehicles. Other vital materials are also sourced from countries with which the EU has strained geopolitical, diplomatic, or ethical relations, prompting their inclusion on the 2020 CRM list. Examples include magnesium, 93% of which is from China, and which is used in laptops and car seats; niobium, 85% of which comes from Brazil and used to make steel alloys in oil pipelines and jet engines; borate, 98% from Turkey, which is used to make fire retardant materials, and cobalt, which is 60% sourced from the Democratic Republic of Congo and 80% refined in China. China dominates the processing of many of these materials and, as such, European industries are reliant on Chinese suppliers and refiners to make products which are key to achieving the goals set out in the EU Green Deal, giving China and other nations the keys to unlocking a greener Europe. Other nations heavily reliant on imports of CRMs like Japan and the US face similar issues, and the problems look likely to get worse too, as for just electric vehicle batteries and energy storage alone, Europe will need “up to 18 times more lithium in 2030 and up to 60 times more by 2050”, according to, Maroš Šefčovič, the  European Vice-President for Interinstitutional Relations and Foresight. Clearly, something more is needed if Europe is to “lead the green and digital transition and remain the world’s first industrial continent” as Thierry Breton, Commissioner for Internal Markets said.

New Partners and Prospects

Fortunately for the continent, Europe’s leaders look set on making changes for the decade ahead. This is evident from statements by Thierry Breton, who declared that “the era of a conciliatory or naïve Europe that relies on others to look after its interest is over”; and by the President of the European Commission, Ursula von der Leyen, who told how “we as Europeans want to diversify our imports away from producers like China because we want more sustainable, less environmental damage, and we want transparency on raw materials”. The European leadership has reason to be confident too, as the continent has its own substantial CRM reserves to be explored and currently only collects about 1% of CRMs from waste electrical equipment. The main barrier standing in Europe’s path towards greater self-sufficiency is global supply chains, and so the 450-member European Raw Materials Alliance was established in October 2020 to address gaps in existing supply chains to overcome shortages of skills and technologies within Europe. As part of this project, countries in the EU will begin to shift existing coal mining infrastructure and manpower over to the exploitation and recovery of CRMs within Europe. The Alliance is also coordinating investment and providing seed money for European mines and processing plants, and initially received €10 billion from the European Commission.

2020 was a landmark year for European CRM procurement, as the bloc became more confident in throwing its geopolitical weight around and demanding its standards be met, made clear in a statement by Maroš Šefčovič who made clear that the EU would only import battery cells which adhere to the bloc’s stringent environmental and labour standards. This newfound confidence is not unfounded either, as there have been several positive developments over the last 18 months. In July 2020, the EU made several important moves, including inviting Ukraine to join the EU industrial alliances on batteries and raw materials, with a view to developing an entire value supply chain of the extraction, refinement, and recycling of minerals, vital for the electric car making industry, in Ukraine. This move would also help to sustain Ukrainian growth despite the expected detrimental effects following the completion of the Nord Stream 2 Pipeline.

In the same month, Greenland also signed onto a multi-billion-euro EU effort to promote mining projects that will help secure the 30 CRMs, and on the 19 July 2020, the new Canada-EU Strategic Partnership on Raw Materials was announced. A month later, Norwegian polysilicon maker Elkem announced plans to build Europe’s first graphite factory in Heroya, Norway, which will help to reduce the bloc’s reliance on China for such materials. Of course, there is more work to be done, and the EU is carrying out research and development activities to improve our understanding of the circular economy and sustainable use of resources, which was discussed by IDRN’s Andrea Limon, in an article from July this year. The European Investment pledge to invest €1 billion to support a pan-European battery industry emphasises the central point that, for the EU to succeed in an increasingly resource-scarce world, greater self-sufficiency and defence of robust supply chains will be of paramount importance. Of course, how the traditional suppliers and refiners of these materials and minerals will react to this new competition remains to be seen.