Reflection: the European Critical Raw Materials Act and the road to strategic autonomy

Supply chains for raw materials and rare earth metals are vulnerable

The act highlights the growing awareness of the vulnerability of modern supply chains, especially with regard to critical goods and related raw materials. Events such as the Covid-19 pandemic, the Russian invasion of Ukraine, and the geopolitical rise of China have mercilessly exposed this vulnerability. It has become painfully obvious that global supply chains, based on free trade, do not provide sufficient security of supply.

CRMA is necessary due to competition and the geopolitical landscape

The CRMA aims to diversify the various stages of the strategic raw materials value chain, better monitor risks, and improve circularity and sustainability. One aspect of the Act that is receiving a lot of attention is that of quantitative targets, such as ensuring that Europe does not depend on a single country for more than 65% of its supplies. This approach is ambitious but necessary given the increasingly complex geopolitical landscapes and increasing competition for access to critical raw materials.

Does the new EU raw materials law stimulate the necessary investments?

Nevertheless, the CRMA also raises some important questions. First, how will the Act affect practice? Will it actually stimulate the investment needed to strengthen Europe's industrial base? The act sets benchmarks, but its success will depend on how well these benchmarks are achieved and how they are enforced. It is important to note that there is no funding attached to the CRMA. This is different in the US, for example, which is investing 350 billion US dollars through the Inflation Reduction Act.

Less focus on inventory management, more on sustainable production

Another concern is the Act's focus on stock control of strategic raw materials. While stock control is important for ensuring the continuity of supply chains, an overemphasis on stockpiling may lead to inefficiency and political tensions once money is allocated. It is crucial for Europe to take a balanced approach that includes both stock control and investment in sustainable production and recycling. The focus in the CRMA on those required investments is currently limited.

Moreover, the EU should ensure that the CRMA is in line with its broader policy objectives, such as the Green Deal and the drive towards climate neutrality. It is important that the Act aims not only to strengthen Europe's industrial base, but also to support sustainable production and reduce the environmental impact of raw material extraction and use. Examples are mandatory recycled content, as is already happening with batteries, or further exploring and developing re-manufacturing technology and urban mining.

International cooperation essential for a solution

Finally, while the CRMA is an major step towards ensuring Europe's strategic autonomy, the EU should also continue to seek international cooperation and dialogue. Given the global nature of supply chains and commodity markets, it is essential that Europe continues to work closely with its international partners to address common challenges and find joint solutions.

In short, the European Critical Raw Materials Act marks an important milestone in Europe's efforts to strengthen its strategic autonomy and protect its industrial base. But success will depend on the extent to which companies actually start investing in sustainable production.