Questions and Answers on the Communication on Critical Raw Materials

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  ACTION PLAN ON CRITICAL RAW MATERIALS

How does the Action Plan on Critical Raw Materials support the Commission's priorities, notably the European Green Deal and the Industrial Strategy?

The European Green Deal Communication, which presents Europe's new growth strategy and sets out a roadmap to become climate-neutral by 2050, recognises access to raw materials as a “strategic security question” for delivering on this ambition. Indeed, many of the materials required to build wind turbines, solar PV, electric cars, fuel cells or batteries are critical raw materials. Not having access to these or depending excessively on single suppliers would harm Europe's ability to become an industrial leader in these technologies.

The Industrial Strategy for Europe proposes to reinforce Europe's industrial and open strategic autonomy, warning that Europe's transition to climate neutrality could re-place today's dependence on fossil fuels by one on raw materials, many of which are sourced from abroad and for which global competition is becoming more fierce. It recognises the importance of critical raw materials for industrial leadership in clean technologies but also for pharmaceuticals, aerospace, defence and digital.

How does the Communication on Critical Raw Materials contribute to Europe's recovery?

The coronavirus crisis has revealed just how fast and how deeply global supply chains can be disrupted. The Commission has proposed an ambitious recovery plan to increase resilience and strategic autonomy and to foster the transition towards a green and digital economy.

In its proposal for the European recovery plan, the Commission sees critical raw materials as one of the areas where Europe needs to be more resilient and autonomous in preparation for future shocks. This can be achieved by diversifying and strengthening global supply chains, enhancing circularity, reducing excessive import dependence and, in strategic areas, by promoting competitive sustainability and by increasing supply capacity within the EU.

With its aim of ensuring a secure supply of sustainable critical raw materials, this Communication on Critical Raw Materials can make a major contribution to the recovery and the long-term transformation of the economy.

To guide its work on recovery, the Commission has identified 14 industrial ecosystems, which together make up 70% of value added in the EU. As shown in Annex 2 to the Communication, critical raw materials are used in nearly all of these ecosystems, especially aerospace/defence, electronics, mobility/automotive, energy-intensive industries and renewable energy. There are also several applications of critical raw materials in the health sector, such as for medical imaging, prosthetics or pharmaceuticals.

Additionally, some of the actions proposed, such as the identification of priority mining projects in Europe and the launch of the European Raw Materials Alliance, will create new investment and employment in Europe in the next years that contributes to both the EU's recovery and its resilience.

Which policy instruments does the EU have at its disposal to improve the security of raw materials supply?

The EU has a direct competence in trade relations and EU-funded research and innovation. These instruments have been used to improve the security of raw materials supply ever since the launch of the Raw Materials Initiative in 2008 and will continue to be used to build partnerships with resource-rich countries and improve circularity and resource efficiency. The EU also has certain financial resources under cohesion policy, foreign policy instruments and through the European Investment Bank (EIB), which it can use to unlock investment into the raw materials value chain within and outside Europe.

However, most of what has to be achieved is only possible in cooperation with Member States, regions, industry and other stakeholders. This Communication, for example, proposes to identify priority investment projects for mining, processing and recovery projects together with Member States and regions and to evaluate the potential for raw materials to provide jobs and value added in regions in transition.

Local actors will structure and develop transition plans and industrial projects, and local or national authorities are the competent authorities for permitting and infrastructure needs, but the EU has an important role to play in setting out the strategic priorities (e.g. through the EU Critical Raw Materials list), mobilising industrial actors and bringing in funding through its programmes or the EIB.

How can the EU ensure that the increased extraction of raw materials causes no environmental harm and contributes to social development?

Balancing access to resources and sustainability is the key issue for the EU's future resource security. Within the EU, a strong regulatory framework exists with careful involvement of local stakeholders and high standards for environmental management. Innovative technologies, such as the use of earth observation, will allow companies and authorities to better monitor the environmental impacts of mining projects.

Outside the EU's borders, however, bigger uncertainty exists as to how sustainably resource extraction is organised. Therefore, the EU is putting sustainability at the centre of international discussions on raw materials such as in the EU-US-Japan Trilateral, the OECD, the UN, the WTO and the G20. The EU is also imposing due diligence requirements on importers of certain raw materials through the EU Regulation on Conflict Minerals, which enters into force on 1 January 2021, and its forthcoming proposal for a Batteries Regulation will address the responsible sourcing of battery raw materials.

How will the EU increase circularity of raw materials?

Circularity and recycling of raw materials from low carbon technologies is an integral part of the transition to a climate-neutral economy. Increasing product life-time, and the use of secondary raw materials, through a robust and integrated EU market and retention of value of high-grade materials, will help to cover a growing share of the EU's raw materials demand.

The EU is at the forefront of the circular economy and has already increased its use of secondary raw materials. For example, more than 50% of some metals such as iron, zinc, or platinum are recycled and they cover more than 25% of the EU consumption. For others, however, especially those needed in renewable energy technologies or high tech applications such as rare earths, gallium, or indium, secondary production represents only a marginal contribution. This is a huge loss of potential value to the EU economy and a source of avoidable strain on the environment and climate.

Therefore, the Action Plan proposes to launch additional research on waste processing, advanced materials and substitution of critical raw materials. It also announces that the Commission will map the potential supply of secondary critical raw materials from EU stocks and wastes by 2022 - a precondition for future policy development and concrete recovery and recycling projects.

How can the EU increase the sourcing within the EU?

Europe has a long tradition of mining and extractive activities, with aggregates and industrial minerals as well as certain base metals such as copper and zinc. It is less successful in developing projects to develop critical raw materials, even though there is significant potential for these. The reasons are multi-faceted: lack of investment in exploration and mining, diverse and lengthy national permitting procedures or tranditionally lower levels of public acceptance.

The EU and its Member States already have a good legislative framework in place to ensure that mining takes place under environmentally and socially sound conditions.

For the reasons mentioned above, it is very difficult to bring new critical raw material projects to the operational stage quickly. However, solutions exists. Innovative technological solutions are transforming the mining and processing of critical raw materials. The sector is already using automation and digitalisation. Remote sensing using Europe's earth-observation Copernicus Programme can become a powerful tool to identify new critical raw material sites, monitor the environmental performance of mines during their operating life and after closure.

What is the objective of the European Raw Materials Alliance?

The EU Industrial Strategy proposes to develop new industrial alliances. The raw materials dimension should be an integral part of each of these alliances. For example, the European Battery Alliance has put a strong emphasis on securing access to lithium. The investment it has mobilised should lead to supplying 80% of Europe's lithium batteries demand from European sources by 2025.

On the top of this, there is also a need for a dedicated industrial alliance on raw materials, as announced in the Industrial Strategy, since there are a number of important cross-cutting challenges such as highly concentrated global markets, investment and innovation barriers, and increased level of sustainable sourcing, that cannot be addressed only per sector.

In a first phase, this European Raw Materials Alliance will focus on the most pressing need, which is to increase EU resilience in the rare earths elements and magnets value chain, as this is vital to most of EU industrial ecosystems (including renewable energy, defence and space). The alliance can expand to address other critical raw material and base metal needs over time.

Who participates in the European Raw Materials Alliance and how is it financed?

The alliance is open to all relevant stakeholders, including industrial actors along the value chain, Member States and regions, trade unions, civil society, research and technology organisations, investors and NGOs. The alliance will apply the principles of cooperation, inclusiveness and transparency. It will respect EU trade and competition rules. The alliance will identify barriers, opportunities and will have a governance framework involving all relevant stakeholders. The Commission will be ready to advise if industrial consortia seek EU funding (such as through InvestEU or the Just Transition Fund) or designation as an Important Projects of Common European Interest.

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  EU CRITICAL RAW MATERIALS LIST

What is the EU Critical Raw Materials list and what is it used for?

Since 2011, the Commission publishes the list of critical raw materials for the EU every three years. Its assessment is based on two main parameters: economic importance and supply risks.

The economic importance looks in detail at the allocation of raw materials to end-uses based on industrial applications. Supply risk looks at various parameters (e.g. EU import reliance, export restrictions in third countries, substitution possibilities) to assess concentration of supply and the share of demand met through secondary raw materials. The assessment is based on data from the recent past and does not forecast future trends. This is why the Commission's services are also presenting a foresight study today on future supply risks.

The resulting list of critical raw materials provides a factual tool to support EU policy development. The Commission uses the list as supporting evidence when negotiating trade agreements or seeking to eliminate trade distortions. The list helps to identify investment needs, and to guide research and innovation priorities under the EU's Horizon 2020, Horizon Europe and national programmes, especially on new mining technologies, substitution and recycling. It is also relevant for the circular economy and industrial policy. Member States and companies can also use it as an EU reference framework for developing their own specific criticality assessments.

What does the 2020 Critical Raw Materials list tell us about current supply challenges?

The 2020 Critical Raw Materials list contains 30 materials, as compared to 14 materials in 2011, 20 materials in 2014 and 27 materials in 2017. 26 materials stay on the list. Bauxite, lithium, titanium and strontium are added to the list for the first time. Helium remains a concern as far as supply concentration is concerned, but is withdrawn from the 2020 critical list due to a decline in its economic importance. The Commission will continue to monitor helium closely, in view of its relevance for a range of emerging digital applications.

The supply of many critical raw materials is highly concentrated. For example, China provides 98 % of the EU's supply of rare earth elements, Turkey provides 98% of the EU's supply of borate, and South Africa provides 71% of the EU's needs for platinum and an even higher share of the platinum group metals iridium, rhodium, and ruthenium. For critical raw materials sourced in the EU, namely hafnium and strontium, EU supply also depends on single companies.