Emil Havstrup & Louise van Schaik
Critical Raw Materials Dependencies
In 2023, the European Commission introduced the Critical Raw Materials Act. The legislation seeks to both identify potential supply chain risks for materials deemed critical for European Industry and the wider green energy transition1 . India has launched a similar domestic initiative, identifying 30 CRMs in a report envisioned as a roadmap for a more self-reliant India2. Both parties have begun to refer to these supply chain risks as “threats”, spurring global competition for control of these resources3.
These policy initiatives fit into a wider global pattern of a desire for greater diversification within the mineral supply chain to reduce existing dependencies. This has become ever more prominent in recent years with rising demand for these goods, which in the case of lithium alone is expected to increase 89-fold by 20504. In large part, the growing demand is linked to the growing renewable energy capacity that requires critical raw materials. Renewables now account for over 21.8% of the overall energy share among the European Union member states5. In India, renewable sources accounted for 20.5 percent of India’s electricity generation in 2022.6 In particular, solar energy has helped support the growing demand for energy in the country7
However, the supply chains for these minerals have increasingly become unstable. The Covid-19 pandemic revealed how major shocks to global trade can hamper the reliable supply of goods8. In addition, much of the global supply chain underpinning these industries is based in or around Chinese refining and mining conglomerates. China is the main refiner and supplier of resources such as graphite, germanium, rare earth minerals (REE), etc.9, 10. China has been willing to use its role as a major supplier of CRMs to apply political pressure when needed.
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