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EU Critical Minerals Act faces criticism from green groups and industry leaders for perceived shortcomings

The EU’s Critical Raw Materials Act, adopted on Thursday, aims to reduce permitting times for domestic mining and recycling projects but fails to create the broader conditions necessary for companies to make those investments, the industry says – a warning echoed by green activists.

Lawmakers in the European Parliament’s industry committee voted on Thursday to rubber-stamp a political agreement reached last month with EU countries on the Critical Raw Materials Act.

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The new law, initially tabled in March by the European Commission, aims to reduce the bloc’s dependency on China for metals like rare earths, needed for making clean tech products such as electric cars and wind turbines.

The text voted in Parliament sets aspirational targets for Europe to domestically extract 10% and process 40% of its annual consumption of key minerals by 2030. The EU will also aim to recycle 25% of critical raw materials ending up in its waste by the same date.

With the Parliament’s vote secured, the law will now be formally adopted by the Council of the EU, representing the bloc’s 27 member states.

Importantly, the agreed text sets time limits on permitting for projects in mining, recycling, and processing for the 16 raw materials considered “strategic” for the EU’s green and digital transition.

The aim is that no foreign supplier should provide more than 65% of any strategic raw material, like lithium, cobalt, copper, or titanium – “giving however special consideration to countries with whom the Union has established a strategic partnership, a free trade agreement or other forms of cooperation covering raw materials”.

Industry reaction

But although the goals of the EU’s new Critical Raw Materials Act were welcomed by the industry, players in the mining and metals sector also pointed to weaknesses related to the EU’s broader economic and business environment.

The CRMA, on paper, presents ambitious targets, said a source in the aluminium industry. “However, the practical implementation of CRMA’s goals to stimulate investments in these raw materials remains virtually non-existent,” the source added.

“The Critical Raw Materials Act takes an important first step to address Europe’s looming metals supply challenge,” said Evangelos Mytilineos, President of Eurometaux, a trade association. “It must now be the start of a much bigger policy shift to really drive EU investment,” he said.

Industry sources point in particular to high energy and regulatory costs posing “a severe challenge” to European industries reliant on raw material processing, saying it makes them less competitive compared to China and the US.

Regulatory hurdles cited by a senior source in the aluminium industry include the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM), which “add astronomical costs” to European industries.

In contrast, the US has experienced a surge in investments worth billions of dollars across the clean tech value chain thanks to its Inflation Reduction Act adopted in 2022, the source pointed out, referring to a recent memo by investment bank Goldman Sachs on the matter.

For Euromines, a trade association, the EU’s lack of competitiveness is also the result of “years of neglect” for Europe’s domestic mining industry as cheap materials were being shipped freely to the EU from countries with lower social and environmental standards.

“The green transition must start in the mine,” said Rolf Kuby, director general of Euromines. “After all, solar panels or wind turbines must not only produce green electricity – they must be made of green raw materials in the first place.”

“The EU must come back on the mining map and the permitting for new, ESG-driven extraction must be streamlined, and member states need to implement to deliver on new mines,” Kuby told Euractiv.

Getting projects off the ground

Remarkably, it is not just the industry warning about shortcomings related to the CRM Act. Transport and Environment (T&E), a clean mobility campaign group, also says much more must be done to achieve the EU’s green objectives.

“The focus on onshoring minerals refining, processing and recycling, simpler permitting for best-in-class projects and upholding strong environmental safeguards are all good aspects of the final EU critical raw materials act,” said Julia Poliscanova, senior director at T&E.

“We now need to shift focus from lawmaking to getting the projects off the ground and building up responsible supply chains in Europe,” she added.

According to T&E, less than a fifth of battery minerals needed by European carmakers by 2030 have so far been secured while governments and downstream companies “have been asleep at the wheel”.

“It’s time to reconnect our green deal aspirations with the critical minerals reality,” Poliscanova told Euractiv. “This means tracking and scaling truly sustainable minerals supply chains, refocusing our trade policy and supporting best-in-class projects with fresh EU money.”

The EU’s lack of dedicated finance for raw material projects indeed appears like a weak spot for the EU.

In September, an alliance bringing together T&E and companies in the battery value chain – including mining giant Rio Tinto, metal supplier Aurubis, and battery maker Northvolt – sent a letter to the European Commission asking to ramp up dedicated EU funding for projects.

“In the long run, a long-term European Critical Minerals Fund should be established as part of Europe’s green investment agenda to support the Green Deal,” the coalition wrote.

For Mytilineos, the main objective should be to establish a business case for companies to invest in Europe instead of Asia or the US. “It’s becoming harder for companies to justify investments here when competing regions offer such a better business case,” he warned.


Source: euractiv

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