EU Parliament Votes In Favour Of Critical Raw Materials Act

Relevance: GS3 - Infrastructure: Energy GS2- Effect of policies and politics of developed and developing countries on India’s interests,

(Source: Down To Earth, 09/15/2023)

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Why in the news?

• Recently, the European Parliament approved the Critical Raw Materials Act which aims to improve the bloc’s domestic capacity for production and reduce its dependence on China.
• At present, the European Union is 99% dependent on China for rare earth metals.

Critical Raw Materials Act

• The Critical Raw Materials Act, 2023 is legislation that aims to increase the production capacity of member nations of the EU in critical materials.
• Raw materials mentioned in the Act: Aluminum [Am. 5], Bismuth, Boron (metallurgy grade), Cobalt, Copper, Gallium, Germanium, Lithium (battery grade), Magnesium, Manganese (battery grade), natural Graphite (battery grade), Nickel (battery grade), Platinum group metals, Rare earth elements for magnets, Silicon, Titanium, and Tungsten.
• It also contains precautionary provisions against deep-sea mining, which is viewed as a solution to the rising demand for rare earths.
  • According to the International Energy Agency (IEA), deep-sea mining could rise by 40% by 2040.
• EU member states and the European Parliament will now enter a final round of negotiations to try to agree on the text.

Provisions

• The EU’ should be able to extract strategic raw materials from ores, minerals, and other concentrates to meet at least 10% of its annual needs.
• Increase processing capacity along the value chain and produce at least 40% of its annual consumption of strategic raw materials.
• Manufacture at least 50% of annual consumption of strategic raw materials.
• A part of the new processing capacity might be developed under strategic partnerships with other countries, especially developing and emerging markets.
  • E.g.: Australia and Chile, which have huge reserves of cobalt, lithium, and manganese.
• Increasing the share of secondary raw materials within the Union’s consumption of strategic raw materials.
• Increase the EU’s recycling capacity to produce more than 10% volume of recycling capacity based on the 2020-2022 baseline for each strategic raw material.
• Collecting, sorting, and processing 45% of each strategic raw material contained in the Union’s waste based on technical and economic feasibility.

Why was the Act deemed necessary?

• Demand: Metals and critical minerals are used as components in solar panels, windmills, and EV batteries.
  • According to the IEA, there has been a large increase in the demand for lithium, cobalt, nickel, and copper as a result of the increased deployment of clean energy technologies.
  • Between 2017 and 2022, the energy sector contributed to a 70% rise in demand for cobalt, a 40% rise in demand for nickel, and a tripling of the demand for nickel.
• China: EU member nations are highly dependent on China for these materials which are crucial elements in the green transition.
  • The European Union faces a greater risk of supply chain disruptions due to its dependence on China.
  • In 2021, China manufactured more than 80% of the of components of solar panels which was more than double China’s global Photovoltaic demand.
  • This also increases the Union’s vulnerability and security risks given the tense geopolitical relations with China which could impact supply chains similar to how petroleum supply was impacted by the Ukraine war.
• Domestic production: The EU adopted the Act with the aim of increasing economic resilience and reducing the risks involved.
  • It aims to ensure the creation of a secure and sustainable supply of critical raw materials to the members of the EU.
• Diversification of imports: It aims to diversify the EU’s strategic raw materials imports.
  • This will help ensure that the EU’s annual consumption of each strategic raw material is not monopolized by any one country.
  • It aims to ensure that imports are from several countries, none of which provide more than 65% of the Union’s annual consumption.

What are the concerns associated with the legislation?

• Environmental concerns: Environmentalists have raised concerns about the increasing issue of permits without addressing the environmental standards that mining companies should.
  • Deep sea mining will most likely result in damage to ecosystems and a permanent loss of biodiversity.
• Global requirements: The Act does not actually establish any global requirements but regulates them separately under the EU Corporate Sustainability Due Diligence Directive.
• Unequal application: The Act allows companies to comply via their membership of “industry schemes”, or organizations.
  • However, these organizations are not managed, equally creating diversity in the application of the provisions of the Act.

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FAQs

MCQs

Question: Recently, there has been a concern over the short supply of a group of elements called ‘rare earth metals’. Why?

1. China, which is the largest producer of these elements, has imposed some restrictions on its exports.
2. Other than China, Australia, Canada, and Chile, these elements are not found in any country.
3. Rare earth metals are essential for the manufacture of various kinds of electronic items and there is a growing demand for these elements.

Which of the statements given above is/are correct? (UPSC CSE 2012)

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Question: With reference to India, consider the following statements:

1. Monazite is a source of rare earths.
2. Monazite contains thorium.
3. Monazite occurs naturally in the entire Indian coastal sands in India.
4. In India, Government bodies only can process or export monazite.”

Which of the statements given above are correct?

(a) 1, 2 and 3 only

(b) 1, 2 and 4 only

(c) 3 and 4 only

(d) 1, 2, 3 and 4