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Deciphering Europe’s critical raw materials puzzle: Advancing circular economy solutions

The significant increase in demand for raw materials has largely been driven by the green transition, as Europe focuses its efforts on shifting towards a climate neutral economy. Demand has also been intensified by Russia’s war on Ukraine – which has accelerated the shift away from fossil fuels from Russia towards a massive expansion in renewable energy.

What are critical raw materials (CRMs)?

The EU agreed an assessment methodology to define a raw material as critical in 2010. The methodology has been revised many times, but since 2017 has been based on the two aspects of supply risk (in general, all restrictions on availability) and economic importance. Criteria include ‘substitutability’, ie how
easy it is to substitute the material, the rate of material recycling and the levels of supply risk.

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If the calculated value of both aspects for the raw material lies above the defined threshold, the material is defined as critical. In the 2010 assessment, which was published in 2011, 41 raw materials were reviewed, of which 14 were classified as critical. This included bauxite and magnesium, which are used to produce alloys such as aluminium, which is a widely used material but is not listed as a CRM.

Other critical materials included were cobalt, fluorspar, indium, the group of REE and tungsten. Since then, the list of CRMs has been updated every 3 years by the European Commission. With the 2023 CRMA, the Commission presented the most recent iteration of the EU’s CRM list.

The list includes strategic raw materials, which are defined “based on the relevance of a raw material for the green and digital transition as well as defence and space applications”.

To illustrate the increasing demand for critical raw materials, lithium is an interesting example. It is a key component of batteries that is not easily replaceable, and demand in Europe is expected to be 12 times higher by 2030, and 21 times higher by 2050. Globally, demand is expected to increase 90-fold by 2050.

Other materials such as rare earth elements are also facing increased demands. REE are used in especially high quantities to create the permanent magnets that are used in electric motors and wind turbine generators. REE are also essential in the fluorescent materials that are used for energy-saving light
bulbs and light-emitting diodes (LEDs). Thus, the phasing out of conventional light bulbs has also led to an increased demand. The EU is highly dependent on a few supplier countries. For many CRMs, China is by far the most important supplier.

This dependency, together with the global increase in demand, significantly increases the risk of supply chain disruptions. The exploration, development and establishment of new manufacturing and processing facilities is a long process. Even the implementation of a mining project, with proven deposits, can take 5-9 years or even longer. Material efficiency, substitution and circularity are therefore key, particularly
if they can be applied in the short term.

In this report, our case studies are lithium, REE and aluminium as it contains bauxite and magnesium, which are on the latest CRM list. These materials have different applications, different sizes of known deposits and different production volumes. For some, production is highly concentrated in one or two countries, creating strong import dependencies, which circular solutions could help to reduce. Potential circular economy strategies for these materials include life extension, efficient use, limiting use, promoting alternatives where feasible and recycling. Although we have focused on only a few CRMs, learnings from these case
studies will have practical applications for many other CRMs.

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