Commission alarmed by lack of critical substances, but what makes a raw material ‘critical’?

The European Commission has raised the alarm about Europe’s lack of self-sufficiency for substances critical to the green and digital transitions. But what makes these materials so critical?

The European Union has set a goal of reducing greenhouse gas emissions in the transport sector by 90% by 2050, compared to 1990 levels, in order to meet its overall goal of having overall net zero emissions by that date. While other technologies such as biofuels are being explored, it is already clear that electrification will be the main contributor to reaching this target.

Electric vehicle sales in Europe have seen significant growth recently, but still not on a trajectory that will get the EU to this goal. And both European production and consumption of EVs are lagging behind growth in China and the United States, prompting much handwringing within the German auto industry recently over the growth of Chinese EV imports.

The causes for Europe now lagging in an area where it only recently led are myriad, but one has very little to do with electrification itself. Europe has a limited supply of the materials needed to make an electric car. The lithium-ion batteries that power them are made of components including lithium, graphite, aluminium, cobalt, copper, nickel, and manganese.

A 2021 study by the NGO Transport and Environment on the raw material requirements for the typical 60 kWh capacity EV battery noted more than 180 kg of critical minerals, excluding the battery casing, binder, and other components. This staggering amount includes approximately 52 kilograms of graphite, 35 kg of aluminium, 29 kg of nickel, 20 kg each of copper and steel, 10 kg of manganese, 8 kilograms of cobalt, and 6 kg of lithium.

Material sovereignty

Many of these materials are not naturally found in Europe, or they exist in very limited quantities. Only one European country currently produces cobalt ore – Finland, and it only produces a small amount. European countries import almost all of their cobalt from outside Europe, and 70% of it comes from the Democratic Republic of the Congo, after being processed in China.

Nickel is an important part of EV battery manufacturing because of its energy density and capacity retention, and for this reason, the demand for nickel is on an upward trajectory as EV sales surge. This has prompted extensive recycling initiatives to recover nickel from spent batteries. Despite these efforts, the demand for this valuable metal continues to outpace supply. Global nickel demand is projected to increase six-fold by 2030 due largely to the surging EV market.

Many of the material components in EV batteries were placed on the European Commission’s Critical Raw Material list and signed into law last month. It builds on a list that has been being enlarged since 11 materials were first identified by the Commission in 2011, and now also contains copper and nickel as “strategic raw materials”.

Critical thresholds for recycling

The nickel sector would like to see battery-grade nickel, which accounts for 11% of nickel use, be eligible for the same measures promoting production and recycling as those materials that have met the critical threshold.

The Commission says that the main parameters used to determine the criticality of material for the EU are its economic importance in terms of end-use applications and the value added of corresponding EU manufacturing sectors on the one hand and the supply risk on the other. This last assessment is based on the import reliance together with the governance performance and trade openness of the countries of primary supply. Substitution and recycling are considered risk-reducing measures but cannot entirely overcome import reliance.

Industrial competitiveness

European industry has been sounding the alarm about resource poverty leading to a competitive disadvantage against global competitors for years. Domestic mining in the EU has been decreasing for decades, with a corresponding increase in resource dependency. Some of this is because the minerals had been mined for so long that the mines have simply been exhausted. But it has also been due to mismatched economic incentives that have made it cheaper to source materials from mines outside the EU than within it.

The global competition for these resources from developing countries, and in particular from China, is now turning this perverse financial incentive on its head. It would now be more reliable to source the minerals domestically, but many mines have long been closed.

In response to these concerns, at the end of 2019 the European Commission president, Ursula von der Leyen, identified access to resources as “a strategic security question” for the European Green Deal. Ensuring the supply of critical raw materials used in clean technologies, digital, space and defence applications is “one of the pre-requisites to make this transition happen,” the Commission said at the time, noting that critical raw materials “are irreplaceable in solar panels, wind turbines, electric vehicles, and energy-efficient lighting”.

Trade tensions

As trade tensions increase between the US, Europe and China, concerns are growing over the availability of raw materials. This led to calls to beef up the EU’s critical raw materials list and to start thinking about a return to mining in Europe, as part of a wider move of thinking about strategic autonomy and lowering the EU’s dependency on foreign entities.

The ability for Europe to increase its mining activity is limited, however. Many materials are just not available here, and some that have already been mined out. However, the EU suffers from a lack of information about which materials are available for mining, and industry players are trying to convince the Commission to increase raw material tracking.

An increase in data could help EU countries increase mining for the materials deemed critical – particularly in concentrations that would ensure that mining them is profitable.

Recycling for independence

Increasing reuse and recycling would also boost Europe’s industrial competitiveness if it can decrease dependence. But in the Critical Raw Materials Act the Commission noted that the possibilities for recycling and reusing metals are limited at the moment because collection remains difficult, and Europe is not at a stage where recycling can eliminate a material’s criticality. Still, efforts are being made.

The steel sector is looking to greatly increase its use of recycled scrap to insulate itself from the volatile import market dynamics. Nickel and nickel-containing alloys can be returned to their original state or converted to a different, but still valuable, form. Examples include nickel-containing stainless-steel scrap being turned into new stainless steel, or nickel from recycled batteries being used for nickel-containing stainless steel.

Around 70% of all nickel available from consumer products is recycled and begins a new life cycle. Copper has a similar recycling rate, though it is completely recyclable and can be recycled repeatedly without any loss of performance. Since 2006, 18 metal commodity associations have been working together as part of their declaration on recycling principles to improve recycling for economic reasons.

Critical Raw Materials Act

Belgian Minister Jo Brouns, who shepherded the Critical Raw Materials Act through to adoption in the Council, said upon adoption that the act: “will boost our mining sector, enhance our recycling and processing capacities, create local and good quality jobs, and ensure that our industry is up and ready for the digital and green transitions.” The key will be in its implementation. The 34 critical and 17 strategic materials identified by the act will be monitored by single points of contact to be established in each EU country.

Extraction projects for these materials must receive permits within a maximum period of 27 months, while recycling and processing projects must receive their permits within 15 months, with limited exceptions. It establishes three benchmarks for the EU’s annual consumption of raw materials: 10% from local extraction; 40% to be processed in the EU and 25% to come from recycled materials.

Large companies manufacturing strategic technologies, such as producers of batteries, hydrogen, or renewable generators, must carry out a risk assessment of their supply chains to identify vulnerabilities.

[By Dave Keating I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

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