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Critical raw materials: the new EU regulation and Italy's position

30 April 2024

The publication of the European regulation on critical raw materials, a strategic sector increasingly at the center of the Italian government's actions, is expected shortly.

Reducing the risk of supply to European Union countries from a limited number of third countries in relation to many raw materials essential for various strategic sectors, for which an exponential increase in demand is expected in the coming years: this is the objective of the CRMA – Critical Raw Materials Act, adopted on 18 March by the EU Council. In particular, the regulation covers raw materials used in the energy transition (in the construction of wind turbines, photovoltaic panels and batteries), digitalisation, space, defence and health.  

In 2050, for example, the demand for lithium, used to manufacture batteries for mobility and energy storage, will grow 60 times compared to the current one, facing the imports from Chile for about 78%.

Considering this expected increase, recent events such as COVID-19 and the energy crisis caused by Russia's war of aggression against Ukraine have highlighted the EU's structural supply dependencies on countries such as China, Kazakhstan or Turkey and its potentially damaging consequences in times of crisis. 

In light of this scenario, the European Union has, therefore, drawn up a regulation in line with the European Green Deal strategy, following up on the European Parliament resolution of 24 November 2021 and the "RePowerEU" communication of May 2022.

The regulation identifies, in a specific annex, 34 critical raw materials, of which 17 are considered strategic, indicating the methodology, through specific mathematical formulas, with which critical raw materials are selected, on the basis of economic importance and supply risk, and among them strategic ones. It is planned to review and, if necessary, update the lists every four years. 

The reduction of European dependence on the supply of critical raw materials is pursued not only through mining but also through the recycling of waste of electrical and electronic equipment and the processing activities, all while ensuring the lowest possible environmental impact.

The regulation thus sets some specific targets regarding the European Union's ability to autonomously meet the annual consumption of critical raw materials:

  • 10% through its own mining capacity; 
  • 40% through processing capacity; 
  • 25% with recycling capacity.  

The regulation also aims to reduce supply risk by diversifying imports of raw materials so that no more than 65% of the EU's annual consumption can be dependent on a single country by 2030, as well as by setting up a system to aggregate the demand of the companies concerned, in order to obtain better conditions with suppliers and to prevent shortages, and by the prohibition of imposing restrictions on movement within the Union market.

Finally, great attention is paid to the procedure for the recognition of "strategic projects" presented by companies or consortia of companies and to the provision of ad hoc measures by the Member States, such as the establishment of a competent authority, to ensure certain times for the issuance of the necessary authorizations which, in any case, may not exceed 27 months for those that provide for extraction and 15 months for those having as their object exclusively transformation or recycling. 

In this context, for some years now, the Italian Government has also started a process aimed at preparing the necessary tools to guarantee the supply of critical raw materials.

In January 2021, the Critical Raw Materials Technical Table was launched, with the aim of strengthening coordination on the topic, enhancing its planning and contributing to the creation of regulatory, economic and market conditions aimed at ensuring a safe and sustainable supply of critical raw materials. 

In addition, with art. 4, paragraph 1, of Law no. 206/2023, the establishment of the "National Fund of Made in Italy", with the initial allocation of 700 million euros for the year 2023 and 300 million euros for the year 2024, was decided "In order to support the growth, support, strengthening and relaunch of national strategic supply chains, in line with the objectives of national industrial and economic policy, also with reference to the supply, recycling and reuse of critical raw materials".

The management of the Fund should be entrusted to Cassa Depositi e Prestiti and Invimit S.g.r. through a ministerial decree expected shortly. 

Finally, the Minister of Enterprise and Made in Italy recently declared that he wanted to present a decree law on mining concessions in view of the entry into force of the EU regulation on critical raw materials and in harmony with it.   

In summary, the speed and concreteness with which decision-makers at European and national level are working suggests the reactivation, in a relatively short time, of a production sector perhaps neglected for too long by European countries, as demonstrated, among other things, by the recent launch in Italy of some interesting projects (https://www.gruppoiren.it/it/everyday/iren-news/2024/iren-altamin-patto-futuro-energetico-sostenibile.html).

Further Reading