Key Takeaways

From a supply-chain risk perspective, the EU’s Critical Raw Materials Act (CRMA) is far from an abstract Brussels file: it is already reshaping plant siting decisions, supplier compliance checkpoints and the way geopolitical risk translates into procurement constraints for critical raw materials (CRM), including rare earth elements (REEs).

At Ti22 Strategies, we view the CRMA through three practical lenses: exposure to sudden export restrictions, structurally higher cost bases when onshoring metal value chains, and the risk of non-compliance where regulatory detail evolves faster than contract cycles. Recent raw-material shocks – from the magnesium scare that nearly idled European casting lines to export controls on niche metals for semiconductors and defence – have elevated CRM from a specialist concern to a board-level stress point.

Earlier in the decade, many industrial decision-makers treated REEs and battery metals as a narrow technical issue for engineering teams. That shifted once original equipment manufacturers (OEMs) began modelling scenarios in which a single policy move in Beijing or Washington could sideline entire product lines for months. The CRMA is the EU’s structural answer to that vulnerability and understanding its mechanics is now essential for interpreting European industrial policy in batteries, wind power, defence, aerospace and advanced electronics.

Key Takeaways

• The CRMA establishes binding 2030 benchmarks for extraction, processing and recycling in the EU and caps reliance on any single third country at 65%.
• “Strategic projects” benefit from accelerated permitting (15–27 months) and facilitated access to EU financing, with 47 projects already approved and a second wave due by 15 January 2026.
• Complementary instruments—RESourceEU, a European Critical Raw Materials Centre and joint purchasing pilots—enhance market intelligence and backstop supply security, but add governance layers and due diligence requirements.
• Operational frictions arise from diverse national permitting regimes, potential scrap export restrictions and technical constraints in shifting supply chains away from China.
• Interpreting the CRMA involves balancing regulatory compliance, resilience to geopolitical shocks and tolerance for a structurally higher European cost base in CRM supply chains.

Regulatory Scope and Strategic Objectives

The CRMA, adopted as an EU regulation in 2024, applies directly across all Member States and aims to secure a “safe, diversified, affordable and sustainable” CRM supply. The EU’s inaugural list included 34 materials—among them lithium, cobalt, magnesium and REEs—of which a subset is classified as strategic raw materials due to their criticality for advanced technologies and high supply risk.

By imposing quantitative targets and governance mechanisms, the CRMA seeks to reduce dependence on concentrated processing hubs—most notably China, which controls over 90% of rare earth refining—and to incentivise on-shore capacity for extraction, transformation and recycling.

Binding 2030 Benchmarks and Diversification Rule

At the core of the CRMA are binding 2030 benchmarks:

• Extraction: ≥10% of annual consumption must originate from EU extraction.
• Processing: ≥40% of consumption must be refined or transformed in the EU.
• Recycling: ≥15% of consumption to be covered by EU recycling.
• Diversification cap: No more than 65% of EU consumption of any strategic raw material may derive from a single third country at any value-chain stage.

The diversification rule is designed to mitigate concentration risk. In practice, it forces companies to weigh cost-competitive imports—often from China—against compliance risks and potential penalties for exceeding the threshold.

Strategic Projects and Accelerated Permitting

A cornerstone of the CRMA is the designation of strategic projects across the CRM value chain, covering extraction, processing, recycling and substitution technologies. Strategic status unlocks accelerated permitting deadlines—27 months for exploration and extraction, 15 months for processing and recycling—compared with national timelines that can exceed five years for greenfield mining.

In March 2025, the European Commission approved 47 projects, spanning a German lithium operation, rare earth refining in Sweden and magnet recycling facilities in the Nordics. Strategic projects also qualify for coordinated treatment by national authorities and priority access to EU financing instruments, including up to €3 billion of support through the European Investment Bank and national programmes in 2025–2026.

Diversification, FDI Screening and External Partnerships

The 65% single-country cap is enforced through monitoring and stress tests, with exemptions for force majeure events subject to Commission approval. Strategic projects fall under reinforced foreign direct investment (FDI) screening, particularly when investors originate from systemic rivals. Notably, certain non-EU entities face exclusion from specific Horizon Europe research initiatives.

To further diversify supply, the EU is forging raw-material partnerships with resource-rich nations such as Namibia and Canada, establishing long-term cooperation frameworks for lithium, REEs and other CRM.

Recycling Targets and Scrap Export Measures

The CRMA mandates that 15% of each strategic raw material’s annual consumption be met through EU recycling by 2030. To support this goal, the Commission plans Q2 2026 proposals for export restrictions on select scrap streams—permanent magnet waste (rich in neodymium and praseodymium), high-value aluminium and copper scrap—using new Combined Nomenclature (CN) codes to reinforce customs controls.

Implementation Tools: RESourceEU and the European CRM Centre

The CRMA is part of the broader RESourceEU action plan, which introduces:

• European Critical Raw Materials Centre: Operational in early 2026, providing market intelligence, project tracking and policy coordination.
• Raw Materials Mechanism: A 2025-launched platform to aggregate demand, facilitate joint purchasing and match industrial buyers with CRM projects.
• Stockpiling pilot: A coordinated scheme for rare earths to buffer short‐term supply disruptions.

Conclusion

The EU’s Critical Raw Materials Act represents a paradigm shift in CRM governance, embedding supply‐chain resilience into industrial strategy. Companies must now navigate binding 2030 benchmarks, accelerated project pipelines and layered governance tools—balancing compliance costs against geopolitical risk mitigation.