Resilient CRM products will be more expensive than China dominated markets or products hence building resilient CRM supply chains comes at a cost. A key question is who pays for the extra costs, governments or industry and consumers. Governments must reduce the extra costs and facilitate investment, yet consuming industries must bear costs too. […]

Current policy efforts in Europe are still not enough. A major additional effort to align supply and demand support mechanisms is needed on the one hand, alongside additional and larger and more dedicated financial support tools aimed at fast-tracking support conducive to Final investment decisions (FIDs), not least in the recycling and processing segments. The EU needs to step up mechanisms for providing competitive financing and derisking projects, alongside predictable regulation and long-term offtake schemes. FIDs on dozens of industrial projects must be taken and facilitated. An effective framework for strategic stockpiling to mitigate short-term disruptions is also needed. […]

The EU and its instruments need to take stock of the fact that securing CRMs requires new approaches and new tools based on strategic geopolitical and geoeconomic planning and acting, rather than normal, market-based, competitive, risk-averse behavior. The EU needs instruments that can take risks, accept lower rates of returns and take long-term positions, as CRM projects require long-term approaches.

The EU CRM Center needs a strong dedicated budget post 2027 of about EUR 15 bn from the EU Competitiveness Fund of the next Multiannual Financial Framework (MFF), to be used for strengthening resilience over the full value chains in critical technologies. In the meantime, the CRM Funding Center, as a single point of contact for all funding requests, should be readily available and have the capacity to direct rapidly the most appropriate funding to the best projects in priority segments. […]

Specific segments need specific support tools: 

• The exploration stage is critical yet extremely risky, and funding is both insufficient and stagnating. […] Effective mechanisms are tax credits and grants convertible into equity.
• For niche companion/small markets metals (ex. gallium, rare earths), which furthermore imply high costs of mastering the processing technology, floor prices and equity investments, giving offtake rights can be a good tool. For base metals/larger metal markets (ex. copper, nickel, cobalt, etc.), concessional loans (giving offtake rights, or linked to offtake commitments by the EU or EU companies) and loan guarantees could reduce the cost of funding for companies and improve diversification of supplies (even in the shorter term in the case of an extension of production capacity). Border tariffs are another option.
• The midstream and downstream stages are critical for securing the offtake of diversified CRM (be it Made in Europe or in partner countries). As such, Environmental, Social and Governance (ESG)/resilience criteria as proposed in the Net-Zero Industry Act (NZIA), conditioning public support schemes (ex. for electric vehicles, EVs) to obligations for companies to have minimum two suppliers for inputs they use across the value chain (or at a minimum respect the 65% maximum threshold of dependency on a single supplier), foreseeing Made in Europe criteria as a condition of EU funding etc., are among the relevant mechanisms.
• The recycling stage is essential and this nascent sector needs visibility over competitive electricity, stable and secure inputs (for instance, making sure European black mass is not leaving Europe), as well as long-term offtake agreements which usually implies having the confidence that midstream demand for recycled products is available and sufficient (ex. precursor cathode active materials [pCAM] and cathode active materials [CAM] producers in the battery value chain). […]

What can be done in an emergency includes:

1. Spending the money already allocated: several existing funds notably take too much time to allocate money for projects. Profit assumptions, risk appetite and ESG have to be adjusted to a degraded environment. Providing long-term preferential credit lines with leading and niche trading houses in order to secure supplies of CRMs in the medium to long term, and let these specialists operate to secure markets and optimize logistics. Putting together additional resources in a hurry before the next MFF.
2. Building up in a confidential manner stocks of niche metals that are key for defense industries, still reasonably priced, potentially subject to future export restrictions, and organizing and planning for the eventual release of stocks. […]
3. Requiring governments to determine demand-side management plans should there be larger supply shortages, enabling to reduce and prioritize demand and possibly cut off designated consumers.
4. Fast-tracking the development of a European mining culture with robust license to operate, in order to build understanding and confidence in European mining operations.
5. Prioritizing recycling investments and shutting down the exports of metal waste and black mass outside Europe, such as in buying up the European battery scrap (black mass), and
6. prioritizing setting up EU recycling industries, in parallel with mandatory product incorporation requirements, in order to ensure the market ramp-up and business case.
7. Developing and funding powerful public-private funds, modelled on the US ones, that support projects in Europe and abroad in taking equity in return for supply commitments with destination requirements.