The European Union’s strategy to secure access to critical raw materials (CRMs) is increasingly focused on reducing supply chain dependencies and ensuring a stable supply of these essential materials. Given the forecasted quadrupling of demand for CRMs by 2040, the EU is prioritizing measures to strengthen self-reliance, diversify supply sources, and promote the circular economy.
Key components of this strategy include:
Supported by
- Strategic partnerships: The EU has signed 13 Strategic Partnerships with resource-rich countries to facilitate public and private EU investment in CRM projects abroad. These partnerships aim to promote economic development in the partnering countries by supporting mineral extraction, processing, and related infrastructure. However, these partnerships are non-legally binding, raising concerns about the level of investment protection they offer.
- Trade policy efforts: The EU is intensifying its trade policy efforts by concluding pending Free Trade Agreements (FTAs) and negotiating new ones. The shift towards exclusive EU competence FTAs allows for quicker ratification but lacks robust investment protections such as Investor-State Dispute Settlement (ISDS) mechanisms. This presents a challenge for attracting European investments in CRM projects, especially in countries where legal and regulatory risks are high.
- Critical Raw Materials Act (CRMA): The CRMA, which came into force in May 2024, sets ambitious domestic targets for CRM extraction, processing and recycling within the EU. However, the EU acknowledges that it will continue to rely on CRM imports and must diversify its supply sources to reduce dependency on any single country.
- Investment protection: The absence of strong, legally binding investment protection measures in the EU’s current trade agreements and strategic partnerships is a significant gap in the strategy. The newly introduced Sustainable Investment Facilitation Agreements (SIFAs), starting with Angola, aim to improve conditions for EU investors but also lack ISDS mechanisms.
- Recommendations for future actions:
- Enhanced investment protection: The EU should consider developing a new legal instrument or expanding existing frameworks to include more robust investment protection measures.
- Coordinated national funding: The EU should encourage Member States to direct coordinated national funding towards projects in Strategic Partnership countries, ensuring that these projects align with the broader EU raw materials strategy.
- Harmonized export credit strategy: Developing a comprehensive EU export credit strategy could harmonize the approach of European credit agencies and development finance institutions, promoting EU enterprises and ensuring long-term CRM supply security.
- Adaptation of competition rules: The EU should explore how existing competition rules can be adapted to support the growth of the European mining industry overseas, without being undercut by non-EU investors.
Overall, the EU’s approach to securing CRMs must continue evolving to address the challenges of global competition, legal risks and the need for strong investment protections. The proposed measures and strategic adjustments will be crucial for achieving the EU’s long-term goals in raw materials security.
