Raw materials are used in every day life and are the basis of many industrial value chains in the EU. Cars, mobile phone, buildings, beverage containers, books are just a few examples where raw materials are needed. Some of these raw materials are crucial and their supply is limited or critical.
The British Geological Survey’s Centre for Sustainable Mineral Development states that
global concerns are growing over the availability of secure and adequate supplies of the minerals and metals needed by society (see Peak Metal: Scarcity of supply or scare story?).
Increase in Raw Material Consumption
Consumption of most raw materials has increased steadily and demand is expected to grow in response to a growing global population, economic growth (especially in developing countries) and the requirements of new and/ or environmental technologies, such as renewable energy and electric vehicles.
The European Commission has created a list of Critical Raw Materials (CRMs). These raw materials are critical due to their growing economic importance and high risk of supply shortage.
The EU is almost wholly dependent on imports of these materials. Availability is compounded by their low substitutability and recycling rates, commonly less than 1%.
Shortages of CRMs may affect businesses and have negative effects on economic growth and prosperity.
Indicators for Critical Raw Materials
The EU uses several indicators to define Critical Raw Materials and define their importance:
- Economic importance – the proportion of each material associated with industrial sectors such as construction, combined with its gross value added to EU GDP. This total is scaled according to total EU GDP to define the overall economic importance of a material.
- Supply risk - the World Governance Indicator (WGI) is used to measure the supply risks of raw materials. This indicator takes into account accountability, political stability and absence of violence, government effectiveness, regulatory quality, and rule of law.
- Link to industry – non-energy raw materials are linked to all industries across all supply chain stages.
- Modern technology – technological progress and quality of life are reliant on access to a growing number of raw materials. For example, a smartphone might contain up to 50 different kinds of metals, all of which help to give it its light weight and user-friendly small size.
- Environment – improving the environment is closely linked to raw materials. They are irreplaceable in solar panels, wind turbines, electric vehicles, and energy efficient lighting.
Critical Raw Materials – Supply, Economic Importance and Production
European Commission studies show in the figures below show the supply and economic importance of Raw Materials for Europe as well as the world supply of Critical Raw Materials and the major production countries.
Source: European Commission