The European Critical Raw Materials Act of 2022
At the State of the European Union on 14 September 2022, the President of the European Commission, Ursula von der Leyen announced - The European Critical Raw Materials Act (‘ECRMA’).
“Lithium and rare earths will soon be more important than oil and gas"
“Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030. We must avoid becoming dependent again, as we did with oil and gas. We will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling. And we will build up strategic reserves where supply is at risk. This is why, today, I am announcing a European Critical Raw Materials Act.” - Ursula von der Leyen
The ECRMA will see Europe secure rare earths and lithium, the new “oil and gas”, as demand rises fivefold by 2030. To achieve this goal, along with becoming the first climate neutral continent in the world, four key areas were highlighted: 1. Identify through strategic applications, which raw materials are of significant importance, for energy and defence. Importantly, greater attention will be focused on critical materials with a bottleneck risk. 2. A European network of raw material agencies. 3. A resilient supply chain, focusing on processing, recycling, mining and refining. 4. Preserve material stockpiles through adequate storage capacities to prevent supply chain disruptions.
"We are on the precipice of an energy-driven modern day gold rush"
As the global race for supply of critical raw materials continues, similar industrial alliances that were established around hydrogen and batteries will be replicated together with increased financial support and a new European Sovereignty Fund. Key focus areas of the ECRMA will consist of an increased resilience of the supply chain, to further prevent potential supply chain disruptions and imbalances, caused by market turmoil. The Act will encourage a strategic approach in identifying specific raw materials and rare earths that play a vital role for our defence needs and economic infrastructure. This in turn will attract private investors who are able to forecast supply gaps within mining, refining, processing and recycling.
With the electric vehicle revolution in full swing, we may soon begin to experience bidding wars for critical supplies of the white silvery metal and rare earths as the world will inevitably witness a quintupling of its’ demand before the end of the decade. We are on the precipice of an energy-driven modern day gold rush.