Critical Raw Materials, what's the problem?

After the Covid-19 pandemic, the global chip shortage brought many tech companies to a standstill. Since then, Critical Raw Materials (CRMs) and Strategic Raw Materials (SRMs) have taken center stage. But why are these materials so important, and how does their scarcity shake entire industries? Let’s break it down.

Challenges and issues of Critical Raw Materials and Strategic Raw Materials

Key industries such as Tech and Agriculture heavily use CRMs and SRMs. We can cite the use of borates in fertilizers, electric vehicles that use lithium, cobalt, and nickel but also semiconductors made of silicon metal crucial to everyday electronics like smartphones.

(Material Demand in the EU - High Demand Scenario)
Bar chart showing projected material demand in the EU for 2020, 2030, and 2050. Major increases are seen in aluminum, copper, and nickel, with aluminum demand rising from around 30 million tons in 2020 to over 200 million tons by 2050. — Source: European Council - An EU critical raw materials act for the future of EU supply chains

A significant amount of key raw materials (such as Magnesium used in aviation industry) used in the EU come from China, South America (Chile, Peru, Brazil), or Turkey. This dependency on non-EU countries puts Europe in a difficult situation, unable to regulate the market independently. To overcome this and the increasing demand for new raw materials sources, the European Council adopted the European Critical Raw Materials Act.

Infographic showing Europe's dependence on critical materials from China in 2024. Key dependencies include 100% for heavy rare earth elements, 97% for magnesium, 85% for light rare earth elements, and 79% for lithium. Other materials include gallium, scandium, bismuth, vanadium, germanium, natural graphite, baryte, and tungsten. — Source: European Commission, Bloomberg

The aim of this act is to:

Increase and diversify the EU’s raw materials sources
Strengthen circularity, especially recycling
Enhance resource efficiency and the development of substitutes by supporting research and innovation

You can find further information in the speech of EU Commission president, Ursula von der Leyen on the 8th November 2024.

Additionally, the waste shipments regulation got modified in 2024, which reinforces the rules on waste export. EU countries will now have to show their ability to manage waste shipments sustainably to have the right to do so. In addition, the export of plastic waste to non-OECD (Organisation for Economic Cooperation and Development) countries will be prohibited. This will make recycling waste within Europe cheaper and easier. This circulation of waste within Europe will help towards a more circular economy and preserve valuable resources.

The EU’s new regulations work to reduce dependence on non-EU CRMs and SRMs, minimizing shortages and price volatility. As recycling becomes a key solution, how can companies integrate it to improve resource efficiency to secure their supply chains?