Critical Raw Materials Act

The European Parliament has granted approval for the Critical Raw Materials Act, marking a significant step towards ensuring a sustainable supply of critical raw materials within the European Union.

This topic of “Critical Raw Materials Act” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

Defining the Critical Raw Materials Act

  • EU Legislation for Sustainability: The Critical Raw Materials Act is a piece of EU legislation designed to address the sustainable supply of critical raw materials within the European Union.

Key Objectives and Highlights

Diversifying Imports and Boosting Domestic Extraction

  • Diversification by 2030: The Act aims to diversify imports of critical raw materials by 2030, ensuring that no single third country supplies more than 65% of any strategic raw material.
  • Boosting Domestic Capacity: Another objective is to enhance the Union’s extraction capacity by 2030, with a goal of domestically extracting at least 10% of strategic raw materials.

Identifying Critical Raw Materials

  • Critical Raw Materials: The Act identifies a list of critical raw materials, which include various metals and minerals such as Aluminum, Cobalt, Lithium, and more.

Increasing Processing and Recycling

  • Increasing Processing: The Act targets increasing the processing capacity to meet 40% of annual consumption, covering all processing steps, with a specific aim of achieving 50% of annual consumption.
  • Strategic Partnerships: To diversify the supply chain, the Act encourages the establishment of strategic partnerships with countries like Australia and Chile.
  • Recycling Emphasis: Recycling plays a significant role in the Act’s objectives, aiming to increase recycling capacity by more than 10% based on the 2020-2022 baseline. The Act also targets achieving 45% recycling of each strategic raw material from the Union’s waste.

Addressing EU Dependence on China

  • Main Objective: A primary goal of the Critical Raw Materials Act is to reduce the European Union’s dependence on China for critical raw materials.
  • Rationale: The EU has a high level of dependence on China, particularly concerning rare earth metals, with up to 99% of these materials sourced from China. This reliance raises concerns about supply disruptions, vulnerabilities, and security risks.

Key Proponent

  • Proposed by: The Critical Raw Materials Act was proposed by European Commission President Ursula von der Leyen.

Supporting Facts

  • IEA Critical Minerals Market Review: The International Energy Agency (IEA) Critical Minerals Market Review has highlighted several key findings, including:
    • Growing Demand: There is a substantial demand for minerals driven by clean energy technologies, such as lithium, cobalt, and nickel.
    • Demand Increases: Between 2017 and 2022, significant demand spikes have been observed, with cobalt witnessing a 70% increase, nickel experiencing a 40% increase, and lithium tripling in demand.
    • China’s Dominance: China plays a dominant role in the production of critical minerals. For instance, in 2021, China accounted for 80% of various stages of solar panel production, surpassing its own global photovoltaic demand.

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