EU Strategic Raw Materials

The Distinction Between Critical and Strategic

The EU Critical Raw Materials Act introduces a two-tier classification system that distinguishes between critical raw materials and strategic raw materials. While the critical designation captures materials with high economic importance and high supply risk broadly, the strategic designation applies a narrower lens focused on the materials most essential to Europe's strategic autonomy in three specific domains: the green transition (electrification, renewable energy, hydrogen economy), the digital transition (semiconductors, advanced electronics, telecommunications), and defense and space applications.

This distinction matters because the binding benchmarks established by the CRMA apply specifically to strategic raw materials. The targets requiring 10% domestic extraction, 40% domestic processing, 25% recycled content, and no more than 65% dependence on any single third country are calculated against strategic materials. Additionally, the "strategic project" fast-track permitting process and the European Commission's Strategic Partnerships with resource-rich nations prioritize strategic materials over merely critical ones.

The strategic classification also triggers corporate obligations. Large companies that depend on strategic raw materials for their manufacturing operations must conduct regular supply chain stress tests, develop risk mitigation plans, and report to competent national authorities. This represents one of the first instances in EU law of mandatory corporate supply chain risk management for raw materials, extending beyond the existing conflict minerals and battery due diligence regulations.

The 17 Strategic Raw Materials

Material	Strategic Importance	EU Import Dependency
Bismuth	Pharmaceuticals, lead-free solders, cosmetics	100%
Boron/Borate	Permanent magnets, nuclear applications, glass	100%
Cobalt	EV batteries, superalloys, catalysts	86%
Copper	Electrical infrastructure, EVs, renewables	44%
Gallium	Semiconductors, 5G, LEDs, defense electronics	98%
Germanium	Fiber optics, infrared systems, solar cells	96%
Lithium	EV batteries, grid storage, ceramics	100%
Magnesium	Lightweight alloys, aerospace, automotive	93%
Manganese	Steel production, battery cathodes	95%
Natural graphite	Battery anodes, refractories	98%
Nickel (battery grade)	EV batteries, stainless steel	63%
Platinum group metals	Fuel cells, catalytic converters, hydrogen	98%
Heavy rare earth elements	Permanent magnets, defense, electronics	100%
Light rare earth elements	Permanent magnets, catalysts, wind turbines	100%
Silicon metal	Solar cells, semiconductors, alloys	64%
Titanium metal	Aerospace, defense, medical devices	95%
Tungsten	Defense applications, cutting tools, mining	46%

The Green Transition Imperative

The green transition is the primary driver behind the strategic raw materials designation. The European Commission's analysis projects that EU demand for lithium will increase by up to 18-fold by 2030 and 60-fold by 2050 compared to 2020 levels, driven almost entirely by electric vehicle battery production. Cobalt demand is projected to increase fivefold, natural graphite demand tenfold, and rare earth demand sixfold over the same period. Without secure and diversified supply chains for these materials, Europe's ability to meet its climate targets under the European Green Deal and the Fit for 55 package would be fundamentally compromised.

The challenge is compounded by the EU's near-total import dependency for many strategic materials. Europe currently produces zero lithium for battery applications, zero natural graphite anode material, and effectively no separated rare earth elements. Virtually all of the EU's lithium hydroxide, cobalt sulfate, graphite anode powder, and rare earth magnets are imported from China. The CRMA's binding targets are designed to force a structural shift in this dependency, but achieving them will require massive investment in mining, refining, and recycling infrastructure across the EU and its partner nations.

Digital and Semiconductor Materials

Gallium, germanium, and silicon metal are designated as strategic in recognition of their essential role in semiconductor manufacturing and advanced electronics. Gallium is the foundational material for gallium arsenide (GaAs) and gallium nitride (GaN) semiconductors used in 5G telecommunications, military radar systems, and high-efficiency power electronics. Germanium is critical for fiber optic cables, infrared imaging systems used in defense applications, and advanced solar cell technologies.

China's decision to impose export licensing requirements on gallium and germanium in July 2023 validated the EU's decision to classify these materials as strategic. The restrictions caused immediate price spikes and supply disruptions, demonstrating the vulnerability of European semiconductor supply chains to geopolitical action by a dominant supplier. The European Chips Act, adopted in parallel with the CRMA, recognizes that semiconductor supply security depends not only on fabrication capacity but also on access to the critical raw materials that serve as inputs to chip manufacturing.

Defense and Space Applications

Titanium, tungsten, cobalt, and the platinum group metals are strategic in part because of their defense and aerospace applications. Titanium alloys are essential for airframe structures, jet engine components, and armored vehicle systems. Tungsten is used in armor-piercing ammunition, missile guidance systems, and high-temperature tooling. Cobalt superalloys are indispensable for the hot-section components of military jet engines. Platinum group metals are increasingly important for hydrogen fuel cells being developed for military logistics and backup power applications.

The defense dimension of the strategic designation reflects growing concern within the EU about the security implications of raw material dependency. Russia's invasion of Ukraine highlighted the risks of depending on geopolitically adversarial suppliers for essential defense inputs. Russia is a major producer of palladium, nickel, and titanium, and the disruption to supply chains caused by sanctions and counter-sanctions reinforced the urgency of diversifying sources for defense-critical materials.

Binding Benchmarks and Enforcement

The four binding benchmarks established by the CRMA for strategic raw materials are measured at the EU level rather than at the level of individual member states, though each member state is expected to contribute to meeting the targets based on its geological endowment and industrial capacity. The European Commission is responsible for monitoring progress and reporting annually to the European Parliament and Council on the status of benchmark achievement.

If progress toward the benchmarks is insufficient, the Commission has the authority to propose additional measures, including increased financial support for strategic projects, accelerated permitting reforms, or expanded Strategic Partnerships with third countries. The Act also empowers the Commission to establish a monitoring system for strategic raw material supply chains, including early warning mechanisms for potential disruptions and mandatory reporting requirements for companies involved in strategic material trade.

The 65% single-country dependency cap is expected to be the most challenging benchmark to achieve. China currently exceeds this threshold for gallium, germanium, magnesium, light and heavy rare earths, natural graphite, and bismuth. Reducing dependency below 65% for all of these materials by 2030 will require both demand-side measures such as substitution and efficiency improvements and supply-side investments in alternative production in Africa, Latin America, Australia, and within the EU itself.