On 14 October, the European Commission officially adopted its Chemicals Strategy for Sustainability.Through this initiative, the EU aims to create a toxic free environment for consumers and nature, by making chemicals sustainable and safe by design. To accomplish this objective, the Commission will deploy financial support through Horizon Europe, cohesion policy, the LIFE programme and other EU funding programmes.

 

The strategy advocates for higher recycling rates of chemicals in Europe. To do so, the Commission will take regulatory actions to minimise the presence of certain chemicals in products on the European market by banning toxic substances while making exceptions based on the establishment of an essential use criteria. Additionally, the strategy recognizes the need to establish safe and sustainable supply chains for some critical chemicals, such as raw materials, intermediates or active pharmaceutical ingredients.

 

Some concerns have arisen regarding the wording used in the strategy. The concept of “essential use criteria” is open for debate because it intends to lead to some advantages but could also lead to negative effects. This is especially the case for the metal industry which could face important ramifications, as explained by Adam McCarthy, president of the Cobalt Institute.

 

Furthermore, some of the proposed measures might significantly increase the financial and administrative burden on the chemical industry, and undermine the level playing field. Additionally, the strategy does not recognize the non-substitutional use of CRMs in key applications, which was a recommendation made by the CRM Alliance in the feedback provided for the public consultation. 

In September 2020, in its communication on “Stepping up Europe’s 2030 climate ambition”, the European Commission proposed to scale up the greenhouse gas emissions reduction target from 40% to 55%. One month later, the European Parliament voted in favour of a 60% emissions reduction target with the aim to drive ambitions upwards.

This escalation of the emissions reduction target was finally settled at the European Council Summit in December 2020, in which EU Heads of States endorsed a net emissions reduction target of at least 55%. This decision is motivated by the belief that the EU needs to protect its industries. The increased target to reduce carbon emissions could endanger the capacity of industries, especially those dealing with critical raw materials, to keep up with new norms attached to such ambition. 

In December 2020, the European Commission published the results of the 414 contributions submitted in its open consultation on EU trade policy. There was a general consensus on:

(1)   the need for the EU to support and ensure an open, fair, and sustainable trade system;

(2)   the importance to improve the resilience of the trade policy focusing on the EU supply chains’ vulnerabilities; and

(3)   the need to reform the WTO system so to ensure the continuity of a rules-based international trade system.

Additionally, many respondents highlighted the need to simplify and increase the coherency of EU policies and to diversify suppliers of CRMs. The CRM Alliance participated in the consultation and generally agrees with these conclusions. Furthermore, in line with the CRM Alliance position, in its contribution, the European Parliament called on the Commission to identify raw materials critical for the Green transformation. This would lead to increase their supply chain resilience.

Over the past couple of months, the EU has intensified its work on the Carbon Border Adjustment Mechanism. In December, the European Parliament established the conditions that would lead to an agreement on a Carbon Border Adjustment Mechanism in Europe, ahead of the European Commission official proposal.

Trade talks between Australia and the EU have heavily intensified in the past few months. The EU is anticipating a rising demand for critical raw materials to lead the transition to a low-carbon and sustainable economy. In that context, the EU is looking for stable allies and Australia has shown perseverance in demonstrating how it would be able to meet Europe’s demand and vice-versa.

In November 2020, EU leaders Ursula von der Leyen and Charles Michel met with the Prime Minister of Australia, Scott Morrison, and agreed to further cooperate on critical raw materials and on the promotion of diverse critical technology markets. This meeting happened in the framework of the negotiations for a future EU-Australia Trade Agreement, which was launched in 2018. In addition, recent diplomatic talks between EU and Australian officials also testify of the desire to build a strong partnership in the field of critical raw materials.

Talks between the two blocks seem to be evolving in a positive way regarding the cooperation on critical raw materials. The date of the next round of negotiation for a future EU-Australia Trade Agreement, remains unannounced but is likely to happen soon. 

The proposal was largely criticized for being unrealistic and too demanding; many industries would be negatively affected, including the CRM sector. Within its Action Plan on Critical Raw Materials, the European Commission announced they would develop sustainable financing criteria for the mining, extractive, and processing sectors through delegated acts in 2021. However, the CRM industry is currently not covered by the first delegated act on the EU taxonomy. On 24 February, the CRM Alliance will host a webinar where experts are invited to discuss the pros and cons of the EU taxonomy tool and how this might impact the CRM industry.