Crises and their impact on global supply chains, the war in Ukraine, and climate change are leaving their mark on the value chains of the basic materials industry. Access to raw material markets is crucial for our future, but so is the know-how to process them. European demand for non-ferrous (NF) metals will multiply by 2050, precisely because of the Green Deal and advancing digitalization.
The EU Commission has recognized the importance of a reliable and sustainable supply of raw materials. In her State of the Union speech on Wednesday, Commission President Ursula von der Leyen announced a European raw materials law.
The war in Ukraine has once again shown that dependencies on various raw materials without diversification can lead to significant problems in supply chains. New cooperations with reliable international partners should thus be initiated to secure raw materials while maintaining high environmental and social standards. Important are trade agreements with Chile, Mexico, New Zealand, and Australia.
In this context, the EU Commission is preparing a Critical Raw Materials Act, modeled on the EU Batteries Alliance and the EU Chips Act. The Critical Raw Materials Act is intended to establish criteria for identifying raw materials that are of particular strategic importance to our transformation and defense needs, including economic importance, supply concentration, strategic applications, and projected supply gaps.
Demand increases rapidly
In addition, more resilient supply chains are to be built by supporting projects and encouraging more private investment from mining to refining, processing, and recycling. The highest social and environmental (ESG) standards are to be ensured. Establishing a level playing field is essential for strategic storage capacity and also for the extraction of secondary feedstocks, in our view.
In April 2022, the Catholic University of Leuven (KU Leuven) calculated the additional nonferrous metal demand triggered by the Green Deal in a study. It was taken into account that nonferrous metals play a crucial role in the investments required by the Green Deal in innovative energy generation technologies (solar plants, wind power, hydro power) and in new products (electrification of automobiles, new batteries). These technologies tend to be more metal intensive than conventional products and technologies. The additional metal demand to make the European energy supply less dependent on Russian energy imports has not yet been considered in the study.
The study calculates that by 2050, the Green Deal alone will increase demand for aluminum by 33 percent, copper by 35 percent, zinc by 11 percent, nickel by 103 percent, cobalt by 331 percent, and lithium by as much as 3535 percent. For the base metals aluminum, copper and zinc, the increased demand can still only be partially met (45 – 65 percent) by higher recycling efforts.
Strategy needs several pillars
The remainder must be absorbed by higher mine production because metals are mostly tied up in applications for the long term and only gradually reach the recycling stage. In addition, a significant proportion of metal scrap is sent abroad and is no longer available for the European metal supply. Compared to other materials, nonferrous metals are nevertheless far ahead in terms of recycling: the recyclate content of every ton of nonferrous metal produced in Germany is around 50 percent.
European raw material supply must therefore rely on several pillars for the time being: More imports of primary and secondary raw materials from countries with sustainable standards, more domestic mine production and, above all, more domestic recycling to leverage the remaining recycling potential. For several years, the EU has therefore placed the political focus on its “Circular Economy” initiative on improving the political framework conditions for recycling (e.g. more design for recycling).
In order to strengthen the contribution of secondary raw materials to secure the supply of metallic raw materials in Germany, the German government is entering into a dialogue with the industry, science, and administration based on its raw materials strategy. The dialogue aims to develop concrete measures by 2023 to remove barriers to closing raw material cycles and to further increase the contribution of metallic secondary raw materials to the supply of raw materials. (Read an interview with State Secretary for Economic Affairs Franziska Brantner here).
To this end, the German Federal Ministry of Economics and Climate Protection (BMWK) has commissioned the German RawMaterialsAgency (DERA) to manage the “Dialogue Platform for Recycling Raw Materials“. The Wirtschaftsvereinigung Metalle is involved in the dialogue platform in the Working Group on Metals and is committed to advancing European raw materials policy together with the circular economy.