If done right, the EU Critical Raw Materials Act can ensure a sustainable supply of metals – but also bring us closer to achieving responsible global supply chains.
“Lithium and rare earths will soon be more important than oil and gas,” proclaimed EU Commission president von der Leyen during her recent annual address to the European Parliament.
This marks a change for Europe as just months ago its leaders were flying around the world desperately trying to secure oil and gas supplies (they still are). But the twin priority of green and digital transformation relies on metals such as copper and lithium, not fossil fuels.
Europe is neither first nor alone in its scramble to secure critical metals. China began as far back as the 1980s and today refines 85% of rare earths found in electric cars and wind turbines, and 65% of all lithium found in batteries. Chinese companies control much of cobalt in the DRC, lithium in Chile and nickel in Indonesia. With little transparency, the labour and environmental conditions under which these metals are sourced are impossible to track.
Meanwhile, the US Inflation Reduction Act is a game changer in industrial policy. Only electric cars with batteries and raw materials procured in North America or friendly countries will get tax credits. This has unleashed a wave of domestic investment announcements in just a few months. The concern in Europe is that companies will now prioritise the US market over Europe’s. Tesla is rumoured to be delaying its German battery gigafactory.
The EU’s answer to the metal supply challenge is the new Critical Raw Materials Act. At its core, the law will create a list of strategic projects in processing, mining and recycling at home that would benefit from lean permitting and extra funding.
But mining has long been out of favour with European communities and civil society organisations concerned about the impact on water, land and people’s livelihoods. Recent protests like those that halted the Rio Tinto project in Serbia underscore the challenge of domestic mining. Unless something changes, we could expect this to be repeated across Europe.
For it to work, the new raw materials act must tackle the problems that are particular to Europe in its race to secure responsibly sourced raw materials. This European way should be based on three pillars.
First, European projects – whether a mine, a recycling plant or a refinery – must consistently meet the high standards they tout publicly. With extractive industries in decline for decades, some of Europe’s standards are outdated. Waste, for example, is one of the core challenges associated with mining, but Europe’s requirements on this are behind those in Brazil, Ecuador and China.
This means that scrapping or watering down environmental requirements to speed up permitting for strategic projects – as the renewables legislation has done – is a no go. It will only bring more protest.
The strategic project badge should be conditional upon consistent application of best practice in waste, water and pollution control, underpinned by engagement with and consent from local communities. Doing things right is the fastest way to get project approvals in Europe.
Second, even if the end game must be urban mining, or recycling, Europe will rely on global imports for years to come. This means that transparent and diverse markets, underpinned by strong sustainability standards such as IRMA, are key to guaranteeing responsible supply.
The EU will soon require a “battery passport” that traces where and under what conditions battery minerals were produced. It should work with like-minded countries like the US, Japan and South Korea to extend this across some of the largest electric vehicle markets. This will bring the scale to change practices globally.
Creating a similar track and trace standard for all raw materials will take time. But the Critical Raw Materials Act can already require all suppliers to measure and report their carbon emissions. This will reward those investing in better technology, as well as recyclers.
Finally, someone needs to be responsible for making all this happen. Recognising the importance of nuclear fuel, Europe created the EURATOM agency in 1957. We need a critical metals authority in 2022. This would coordinate the 27 EU governments’ efforts, ensure high standards are met and oversee joint purchasing or stockpiling across the bloc.
Europe can’t do it alone. Global markets, including China, will be needed for scale, innovation and competition. But we should not be naive. The Critical Raw Materials Act, if done right, can ensure resilient and sustainable supply for the green transition. It should also help improve the way in which we source metals and bring us closer to the responsible global supply chains we all want.
