Regulation watch: everthing you need to know about raw materials legislation

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Raw materials are critical to European industry. But at the same time, access to certain raw materials is a growing concern within the EU.

In March of 2023, the European Commission proposed a Critical Raw Materials Act (CRMA).

This builds on the list of critical raw materials – classified as ‘critical’ due to their importance to the EU economy and the high risk associated with their supply.

The act then seeks to ensure the EU’s access to a secure and long-term supply of such materials.

It also designates a list of strategic raw materials (SRM) based on their utilisation in the manufacturing of strategic technologies.

The proposed CRMA has four specific objectives:

• Strengthening the whole SRM value chain
• Diversifying the EU’s imports of SRMs
• Improving the EU’s ability to monitor and mitigate the CRM supply risk
• Ensuring the free movement of CRMs and products containing CRMs placed in the EU market and ensuring a high level of environmental protection, by improving their circularity and sustainability

FERMA has formed a working group on CRM and published a paper on the topic in June 2023.

What it means for risk managers

Risk managers will need to monitor this fast-evolving legislative landscape closely, keeping updated on SRM and CRM lists, plus the EU targets for circularity in raw materials – and the associated risks.

The Commission devotes an entire chapter in the proposed legislation to risk monitoring and mitigation.

While aimed at Member States, the Commission mentions stress tests and ‘monitoring’ of supply risks, and also implicitly calls on ‘private actors’ to work towards mitigating supply risks linked to CRMs.

Elevating the risk manager role

One feature that FERMA is focused on is that the CRMA plans to create a European CRM board to assist the European Commission and Member States on a  advisory basis.

Currently, the board will not include a professional risk manager – something FERMA is actively looking to change.

This board would examine the financing of strategic projects as well as being responsible for monitoring and coordination in relation to strategic shocks.

”FERMA will continue to push for a seat for the risk management profession, even at this late stage in the policymaking process.”

It is FERMA’s strong belief that a risk management representative would add value to this body, as well as giving the risk management discipline the much-needed recognition of its strategic importance at EU level.

So far, the only changes to the text proposed by the Parliament with respect to the composition of the board have been to involve the European Parliament and a representative of SMEs.

These are both important changes. However, FERMA will continue to push for a seat for the risk management profession, even at this late stage in the policymaking process.

The proposal is currently in the hands of the co-legislators, who will work towards trying to finalise a legal text by the end of this year.