Will the new Critical Raw Materials Act (CRMA) and negotiations with the USA on critical materials and electric vehicles have a big impact on the continent? 

The long-awaited CRMA is due to be publicly released on 14 March 2023 but was leaked last week. The thinking behind it is that to achieve green and digital transitions, the EU needs to significantly increase and diversify its critical raw materials supply, strengthen circularity, and support research and innovation.

With these ambitions in mind, the CRMA is intended to take measures to ensure access to a secure and sustainable supply of critical raw materials in order to safeguard the union's economic resilience and strategic autonomy.

Key elements of the act include targets for EU industry to source 10% of mined and 40% of processed critical materials from within the EU by 2030. In addition, it is expected that the CMRA will set out plans for both stockpiling and a “central buying agency” – the idea being that such an entity would be able to aggregate the demand of interested union buyers and then negotiates on their behalf with sellers globally. Meanwhile, changes to permitting are expected – with “strategic” mine projects set to get permits within 24 months and processing facilities within a maximum of 12 months.

The 2030 targets for mining and refining, if accurate, are ambitious. It will take not just huge investment (in assets, infrastructure and energy) and regulatory support, but also buy-in from local stakeholders on a continent where mining is not widely seen as an attractive industry. Meanwhile, the idea of a central buying agency is interesting – and could have significant clout – although there will be fears that a large bureaucracy will not operate with sufficient agility compared to firms operating in an open market. 

Also last week, President Joe Biden and European Commission President Ursula von der Leyen agreed that the two parties would launch talks on critical materials and electric vehicles. Negotiations centred on whether an agreement could be reached so that minerals mined or processed in the EU would count towards US clean vehicle tax credit under the IRA. 

Concerns have been mounting in Europe that the IRA’s subsidies will divert investment away from Europe, prompting Europe to respond (in part through the Green Deal Industrial Plan). Just last week, it was announced that Volkswagen is putting a planned battery plant in Europe on hold while prioritising a similar facility in North America after estimating it could receive nearly US$11Bn in IRA incentives. The talks may ease concerns over US protectionism for now – but it remains to be seen whether EU raw materials will count in future towards US electric vehicle tax credits.