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With demand for critical minerals projected to increase dramatically against the backdrop of geopolitical tension and strained supply chains, the European Union has released its long-awaited action plan to “ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials.”

The Critical Raw Materials Act (CRMA) presented to lawmakers in Brussels on March 16, includes a comprehensive set of actions aimed at shoring up European critical mineral supply chains.

At the EU level, the CRMA would streamline the permitting process for raw materials projects and allow for selected “Strategic Projects” to benefit from support for access to financing and shorter permitting timelines (24 months for extraction permits and 12 months for processing and recycling permits).  The Act also requires EU member states to develop national programs for resource exploration.

An updated critical raw materials list is complemented by a list of “strategic raw materials” deemed “crucial to technologies important to Europe’s green and digital ambitions and for defense and space applications, while being subject to potential supply risks in the future.”

The Act also sets forth clear benchmarks for domestic capacities to diversify critical mineral supply by 2030:

• At least 10% of the EU’s annual consumption for extraction,
• At least 40% of the EU’s annual consumption for processing,
• At least 15% of the EU’s annual consumption for recycling,
• Not more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage of processing from a single third country.

Followers of ARPN will be interested to learn that the Act designates copper and nickel, metals ARPN has long considered indispensable for a number of reasons - not least because of their status as “gateway metals” yielding access to critical co-products – as critical raw materials.   With nickel added to the U.S. Government Critical Minerals List in 2022, copper remains the outlier – the most “critical non-Critical” as we have said in the past.

Writes Mark Burton for Bloomberg:

“Copper, one of the largest industrial-metal markets, wasn’t included in the EU’s last list of critical raw materials published in 2020. Copper’s diverse uses in manufacturing, construction and industry mean it’s widely viewed as a bellwether for global economic activity, but surging usage in electric vehicles and renewables are fueling fears of deep shortages in years to come.”

 Burton cites Glencore Plc. chief executive Gary Nagle who said that copper production would need to almost triple by 2040 if the world was to meet net zero carbon emission goals, with demand driving prices up by some 15%.

He adds:

“The nickel market, meanwhile, was rocked by an unprecedented price spike last year in the wake of the invasion of Ukraine, which threatened to throttle supplies from Russia. In future, the world will become increasingly reliant on supplies from Indonesia, where supply of the key battery metal is expanding rapidly.”

Nickel was added in the first official USGS update to the 2018 in 2022, bearing testimony to the fact that policy makers and other stakeholders increasingly acknowledge the challenges associated with providing reliable supplies of the critical minerals underpinning the “Tech Metal Era.”

The United States has yet to designate copper a critical mineral in its official government list, but an effort to correct this omission is underway with senators calling on the Secretary of the Interior to use her power to short-circuit the standard three-year review timeframe for the critical minerals list and change copper’s designation to “critical” ASAP.

In a letter to Secretary Deb Haaland in early February, U.S. Senators argued that “[b]y recognizing copper as a ‘critical mineral,’ the United States’ federal government can more effectively ensure a secure and reliable supply of domestic copper resources in the years to come at all points of the supply chain including recycling, mining, and processing. Given the enormous investment required, the time lag for new sources of supply, and projected demand, time is of the essence,” with Senator Kyrsten Sinema (Ind.-Ariz.) adding in an interview that this should be a “no brainer” because “[w]e have major gaps in both our ability to mine and process these minerals to ensure our energy security for the future, and the administration knows how important copper is to our domestic and national security.”

While European Commission President Ursula von der Leyen expressed confidence that the Act would “significantly improve the refining, processing and recycling of critical raw materials here in Europe,”observers lament that the act was “short on details and excluded important raw materials needed for the green energy transition such as zinc, silver and aluminum.” 

Comparing the CRMA to the U.S Inflation Reduction Act, which, in his view “was heavy on providing monetary firepower,” Colin Hamilton of BMO Capital Markets commented that the “the EU version has limited mention of funds but lots of policy rationale.”

The EU sees partnerships with “like-minded countries willing to strengthen global supply chains” as critical for EU strategy to succeed, and has proposed a “Critical Raw Materials Club,” a concept that was already part of U.S.-EU discussions earlier this year amidst European concerns that the U.S. Inflation Reduction Act could end up penalizing non-U.S. companies.  Against the backdrop of rising tension with China and Russia, in a joint statement earlier this month, U.S. President Biden and EU Commission President von der Leyen vowed to iron out such differences and pledged close cooperation on the critical minerals front.

The CRMA will now be discussed and voted upon by the European Parliament and the Council of the European Union before its adoption and entry into force, and ARPN will be sure to keep tabs on related developments.

 Semiconductors have become indispensable components for a broad range of electronic devices.

They are not only “the material basis for integrated circuits that are essential to modern day life” – the “‘DNA’ of technology” which has “transformed essentially all segments of the economy,” they are also essential to national security, where they enable the “development and fielding of advanced weapons systems and control toe operation of the nation’s critical infrastructure,” as the Department of Commerce-led chapter in the Biden Administration’s 100 Day Supply Chain Review report outlines.

As such, they sit at the heart of U.S.-Chinese tech competition, and have been dubbed “the next frontier in the tech battle between the U.S. and China” for good reason.

In his State of the Union address last month, U.S. President Joe Biden touted last fall’s passage of the CHIPS and Science Act allocating new funding for research, development and production of semiconductors, which has spurred private investment in the sector. Following on the heels of the new law, the Commerce Department in October applied new export controls to China’s access to advanced computing chips, its ability to develop and maintain super computers and manufacture semiconductors.

As Shubham Dwivedi and Gregory D. Wischer wrote last month for RealClearEnergy, “[t]he subsequent chip measures were clinically targeted at critical chokepoints in the global chip supply chain, and have since been backed by important partners, including Japan and the Netherlands, two key players in the advanced semiconductor ecosystem.” 

But the semiconductor space is just the tip of the proverbial iceberg.

Write Dwivedi and Wischer:

“Semiconductors require various minerals such as silicon, gallium, arsenic, cobalt, and more. Silicon is the most common foundational material for chips today, while gallium arsenide is the second most common. Cobalt is increasingly important for advanced chips too.”

As long as China controls critical mineral supply chains – and a look at the latest USGS Mineral Commodity Summaries leaves no doubt about that, semiconductor supply chains – and as such national security will still be jeopardized.

In their quest to alleviate “undue geopolitical leverage,” U.S. allies like Canada, and more recently Australia, have taken steps to reduce Chinese influence in their critical mineral industries.

A proposal to bolster the Investment Canada Act (ICA) to empower government ministers to block or unwind critical mineral investments if these are considered as a threat to national security, considered a defensive measure against China which has invested $7 billion in Canada’s base metals sector in the past two decades, is expected to be finalized this spring. Prior to the unveiling of the proposal, Canadian officials had ordered Chinese companies to sell their stakes in three Toronto Stock Exchange-listed companies last fall.

Australia’s Treasurer Jim Chalmers recently blocked a request by a Chinese company to boost its investment in Australian REE company Northern Minerals via a prevention order, the first move of this kind since the Treasurer had expressed concerns over the “concentrated nature of the China-dominated critical minerals supply chain” elevated by the Russia-Ukraine war.

When Dwivedi and Wischer published their piece in February, they lamented that the CHIPS and Science Act represents a missed opportunity to strengthen the U.S. domestic critical mineral industry, and urged Congress to take up legislation to not only provide funding for domestic critical mineral projects, but rather also reform the cumbersome permitting system.

Since then, House Republicans have put forth the  Transparency, Accountability, Permitting and Production of (TAPP) American Resources Act, H.R. 1 which seeks to bolster U.S. critical mineral supply chains by reducing red tape, entry barriers and redundancies, and reforming the National Environmental Policy Act (NEPA) to provide industry with clearer timelines and more certainty, and would emulate, to an extent Canada’s and Australia’s approach to curbing Chinese influence by seeking to limit Chinese and other “bad actors’”involvement in the U.S. critical minerals industry.

H.R. 1 will only be an opening salvo in the discourse over securing the supply chains underpinning 21^stCentury technology, but it is becoming increasingly clear that the West has woken up to the seriousness of its over-reliance on Beijing, and the tech arms race is heating up.

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Followers of ARPN have known since long before the U.S. Government issued its first comprehensive Critical Minerals List in 2018 that rare earth elements are in fact critical minerals. However, more often than not, the group composed of scandium, yttrium and the lanthanides has been treated as a homogenous group considered critical for producing electronics, [...]

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