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Analyzing Critical Raw Materials Act effects on lithium and rare earth element supply chains

The Critical Raw Materials Act (CRMA) enacted by the EU marks a significant milestone in securing critical raw materials supply chains within the union. However, as outlined in the report, there are both positive outlooks and challenges ahead, particularly regarding lithium and rare earth elements (REEs).

Lithium Outlook: The CRMA sets forth ambitious but achievable targets for lithium, with the EU well-positioned to meet or exceed expectations across all pillars: extraction, processing, recycling, and supply diversification. This optimistic outlook stems from existing infrastructure and capabilities within the EU, coupled with growing recognition of the importance of lithium in various technologies, particularly battery production. Continued investment and innovation in lithium extraction, processing, and recycling technologies will be crucial to sustaining this positive trajectory.

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Rare Earths Outlook: Conversely, the outlook for rare earths appears more challenging. Meeting the 2030 extraction and processing targets for rare earths is uncertain due to various factors, including limited domestic reserves, inadequate processing capacity, and social resistance to new mining projects. The EU faces significant hurdles in establishing end-to-end processing capacity for rare earths, hindering efforts to recover these materials from production waste and end-of-life devices. Addressing these challenges requires a coordinated effort from both government and industry stakeholders, including investment in research and development, infrastructure, and public engagement initiatives.

Policy Recommendations: Given the critical importance of raw materials independence, policymakers and industry stakeholders must prioritize dialogue and collaboration with the EU population to foster acceptance of responsible mining projects. Public awareness campaigns, educational initiatives, and transparent communication are essential for building trust and garnering support for strategic initiatives outlined in the CRMA. Additionally, policymakers should explore incentives and regulatory frameworks to encourage investment in domestic extraction, processing, and recycling infrastructure for both lithium and rare earths.

In conclusion, while the CRMA represents a significant step forward in strengthening the EU’s raw materials supply chains, realizing its objectives will require concerted efforts to address challenges and capitalize on opportunities in the lithium and rare earth element sectors. By engaging in meaningful dialogue and implementing targeted policies, the EU can enhance its resilience to global supply chain disruptions and secure its position as a leader in sustainable raw materials management.

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