Critical Raw Materials, Supply Security, and Circular Strategies
Metals and other critical raw materials underpin the technologies driving modern economies, from aerospace systems to electric vehicles and renewable energy infrastructure. Demand for certain metals has surged as the energy transition accelerates and digitalisation deepens. Lithium for batteries, rare earths for electric motors, and silicon for solar photovoltaics are among those seeing sharp increases. The International Energy Agency projected in 2022 that global demand for many critical metals could rise by 400% by 2040. This trajectory has prompted governments to develop policies aimed at securing supply, though some measures risk geopolitical friction.
The European Union’s reliance on imports for many raw materials, including fossil fuels and semiconductors, has exposed vulnerabilities. European Commission President Ursula von der Leyen stated, “Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030. …We must avoid becoming dependent again, as we did with oil and gas.” The EU’s Critical Raw Materials list currently includes 34 materials, selected based on supply risk and economic importance, with 16 identified as strategic due to projected supply-demand imbalances.
Criticality is dynamic. Lithium was added to the EU list in 2020 due to rising demand for EV batteries and concentrated refining capacity in China. Helium, removed in 2020, was reinstated in 2023 despite limited substitutes for certain applications like MRI systems. Historical shifts show how technological changes and environmental regulation can move materials off the critical list—mercury and sulphur once held strategic importance but no longer do.
Supply constraints fall into “below ground” factors, such as geological availability, and “above ground” factors, including political stability, environmental regulation, and social governance issues. While geological reserves appear sufficient for near-term energy transition needs, above ground constraints can be significant. Many critical raw material mines are located in water-scarce regions or on indigenous lands, creating conflicts. Concentration of reserves and refining in a few countries increases sensitivity to local disruptions and potential supply weaponisation, though metals generally have less immediate societal impact than energy flows.
The circular economy offers strategies to close, narrow, and slow resource loops. Closing involves recycling end-of-life products; narrowing reduces material use through efficiency and substitution; slowing extends product lifetimes via repair, reuse, and remanufacturing. EU policy documents highlight security benefits from increased recycling, but recycled materials are not inherently more secure or price-stable. Without domestic recycling infrastructure, import dependence may shift from primary to secondary materials. In 2020, the EU exported 32.7 million tonnes of waste, over half being ferrous metals, with Turkey as the largest destination.
Trade-offs emerge between self-sufficiency and supporting economic development in partner countries. The Critical Raw Materials Act commits to helping partners “move up the value chain” while setting ambitious domestic processing and recycling targets. Recycling’s short-term impact on primary demand is limited due to long product lifetimes. For example, improved battery recycling could meet only 5.2–7.2% of EU demand for key metals in 2030. Infrastructure to process waste lithium batteries is lacking, requiring significant capacity expansion.
Material efficiency and substitution can reduce CRM demand, though sometimes at the expense of performance or recycling economics. Reduced cobalt in batteries and silver in PVs lower costs but make recovery less profitable. Substituting permanent magnets with copper coils in wind turbines increases weight and may require additional mechanical components.
Extending system boundaries in analysis reveals larger potential reductions. Studies show that reducing vehicle ownership and increasing fleet utilisation can cut CRM use while maintaining mobility, though such shifts require technological and institutional changes. Strategies to slow loops through reuse and remanufacturing have high long-term potential—reuse could meet 70% of U.S. neodymium demand in 2050—but limited short-term impact.
Repurposing, such as using spent EV batteries for stationary storage, can extend material lifetimes but may lock in dependencies on certain supply chains. Security assessments must weigh such trade-offs. Even modest increases in recycled material use diversify supply sources, providing resilience against uncertainty.
The EU faces choices between building domestic recycling capacity and deepening cooperative processing with partners. Narrowing CRM loops appears to offer the greatest short- to medium-term impact, yet remains under-targeted by policy. Broader integration of CRM demand considerations into policy could strengthen resilience and strategic autonomy. Enhancing circularity in flows like phosphate and potash could also bolster food security, underscoring that the most significant security gains may come from reducing fossil energy dependence while managing critical material needs.
