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Critical Raw Materials Act: Success depends on concrete implementation

The agreement on the Critical Raw Materials (CRM) Act sends an important signal to strengthen European sovereignty and resilience in the supply of raw materials - especially against the backdrop of increasing geopolitical risks and global measures to control raw materials trade. The success of the CRM Act will depend on its concrete implementation, although the right framework conditions and important instruments are still lacking.

The fact that raw materials can be used as a weapon in the context of geopolitical conflicts were illustrated most recently in August and October 2023. On the grounds of protecting national security, China imposed export controls on the critical raw materials gallium and germanium and, most recently, graphite. Exporters must apply for licences and provide detailed information on foreign buyers and their plans to use these materials. Germany and Europe are disproportionately dependent on China for all three raw materials, which intensifies the risk of shortages and price increases for the industry. 

Agreement on the CRM Act sends an important signal for increased security of supply

The fact that the Council and Parliament negotiators were able to agree on the Critical Raw Materials Act so quickly in the trialogue is a success. It sends out the message that European decision-makers are serious about securing the supply of strategic raw materials. The agreement sets the following targets for the development and expansion of European production capacities: At least ten per cent of annual consumption of strategic raw materials is to be covered by domestic mining by 2030. At least 40 per cent of annual consumption is to be covered by domestic processing. The targets for recycling have been increased and should account for at least 25 per cent of annual consumption. In addition, no more than 65 per cent of the annual consumption of each strategic raw material at each relevant processing stage should come from a single third country. Aluminum and synthetic graphite have also been added to the list of strategic raw materials.

Accelerated permitting procedures only one building block for strategic projects

The success of the CRM Act will be determined by its concrete implementation, i.e. when the so-called "strategic projects" start and actually deliver results.

The commitment to shorter permitting procedures (27 months instead of the usual 10-15 years for mining, 15 months for processing and recycling) is a step forward. One hurdle is social acceptance. The support of the federal and state governments is crucial here in order to specifically promote projects along the entire raw materials value chain. In Germany, this requires close dovetailing with the process of amending the Federal Mining Act and better staffing of the authorities.

The right framework conditions and important instruments for implementation are lacking

Europe must keep pace in the geopolitical race for critical strategic raw materials, but the CRM Act lacks an urgently needed funding offensive.

The reference to other EU programmes and the member states is not enough. A rapid, unbureaucratic and effective pooling of existing financial instruments is necessary. Among other things, the German government should advocate an explicit mandate for the European Investment Bank for strategic raw materials. Furthermore, the CRM Act can only succeed if conflicts of interest are resolved, issues related to framework conditions for industrial production are clarified and a fair level playing field is created. Regulations in the areas of supply chain due diligence obligations, chemicals legislation and taxonomy as well as the lack of competitive energy prices and sufficient electricity threaten energy-intense mining, processing and recycling production.

The compromise text has been adopted in Parliament on 12December 2023. Since the EU Ambassadors already adopted the text, too, the CRM Act is likely to enter into force next year.