EFS Consulting

EU proposes the Critical Raw Materials Act

The European Union (EU) proposed a landmark piece of legislation, the Critical Raw Materials Act (CRM-Act) to address growing concerns about the availability and sustainability of critical raw materials.

The materials involved are critical to future-oriented industries such as electronics, renewable energy, and transportation.

Critical raw materials are those that are of vital importance to the European economy but where demand is expected to increase sharply, posing a supply risk. For lithium, cobalt, nickel, silicon and rare earths in particular, the EU faces the challenge that these are imported from only one or a few countries outside the EU. This creates dependency and disruption-prone supply chains. The EU wants to prevent this and is taking clear steps with the draft CRM law.

The draft focuses on diversifying sourcing, promoting sustainable extraction and processing. In addition, the draft law also addresses the promotion of recycling and substitution of raw materials and the strengthening of international partnerships. In terms of recycling and substitution strategies, the EU aims to promote the circular economy and thus reduced waste generation and increased recovery of key raw materials from end-of-life products.

By promoting sustainable extraction methods and reducing the environmental footprint, the EU aims to reduce the use of resources, thereby ensuring their long-term availability while minimizing the impact on ecosystems and local communities. In addition, research and development efforts are encouraged to find viable substitutes for critical materials and reduce the EU’s dependence. The EU is actively working with partner countries and organizations to promote responsible sourcing and trade and to address issues related to transparency, traceability, and fair practices.

For entrepreneurs, this law will impose a variety of obligations, including a Conformity Assessment Procedure similar to type-approval processes. Accordingly, before placing an affected product on the market, the responsible natural or legal person must proof conformity, label the product with a CE mark and conduct internal audits on its supply chain every two years.

The draft law is open for comments until June 30, 2023. The law is not expected to enter into force before 2024.

The text of the Draft Regulation can be consulted HERE.

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