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EU’s Answer to U.S. Inflation Reduction Act Creates New Critical Mineral Category

As ARPN outlined earlier this week, the European Union has dropped its response to the United States’ Inflation Reduction Act passed last summer: the just-dropped Critical Raw Materials Act (CRMA) paired with sister legislation, the Net Zero Industry Act (NZIA), which aims to support investment in manufacturing capacity in ‘net zero emissions’ technologies in Europe.

The CRMA not only seeks to streamline the permitting process for raw materials projects, floats the idea of a critical raw materials “club,” sets benchmarks for domestic resource diversification, and updates the bloc’s critical raw materials (CRMs) list.

The CRMA also creates a separate category of “strategic raw materials” (SRMs) which includes a set of materials considered “of high strategic importance, taking into account their use in strategic technologies underpinning the green and digital transitions or for defence or space applications, that are characterized by a potentially significant gap between global supply.”

The new classification of strategic raw materials includes bismuth (metallurgical grade), cobalt, copper, gallium, germanium, lithium (battery grade), magnesium metal, manganese (battery grade), natural graphite (battery grade), nickel (battery grade), platinum group metals, rare earth elements for magnets, silicon metal, titanium metal and tungsten.

All of these, as Connor Watts notes in his discussion of the Act for RethinkResearch.biz, are included within the EU’s CRM list, which further included s antimony, arsenic, bauxite, barite, beryllium, coking coal, feldspar, fluorspar, gallium, germanium, hafnium, helium, heavy rare earth elements, light rare earth elements, niobium, phosphate rock, phosphorus, scandium, strontium, tantalum and vanadium.

As ARPN’s Daniel McGroarty noted earlier this month, the U.S., albeit less explicitly, has also seen the creation of new categories of critical minerals in recent months, including most recently via the grouping of certain critical minerals in the context of yet another Presidential Determination invoking Title III of the Defense Production Act (DPA) to strengthen supply chains in February of this year, a grouping ARPN has dubbed the “defense criticals.” This development followed President Biden’s March 2022 designation of what ARPN calls the “battery criticals.” President Biden also invoked Title III for Platinum and Palladium in a DPA Presidential Determination in June 2022.

The classification of a more narrow subset of critical minerals underscores their increased importance in the context of rising demand as geopolitical tensions soar and the green energy transition marches on, and will allow for more targeted policy approaches and specific measures designed to strengthen their supply chains — and ARPN will keep tabs on further developments in this space on both sides of the Atlantic.

As for the EU’s two laws in response to the United States’ IRA, they will now head to the European Parliament and the Council of the European Union before they can be adopted and enter into force, and can either be strengthened or watered down along the way.

These initiatives come at a critical juncture in time.  With geopolitical tensions getting higher and China and Russia cozying up to one another, the stakes are ever-increasing, but recent measures on both sides of the Atlantic show that the West has realized the urgency of its critical mineral conundrum.