European Parliament adopts position on critical raw materials

The European Parliament has adopted its position on boosting the supply of strategic raw materials, which it says is crucial to securing the EU’s transition to a sustainable, digital and sovereign future. The Critical Raw Materials Act is intended to make the EU more competitive and autonomous. “It will cut red tape, promote innovation along the entire value chain, support SMEs and boost research and the development of alternative materials and more environmentally friendly mining and production methods,” said the parliament. This Act matters to Europe’s risk and insurance managers because it also forms part of the EC’s push on supply chain due diligence. Back in April, Ferma created a new project group to work on the increasingly important area of critical raw materials following the publication of the proposed rules by the EC. The proposal was published in mid-March on the same day as the EU Net Zero Industry Act, the EU’s green industrial strategy that was launched in response to the US Inflation Reduction Act. “As the Critical Raw Materials Act is a key piece in the twin digital-green transition-puzzle, Ferma has set up a project group to work on the topic,” said the European risk management federation at the time. The EU pointed out that the regulation would complement the proposed directive on Corporate Sustainability Due Diligence (CSDD) and ensure that European firms take a closer look at the environmental footprint of critical raw materials (CRMs) in their supply chains. “The CSDD proposal might cover companies using CRMs, ensuring that they adequately address adverse human rights and environmental impact in their own operations and value chains, but does not develop the requirement to produce information on the environmental footprint of critical raw materials,” stated the EU in its CRM proposal. “Where relevant, the calculation of the environmental footprint of each material under the CRMs regulation could contribute to the effective implementation of a due diligence policy,” it added. In its negotiating position agreed late last week, ahead of talks with the European Council, MEPs highlighted the importance of securing strategic partnerships between the EU and third countries on CRMs, in order to diversify the EU’s supply with benefits for all sides. They said that they want to pave the way for long-term partnerships, with knowledge- and technology-transfer, training and upskilling for new jobs with better working and income conditions, as well as extraction and processing on the best ecological standards in partner countries. MEPs said that they also want to push for a stronger focus on research and innovation concerning substitute materials and production processes that could replace raw materials in strategic technologies. They said they want to set “circularity targets” to foster the extraction of more strategic raw materials from waste products. MEPs also insist on the need to cut red tape for companies, in particular SMEs. Lead MEP Nicola Beer said: “The course towards European sovereignty and competitiveness has been set. With an overwhelming majority across political groups in today’s vote, the European Parliament has made its position on European security of supply very clear, and takes a strong mandate into negotiations with the Council and the Commission. Our focus is on reducing bureaucracy, fast and simple approval processes, a research and innovation boost along the entire value chain, and targeted economic incentives for private investors with a view to European production and recycling. The European Parliament is focused on building strategic, equal partnerships with third countries.” Beer said that parliament will push to conclude the trilogue negotiations by Christmas. “We are counting on the urgency and relevance of the secure and sustainable supply of raw materials being as much a concern for member states as it is for us, the people’s representatives," she added. The draft legislation was adopted by 515 votes to 34, with 28 abstentions. Parliament will now enter into negotiations with the Spanish presidency of the Council in order to reach a first reading agreement. The parliament explained that electric cars, solar panels and smartphones all contain critical raw materials, notably lithium. “For now, the EU is dependent on certain raw materials. Critical raw materials are pivotal for the EU’s green and digital transitions, and securing their supply is crucial for the European Union’s economic resilience, technological leadership and strategic autonomy. Since the Russian war against Ukraine and an increasingly aggressive Chinese trade and industrial policy, cobalt, lithium and other raw materials have also become a geopolitical factor,” it said. “With the global shift towards renewable energies and the digitisation of economies and societies, the demand for these strategic raw materials is set to rapidly increase in coming decades,” added the parliament statement issued after the vote.

European Parliament adopts position on critical raw materials

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