Regulation
European Critical Raw Materials Act (EU CRMA)

The CRMA was published as Regulation (EU) 2024/1252 and entered into force on 23 May 2024.

CRMs are minerals exposed to serious supply chain risks while being essential to the EU economy. The latest list published by the European Commission (EC) includes 34 critical mineral and mineral groups, 17 of which are selected as strategic (SRMs) due to their relevance for the green and digital transition as well as to health, defence and space applications, including microchips and batteries. The list will be reviewed and updated at least every 3 years.

Like most major economies, the EU heavily relies on imports from Asia, Africa, Latin America, and other regions to produce, process, and supply strategic and critical elements, with China holding a midstream chokehold on many supply chains. 

In this context, the CRMA contains a set of measures designed to encourage domestic exploration, production, processing, and recycling capacities of strategic materials, such as cobalt and lithium (battery grade), and of the extended list of critical materials. The annual consumption targets of CRMs set by the CRMA are of 10% from local extraction, 40% that were processed within the EU, and 25% from recycled materials, which are far from the current figures for extraction, processing, and recycling of most SRMs.

How does CRMA aim to achieve a more secure and sustainable CRM supply chain?

1. Creation of the category Strategic Projects for projects focused on CRM sourcing

Projects related to CRM sourcing can apply to be considered “Strategic Projects” under CRMA. Projects deemed as “strategic” will be granted beneficial legal treatment in the EU and will benefit from streamlined permitting processes and a framework for coordinated access to finance.

The EC opened the applications for the first round of potential strategic projects in May 2024, and the deadline was set on 22 August 2024 (see the Strategic Project website here). After that, the process will start to determine which of these projects meet the requirements to be considered strategic under the CRMA.

These requirements include meaningfully contributing to the security of the Union’s supply of strategic raw materials and implementing the projects sustainably by monitoring, preventing and minimising the associated ESG risks. The EC has provided guidance on how to comply with these requirements.

2. Large companies’ obligation to conduct supply chain ESG risk assessments

By 24 May 2025, Member States shall identify large companies (with an average of more than 500 employees and a net worldwide turnover of more than EUR 150 million) manufacturing strategic technologies using SRMs on their territory.

Which strategic technologies? The list includes batteries for energy storage and e-mobility, equipment related to hydrogen production and use, equipment related to renewable energy production, aircraft, traction engines, heat pumps, equipment related to data transmission and storage, mobile electronic devices, equipment related to additive manufacturing, equipment related to robotics, drones, rocket launchers, satellites or advanced chips.

Once this list of manufacturers is drawn up and conveyed to the EC, these large companies will be required to:

• Perform a risk assessment of their SRM supply chain at least every 3 years;
• Demonstrate an SRM supply chain mapping (incl. extraction, processing and recycling);
• Conduct a stress test of their SRM supply chain, consisting of an assessment of their vulnerability to supply disruptions by estimating the impact of different scenarios that may cause such disruptions and their potential effects.

3. Other provisions

Other provisions include setting a framework for sustainability schemes recognition, measures to support circularity, and targeted recommendations for CRM recycling/recovery, labelling obligations for products in the EU market that contain permanent magnets, and mandatory environmental footprint declarations for minerals that are linked to significant environmental impact.

How will this affect companies?

• Companies willing to pursue mining, processing, and/or recycling projects related to CRM may benefit from this special treatment, which focuses on facilitating access to permits and financing.
• Companies already engaged in the exploration, extraction, processing and recycling of critical raw materials in the EU may see increased demand for their services and expertise.
• Large manufacturers in strategic sectors should start adapting their supply chain mapping systems to the requirements before the article comes into force. This will involve collecting all relevant information on the supply chains of SRMs. The level of specification for supply chain mapping is not yet defined. In the absence of revisions to this specific article, it is recommended that these companies align with globally recognised frameworks such as the OECD Due Diligence Guidance. The identified large manufacturers will be required to conduct risk assessments to better understand the risk across their supply chains.

Convergence with other Regulations

The CRMA complements existing requirements set out in other regulations and directives, such as the EU Corporate Sustainability Due Diligence Directive, the EU Battery Regulation or the future EU Forced Labour Ban Regulation, by increasing the focus on supply chain transparency and due diligence.

New obligations are being established to identify, assess, prevent, and mitigate environmental and social risks. These regulations directly affect companies within their scope and indirectly affect any company in the supply chains involving critical raw materials.

Therefore, anticipation and preparation, as well as understanding the practical implications of these requirements, are key to ensuring a sustainable supply chain that is compliant with the current regulatory landscape.

• Do you want to know more? Download our CRMA Commentary, and access to a more detailed description of the main provisions included in this new regulation.

 How can RCS Global support you?

→ Responsible Sourcing Strategy and Governance Advisory

→ Gap Analysis of company policy, processes and systems against the requirements of the Regulation

→ Mapping and auditing companies’ raw material supply chain

→ ESG risk assessments of the supply chain

→ ESG risk assessments of specific suppliers

→ Development of comprehensive Due Diligence Management Systems aligned with internationally recognised good practice frameworks

→ Staff and supplier training on ESG Risk Management

→ Meeting disclosure and reporting requirements