Missed opportunity for Europe as an industry location: Raw Materials Act falls far short of the strategic necessities

The European Commission has presented the Critical Raw Materials Act as part of the Green Deal Industrial Plan. The legislative initiative falls far short of expectations and needs.
"For a successful future industrial location and for the success of the task of the century of transformation, the appropriate framework conditions must be considered from the outset and appropriate strategies must be developed. In the international race for raw materials and energy, Germany and Europe are increasingly left behind - with correspondingly clear effects on competitiveness.

With the Critical Raw Material Acts, Europe would have had the chance to catch up and set new standards. However, the necessary political determination and forward-looking strategy for a future with secure supply of raw materials is largely lacking – apart from a few right impulses. Thus it expressly falls well short of expectations and needs," explains VDA President Hildegard Müller.

Overall, the strategy has strengths and weaknesses: "Concentrating on a list of strategic raw materials is fundamentally correct – this directs the focus to the raw materials for the urgently needed climate technologies. The fact that a Critical Raw Materials Board should identify strategic raw materials projects, which then benefit from faster approval processes and simpler financing, is an important step in the right direction," says Müller.

Besides these positive aspects, the proposal unfortunately falls far short of what was originally announced:

"In parts it even weakens Europe's position on the global commodity market. In concrete terms, the Commission's proposal ignores the demand for a European agency for strategic raw materials projects, which would invest directly in relevant projects and thus strengthen supply. The same goes for the establishment of a raw materials fund to finance the identified strategic raw materials projects. This ignores two central demands from experts and industry - and misses a great opportunity. Instead, completely unrealistic goals for self-sufficiency, recycling and import quotas are defined for 2030. Goals that cannot be achieved from today's perspective due to the long lead times of raw material projects (up to 10 years) or the long service life of products (at least 15 years for vehicles)," says Müller.

Müller points out that other important instruments are not part of the initiative: "Direct financial support at EU level in the form of tax credits or direct subsidies is also not planned for the strategic raw material projects. Instead, the member states are asked to support strategic projects with financing, if necessary with Untied Loan Guarantees, insurance or direct financial resources. This can lead to competition among individual member states - competition in the wrong place: In view of the geopolitical situation and the economic and strategic challenges, the EU is missing the opportunity to demonstrate strength and influence through unity and joint action".

The digital dashboard, which is supposed to publicly display the results of stress tests, is almost absurd: "It is counterproductive and negligent: Disclosing European vulnerabilities leads to a weaker negotiating position for raw material imports, on which Europe will continue to be dependent," says Müller.