The European Union’s Critical Raw Materials Act is proposed legislation focused on ensuring the EU’s access to a sustainable supply of critical minerals. This Act is a keystone of the EU’s continuous strategy towards achieving its climate neutrality goals, and sets targets for the extraction, processing, and recycling of critical materials by 2030 by establishing a framework for sustainable access.

The Critical Raw Materials Act is significant as it promotes sustainability and circularity, encouraging increased recycling and reuse of crucial materials. Additionally, it’s designed to facilitate joint procurement of strategic raw materials and strengthen international coordination efforts, which is not only integral to sectors like renewable energy and healthcare but also addresses environmental and social risks associated with these materials.

The Critical Raw Materials Act will have a broad impact, directly influencing businesses reliant on non-energy, non-agricultural strategic and critical raw materials. The Act will also influence domestic suppliers, as the legislation includes initiatives to boost the EU’s domestic capacity in critical minerals supply chains.

In order to diversify the EU’s mineral supply chain, the Act sets clear benchmarks for the local strategy by 2030: 

• At least 10% of the EU’s annual consumption of mined strategic minerals must be sourced domestically.

• 40% of processed strategic materials and 15% of its recycled strategic materials must also be domestically produced.

• No more than 65% of its annual consumption of each strategic raw material – at any stage of processing – should come from a single third country.

The Act will challenge business models that do not prioritise sustainability. Companies involved in extracting, processing, and recycling critical materials will need to adapt to meet the established targets. Businesses must transition towards more sustainable practices, emphasising recycling and the reuse of materials.

Companies can prepare for the Act by integrating sustainability into their business models and can focus on implementing recycling and reuse practices into their business strategies surrounding critical materials. Businesses should also start exploring partnerships for joint procurement of raw materials. Streamlining permissions and approvals processes will be beneficial, as the Act aims to improve efficiency in these areas.

The European Union’s Critical Raw Materials Act represents a significant step towards sustainable sourcing and recycling practices. With proper guidance and preparation, businesses can comply with the Act’s requirements and leverage them for strategic advantage. As we move towards a more sustainable future, the Act will be crucial in shaping the EU’s climate objectives.

By leveraging the Act’s emphasis on sustainability, TDi Sustainability can help businesses turn this legislative change into a strategic advantage.TDi can help companies navigate the complexities and implications of the Critical Raw Materials Act and assist clients in adapting their business models to meet the requirements to position themselves strategically for the changes to come.