The consensus is clear: there will be no energy transition without strategic metals. Batteries, wind turbines and solar cells require large amounts of lithium, nickel, rare earths and other exotic elements. More broadly, strategic sectors like aerospace and defence are also dependent on critical resources whose suppliers have de facto life-or-death control over the relevant production chains. As per the recent example of the gradual exclusion of Russia (and its bounteous underground resources) from the European market, Europe is seemingly keen to quickly free itself of its over-reliance on geopolitical vagaries.
In reality, the European Commission has been talking about this issue since 2008, when it launched the EU Raw Materials Initiative. Since then, it has maintained a list of critical substances, first published in 2011 and updated every three years. The most recent version, published in 2023, lists 34 resources (including 27 metals and groups of metals) considered critical to the functioning of the European Union.
Under this initiative, materials are assessed on the basis of two criteria:
- Their economic importance: a product of the extent to which a resource is used in a given sector and the value added by that sector. This parameter is corrected by means of a substitution index, which quantifies the ease of finding an equivalent resource. By this measure, the most important materials are tungsten , magnesium and the platinum group elements.
- Supply risk: a complex parameter reflecting, inter alia, import reliance, import sources and options for recycling. By this measure, the top three materials are rare earth elements, niobium and magnesium.
By setting the boundaries of these two parameters, the Commission defines what does and does not constitute a critical substance.
One text for 16 strategic metals
Sixteen materials (or groups of materials) on this list that are considered even more sensitive are defined as strategic because of their criticality to the development of five sectors: renewable energy, electric mobility, industry, information and communications technology, and aerospace and defence. On this basis, the following are listed as strategic materials:
- 12 metals and groups of metals: bismuth, cobalt, copper, gallium, lithium, magnesium, manganese, nickel, platinum group metals, rare earth elements, titanium and tungsten
- Three metalloids (elements whose properties are intermediate between those of metals and non-metals): boron, germanium and silicon
- One non-metal: natural graphite
Keen to begin thinking about how to manage flows of these resources, the European Commission announced in 2020 that it was setting up the European Raw Materials Alliance (ERMA), a consortium of industrial players and public entities whose mission is to identify risks and opportunities in the critical materials value chain.
The goal of CRMA: to bring production back to Europe
With the diagnosis established, Europe is now keen to free itself of hegemonic influence. The Critical Raw Materials Act clearly states its objectives in this area. For each of the strategic resources identified, it wants to ensure that, by the 2030s:
- EU extraction capacity covers at least 10% EU annual consumption;
- EU processing capacity covers at least 40% of EU annual consumption;
- EU recycling capacity covers at least 15% of EU annual consumption.
There is also a desire not to be reliant on any one third country for imports accounting for more than 65% of annual consumption of a given raw material, thus forcing an effort to diversify sources of supply.
To make sure its ambitions are backed by the necessary resources, the EU is firstly committed to better understanding and mapping its resources by requiring member countries to kick off underground exploration programmes within one year of the regulation entering into force, to be reviewed at least every five years. Member countries are also encouraged to streamline legislative arrangements to facilitate the granting of permits for projects focused on critical raw materials.
The regulation also provides for supply chain monitoring and stress tests to quantify the resilience of critical raw materials. The Commission also requires countries to report on the state of their strategic stocks. Lastly, well aware of potential reservations over these types of industrial projects, the Commission is calling on Member States to address the issue of social acceptance.
Near-unanimous support in the European Parliament
The regulation, originally proposed by the European Commission in March 2023, was adopted by a wide majority in the European Parliament on 12 December 2023, with 549 votes for and 43 against. It must now be approved by the Council of the EU.
The initiatives set out in CRMA will receive EU financial support through the European Investment Bank’s InvestEU programme. The EU is also committed to facilitating state aid for related projects. On the research and development front, the Horizon Europe programme will set aside €470 million for exploration, mining, processing and recycling.
Lastly, to facilitate cooperation and transparency in respect of third countries, CRMA provides for the creation of a Global Critical Raw Materials Club made up of producer and consumer countries. Details of how this working group is to be established and how it will interact with existing players are as yet uncertain.
France is ahead of the game
As Emmanuel Macron reiterated in a speech in Toulouse on 11 December 2023 marking the two-year anniversary of the launch of the France 2030 plan, “One of the areas of the France 2030 plan where I want us to move forward more quickly is mineral resources and, more broadly, our control over the critical metals value chain”. Yet there has been no shortage of initiatives in this regard, many of them forging ahead in areas where European legislation has yet to catch up.
For example, in early 2022, the Varin Report on securing supplies of mineral raw materials highlighted Europe’s and France’s heavy reliance on Chinese metals. On the basis of this observation, the Observatoire Français des Ressources Minérales (French Observatory of Mineral Resources, OFREMI) was created in November 2022 with €6 million of government funding, with the aim of pooling French expertise in this area. Also in 2022, the reform of the French Mining Code, which governs mining on French territory, was ratified, strengthening oversight of mining activities, particularly in respect of environmental safeguards.
As regards funding for projects related to critical metals, independent European private equity firm InfraVia Capital announced in May 2023 that it was launching a dedicated critical metals fund with a target amount of €2 billion, including €500 million in government funding. Meanwhile, work to improve our understanding of France’s underground resources could kick off as early as 2024, led by the Bureau de Recherches Géologiques et Minières (Office for Geological and Mining Research, BRGM).
A future Airbus for metals?
In a Europe with unequally distributed resources that is keen to lessen its reliance on mining giants, the only way to achieve the stated ambitions appears to be through a structured pan-European partnership. This will admittedly require a huge amount of work; however, with strategic sectors still reliant on a cocktail of materials that are rarely mined in the same place, the rewards for stakeholders seem clear. It is thus likely that European industrial operators will have to collaborate or unite; otherwise, the goals of CRMA will remain wishful thinking and the threat of China turning off the taps will continue to hang over key sectors.
In addition, this approach will help homogenise debate over the social acceptance of mining projects and heavy industry more generally. Justifying these developments in terms of European independence appears less arduous than justifying them as local commercially driven initiatives. It will, however, remain crucial to convince stakeholders that, in these areas, relocating our environmental impact may ultimately enable us to moderate it. The environmental demands set out by the EU and the emphasis on circularity through this regulation continue to support this view.
Finally, still on the social front, rebuilding skills in neglected sectors will also be a key priority: without labourers, technicians and engineers, there can be no metals. Let us not forget that the number of jobs in France’s metallurgical industry has fallen by 40% since 1990.
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