Reducing supply risks for critical raw materials: Evidence and policy options

The uptake of strategic green and digital technologies will massively increase demand for critical raw materials (CRMs) over the coming years. CRM supply chains, however, are now heavily concentrated in a limited number of countries, with China holding significant market power. In the EU, this has raised legitimate concerns about its excessive exposure to CRM supply risks – all the more justified amid mounting geopolitical tensions. As a growing number of countries are coming to acknowledge these risks and adopt CRM strategies, the Critical Raw Materials Act was the EU’s response to these concerns. As the EU consolidates its CRM strategy, several realistic policy options emerge. Domestically, there is potential to produce both primary and secondary CRMs at scale, yet significant time and resources will be required to turn this potential into large-scale production. Mining operations still face a host of challenges, including lengthy permitting processes and public opposition, as well as a possible lack of specialised workforce and difficulty in attracting private capital. Overall, the absence of a comprehensive mapping of EU resources leaves a substantial degree of uncertainty as to the underground potential of the continent. Given the intrinsic limitations of domestic sourcing, the EU will need to consider a broader policy toolkit, especially in the short term. Material substitution and resource efficiency might play non-negligible roles, provided continued research and innovation efforts support the market uptake of alternative solutions. On the international front, both trade policy and international cooperation hold significant prospects for mitigating CRM supply risks. For the former, this entails lowering tariff and non-tariff barriers to CRM trade. For the latter, it means engaging in business-oriented strategic partnerships to channel know-how and capital into extra-EU production capacity. Multilateral fora such as the Minerals Security Partnership and the Critical Raw Materials Clubs promise to play an important role in coordinating global efforts. If properly managed, stockpiling CRMs can also help shield against short-term supply or price shocks. Building upon existing evidence and expert inputs, this CEPS In-Depth Analysis provides an overview of EU CRM supply risks and the options available for securing access to these resources.