France and Germany outline priorities for upcoming EU Raw Materials Act

Germany and France have outlined their priorities for the EU’s upcoming Critical Raw Materials Act in a position paper to boost the resilience of supply chains and decrease Europe’s dependence on foreign suppliers like China.

The joint Franco-German proposal was submitted to the European Commission and discussed by EU member states on Thursday (29. September). The Commission received the initiative positively, stressing there is a broad consensus among EU countries on the matter. 

“I think things are moving forward, and we are now reaching some kind of consensus over something, which I think is very important,” European Commissioner for the internal market, Thierry Breton, said on Thursday. 

EU member states already pushed in March for an EU legislative proposal to tackle the vulnerability of raw material supply chains, which have come under strain from the war in Ukraine and the COVID-19 pandemic.

Commission President Ursula von der Leyen declared the Raw Materials Act one of the key initiatives for the coming year, reminding that demand for critical raw materials is expected to increase 500% by 2030 across the EU due to the green and digital transition.

EU aims to lessen dependency on China with Raw Materials Act

Commission President Ursula von der Leyen announced a new legislative proposal, the Critical Raw Material Act, to tackle the evolving dependency on China when it comes to raw materials and ensure more resilient supply chains.

Franco-German push

France and Germany have both been looking into reducing dependency on foreign countries – and China in particular – to boost the EU’s strategic autonomy. 

The push for more strategic autonomy “concerns Russia on the one hand, where we need to break away from unilateral dependence on cheap energy, and China on the other, with a view to raw materials dependence”, said Franziska Brantner, Germany’s parliamentary state secretary at the economy ministry, in statements made to EURACTIV in June.

With the publication of the position paper, the EU’s two largest economies reiterated the importance of the Raw Materials Act and outlined their vision of what upcoming EU legislation should entail. 

According to the duo, the bill should rest on three pillars: an early warning system and crisis management mechanism for Critical Raw Materials, boosting investment in production and recycling, and ensuring a global level-playing field.

The first two pillars bear many similarities with the European Chips Act that was proposed by the Commission in February and deals with a similar problem: boosting the resilience of supply chains when it comes to semiconductors. 

The Chips Act was already positioned at the time by the Commission as a potential blueprint for the upcoming Raw Materials Act. It relies, among other things, on looser state aid rules allowing governments to subsidise strategic projects and on establishing dedicated funds to encourage European production.

The Raw Materials Act is expected to take a similar approach, with the Franco-German proposal emphasising the need to create a sovereign investment fund to boost mining and recycling capacity for raw materials in Europe. 

The joint Franco-German position emphasises the need to identify strategic projects along the entire value chain – from mining to processing and recycling – with a view to closing existing loops by 2050.

Explosive demand growth could lead to supply shortages in raw materials

While the EU is currently working to unbundle the economic dependency on Russia, the exponential increase of demand for raw materials is unveiling increasing supply risks due to the high dependency on China, industry and experts warn.

[Edited by Frédéric Simon]

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