The European Commission (EC) approved the Critical Raw Materials Act (CRMA) as a new law as part of the European Green Deal. The European parliament and council adopted this in April 2024 and it came into effect on May 23 of that same year. This law will make it easier in Europe to produce, process and recycle strategic raw materials, as well as it has a constant and sustainable source of raw materials that will help to reach the ecological objectives.
Imagine that wind turbines are powerless due to a lack of rare earth elements, while electric cars are idle due to a lack of lithium. By enacting the Circular Raw Materials Act, the EU hopes to prevent this potential future.
This blog post will go into more detail about the CRMA, including its main points, goals and possible effects. We'll learn why this initiative is important to the EU and how it helps to make technology more secure and sustainable.
Understanding the EU Critical Raw Materials Act?
Due to rising demand, geopolitical strife and more competition, it is harder to decide on materials for making products like smartphones, electric cars and solar panels. That's why the European Commission looked into the Critical Raw Materials Act to find a way to fix it.
What is it and how will the Critical Raw Materials Act help?
The EU Critical raw materials act is an initiative legislation that aims to ensure that the secured supplies of critical raw materials are needed for economic and technological growth. By 2050 materials like lithium, cobalt, rare earth elements and others could become 89x more popular. These materials are essential for making many products from batteries and smartphones to wind turbines and electric cars. Through new, fair and reliable global partnerships, this EU law will help and ensure that important materials are always available. It will not only give the EU greater autonomy, but it will also create green jobs.
To offset their carbon emissions companies purchase carbon credits, therefore assisting in global climate change prevention. Every carbon credit releases one less tonne of carbon dioxide into the atmosphere thereby mitigating the environmental effects.
What will change in the EU?
These new rules encourage mining, processing and recycling in the EU. They will boost innovation and research into cleaner materials and production methods.
The Goals of the CRMA is
The Act's primary objectives are as follows:
Strengthen different stages of supplychain
We aim to enhance the strength and efficiency of every aspect of the raw materials supply chain from acquiring the materials to managing them, recycling them and incorporating them into the final product.
Diversify supply
We aim to reduce the dependence on a limited number of non-EU nations by sourcing essential raw materials from multiple sources.
Promote sustainable development
Ensure the mining, processing and use of crucial raw materials adhere to strict social and environmental standards.
Monitor and mitigate supply risks
Identify and address potential supply issues and risks associated with essential raw materials before they become available.
Materials covered by the Critical Raw Materials Act
A wide range of different materials are covered by the European critical raw materials act as they are important for the EU's strategic industries and economic growth. The following are some of the most important materials that the Act covers:
Rare Earth Elements (REE)
- Neodymium (Nd)- Used to make strong magnets for electric car motors and wind machines.
- Dysprosium (Dy)- Improves the performance of neodymium magnets when used in places with high temperatures
- Praseodymium (Pr)- This element is used to make high-strength metals, magnets and airplane engines
- Lanthanum (La)- Used to make battery cells and lenses for optics
- Cerium (Ce)- This element is used to make metals, polish glass and make catalytic converters
Battery Metals
- lithium (Li)- An important metal for lithium-ion batteries, which are used in electric cars and portable tools
- Cobalt (Co)- It is necessary for rechargeable battery cathodes.
- Nickel (Ni)- Used to make batteries and stainless steel
- Graphite- It is used in battery anodes and other high tech tasks
Base metals and industrial metals
- Copper (Cu)- It is an important metal for electrical wiring, motors and renewable energy sources
- Aluminum (Al)- It is used a lot in the building, packaging and transportation businesses
- Zinc (Zn)- Used to make batteries and keep steel sealed
- Tin (Sn)- Used for joining devices and in many metals
Precious Metals
- Platinum group metals(PGMs)- It is used in fuel cells, catalytic converters and other industry settings
- Palladium (Pd)- A metal that is used in electronics, catalytic converters and hydrogen cleaning
- Rhodium (Rh)- Utilized in catalytic converters and chemical production
- Gold (Au)- Used in electronics, space travel and as a valuable metal
- Silver (Ag)- This metal is used in technology, solar panels and to destroy germs
Specialty and Technology Metals
- Tungsten (W)- This metal is used in cutting tools, electronics and spacecraft
- Tantalum (Ta)- Used to make capacitors for electronics and parts for spacecraft
- Niobium (Nb)- This element is used to make steel and superalloys
- Indium (In)- This metal is used in solar panels, electronics and LCD screens
- Gallium (Ga)- A metal that is used in solar cells, LEDs and semiconductors
Challenges and Solutions in Securing Raw materials
Dealing with all of these issues, as well as our suggested solutions, is necessary to ensure a robust and sustainable supply chain for crucial raw materials.
Dependency on Non- EU sources
Challenges
Currently, the EU imports many important raw materials, which leaves it open to supply problems and price changes. This dependency on a small group of non-EU countries poses big risks, especially when problems exist in the world's politics.
Solutions
The EU wants to make its supply chain more resilient by encouraging the mining, processing and reusing of important raw materials in Europe. This will make the EU less reliant on foreign sources.
Environmental and ethical concerns
Challenges
The processing and extraction of raw materials can have huge effects on the environment like destroying habitats, polluting water and releasing greenhouse gasses. Workers treatment and human rights violations in some mining areas raise ethical concerns.
Solutions
Sustainable and ethical methods of obtaining raw materials are prioritized by the Critical Raw Materials Act. It also encourages the adoption of environmentally friendly technologies and ensures the fulfillment of high social standards.
Regulation and compliance issues
Challenges
It can be challenging for companies to figure out how to deal with the rules and regulations that affect raw products. Obtaining a stable supply can be challenging due to the varying regulations across different countries regarding the environment, trade and compliance with regulations.
Solutions
The EUs legislative system seeks to harmonize rules and set clear standards for the sustainable sourcing and processing of important raw materials making it easier for companies to follow the rules.
Changes in Technology and the market
Challenges
How quickly technology changes can affect the demand for and availability of important raw materials. As technology advances, it can alter the types and quantities required while market fluctuations can impact prices and availability.
Solutions
The Critical Raw Materials Act encourages research and new ideas to create better ways to use and recycle materials helping businesses adapt to changing market conditions.
Infrastructure and logistics
Challenges
To transport, process and move raw materials tracking software, good infrastructure and logistics are needed. Inadequate infrastructure can impede access to crucial resources, escalate expenses and delay shipping schedules.
Solutions
The EUs plan includes spending money on building up facilities and improving logistics networks so that important raw materials can move more easily along the supply chain.
Critical Raw Materials: Impact on Various Industries
Many companies require critical raw materials (CRMs) which serve various purposes within those industries. The availability and use of CRMs have a significant impact on these areas performance, innovation and long-term viability. Here are a few examples of the significance and impact of raw materials in various fields:
Textile
CRMs such as rare earth elements and chemicals are used by the textile industry to create high-performance and smart fabrics among other advanced textiles. These materials are necessary to make fabrics that have better qualities like being durable, stain-resistant and able to wick away moisture. A secure supply of these materials fosters the growth of durable, eco-friendly and recyclable clothing.
Construction
Copper, aluminum and rare earth elements are important raw materials used in the construction industry for many things such as plumbing, electrical wires and making high-tech building materials. These materials are essential for making buildings and structures that use less energy. Using CRMs helps make construction projects safer and last longer in the long term.
Defence/Aerospace
The aerospace and defence industries use CRMs like titanium, rare earth elements and high strength metals to construct planes, spaceships and advanced defense systems. These materials possess the necessary strength, durability and performance qualities for high stress and high temperature applications. CRMs make it possible to create and keep up to date cutting edge defense and aerospace technologies which are important for national security and technological leadership.
Energy intensive industries
Industries that use a lot of energy such as making steel and aluminum, depend on CRMs like bauxite, chromium and manganese to do their work. These materials are required to make high quality alloys and industrial parts. The availability of CRMs has an impact on these businesses efficiency, cost and environmental friendliness. These materials are important for keeping industries running, cutting down on energy use and protecting the environment.
Mobility/Automotive
The automotive sector relies heavily on CRMs like lithium, cobalt and rare earth elements for the production of batteries for electric vehicles (EVs), catalytic converters and high-tech electronics. These materials are necessary to make fuel-efficient, low emission cars and EVs run better. To meet government guidelines and reduce the damage that transportation does to the environment is important to have a secure supply of these materials.
Electronics
The electronics industry uses a variety of CRMs to create semiconductors, printed circuit boards and high-tech electronics. Some examples are gallium, silicon and rare earth elements. For making high performance consumer goods, telecommunications devices and computer technologies these materials are essential. The CRMs encourage new ideas and help electronic technologies move quickly forward.
Renewable Energy
The renewable energy industry uses CRMs such as neodymium, dysprosium and lithium to manufacture wind turbines, solar panels and energy storage systems. These materials are necessary to make renewable energy systems work better and be more efficient. The availability of CRMs impacts renewable energy production and the speed at which we transition to a low-carbon energy system.
Digital food
The digital food business which works on smart farming technologies and new ways to process food uses CRMs like silicon, rare earth elements and advanced sensors. These materials are necessary to make precision farming tools, automated food preparation systems and devices that check for food safety. CRMs are available to help digital food technologies grow which can boost food safety, increase agricultural output and reduce food waste.
Food/farming
The agri-food business uses CRMs in many areas, including for fertilizers, pesticides and farming equipment. Healthy soil and crop growth require nutrients such as phosphate, potash and nitrogen. It is accessible to CRMs that change how productive and long-lasting farming methods are. Make sure that there is a secure supply of this raw materials management software which is important for meeting the world's food needs, promoting healthy farming and improving food security.
Strategic raw materials and Critical raw materials
Critical raw materials are those that are vital for the entire EU economy but face significant supply risks due to lack of shortages and geopolitics. Among the important raw materials are platinum group metals and rare earth elements.
Key EU businesses like defence, space, renewable energy and digital technology require Strategic raw materials to achieve their strategic goals. In these businesses there will likely be imbalances in the supply and demand of raw materials. Additionally, manufacturing more of these elements is more challenging. Lead, copper and cobalt are all examples of important raw materials.
The Key Benefits of Critical Raw Materials
Supply chain Transparency
The Critical raw materials act makes it easier to track important raw materials from where they are mined to where they are used.This traceability aids in identifying issues within the supply chain and ensures the responsible collection of materials.
EU strategic autonomy
This Act promotes strategic autonomy by making it easier for the EU to extract, process and recycle CRMs. This way Europe can meet its essential raw material needs independently.
Promoting sustainable methods
The CRMA promotes responsible and sustainable CRM sources such as better recycling and circular economy methods. This reduces the ecological impact of CRM extraction and use while also aligning with EU environmental aims.
Support for green technologies
The Act makes it easier for green technologies like electric cars and renewable energy systems to get CRM availability. This helps the EU reach its climate goals and supports its move to a low-carbon economy.
Strengthened regulatory framework
The Act establishes clear and consistent rules for CRM management. This allows companies and investors to expand within the EU, making the sector more transparent and predictable.
Better resource efficiency
The CRMA promotes responsible use and recycling of CRMs which reduces waste and improves resource utilization. As a result, the economy becomes less reliant on new resources and more circular.
Opportunities in CRMA
Conclusion
The Critical Raw Materials Act (CRMA) emphasizes being transparent and environmentally friendly when handling critical and rare earth materials. Transgenie traceability software is one of the most important tools for meeting these needs. Transgenie provides digital product passports, so that companies can share important information about their goods and track their raw materials with supply chain partners while keeping private data safe.
Our blockchain-based traceability platform improves supply chain’s transparency and provides trustworthy information about sustainability. As businesses try to follow the rules set by the CRMA, Transgenie's expertise in monitoring rare earth elements is a crucial resource for companies adhering to the CRMA's regulations and adopting eco-friendly practices.
Don't wait for disruptions. With Transgenie, you can secure your raw material supply chain. Contact us today and let our experts create a customized solution for your business needs.
Yokesh Sankar