Critical Raw Materials Guide

• Critical raw materials are indispensable minerals and metals required for advanced and clean energy technologies that form the backbone of our modern and industrial ecosystem.
• Due to the high-demand and high-risk of sourcing critical raw materials, the EU and U.S. have introduced regulations and schemes to protect their supply while encouraging the transition to cleaner energy systems.
• To keep your supply chain up-to-speed with the evolving regulatory landscape (while boosting resilience), traceability solutions like BanQu offer better visibility for a better handle on sourcing operations.

Navigating the complex landscape of critical raw materials can feel like walking a tightrope. With the rapid advancements in technology and increasing global demand for sustainable practices, staying compliant with regulations has never been more crucial—or more challenging. 

Whether you're an industry veteran or a newcomer, understanding the ins and outs of critical raw materials is essential for your business's success and integrity. In this guide, we'll delve into what critical raw materials are and the key regulations you need to know to stay ahead of the curve. Plus, we'll explore how innovative solutions like BanQu can simplify compliance and boost transparency in your supply chain. Let’s get started.

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What Are Critical Raw Materials

“Without a safe and sustainable supply of critical raw materials, there will be no green and industrial transition.” - Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age

It’s no secret that our planet is heating up at an unprecedented pace. In fact, global warming is accelerating at a rate we haven’t seen in 10,000 years – ten times faster than the average post-ice age warming rate. The  Intergovernmental Panel on Climate Change stated that “the influence of human activity on the warming of the climate system has evolved from theory to established fact." But how does this relate to critical raw materials? 

As the world tackles the climate crisis, the demand for clean energy technologies – such as solar panels, electric vehicles, and wind turbines – is set to skyrocket. Critical raw materials are the indispensable minerals and metals required for these advanced technologies (and everyday appliances such as phones) to be developed and function effectively. These materials are often scarce, geographically concentrated, and challenging to replace. Yet, they are essential for sustaining our modern economy and achieving a net-zero future.

The demand for these rare earth elements is projected to grow exponentially in the coming years. For instance, in the EU, the demand for rare earth metals is expected to increase six-fold by 2030, and the demand for lithium is projected to grow twelve-fold. The scarcity and supply risks of these critical raw materials make them a central concern for policymakers and businesses striving to maintain economic stability and drive technological advancement.

List of Critical Raw Materials

The EU and the U.S. have each established a list of critical raw materials based on their economic importance and supply risk. These lists are regularly re-evaluated to adapt to changing needs and circumstances.

EU Critical Raw Materials List

• EU 2023 list of 34 critical raw materials: Aluminium/bauxite/alumina, coking coal, lithium, phosphorus, antimony, feldspar, light rare earth elements, scandium, arsenic, fluorspar, magnesium, silicon metal, baryte, gallium, manganese, strontium, beryllium, germanium, natural graphite, tantalum, bismuth, hafnium, niobium, titanium metal, boron, helium, platinum group metals, tungsten, cobalt, heavy rare earth elements, phosphate rock, vanadium, copper, nickel

U.S. Critical Raw Materials List

• U.S. 2023 Critical Materials List for Energy: aluminum, cobalt, copper, dysprosium, electrical steel, fluorine, gallium, iridium, lithium, magnesium, natural graphite, neodymium, nickel, platinum, praseodymium, silicon, silicon carbide and terbium
• U.S. 2023 Critical Minerals List: Aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, dysprosium, erbium, europium, fluorspar, gadolinium, gallium, germanium, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, tellurium, terbium, thulium, tin, titanium, tungsten, vanadium, ytterbium, yttrium, zinc, and zirconium

EU & U.S. Critical Raw Materials Regulations

“This Act will bring us closer to our climate ambitions. It will significantly improve the refining, processing and recycling of critical raw materials here in Europe… It’s in our mutual interest to ramp up production in a sustainable manner and at the same time ensure the highest level of diversification of supply chains for our European businesses.” - Ursula von der Leyen, President of the European Commission 

EU Critical Raw Materials Act (CRMA)

Overview: On March 18, 2024, the European Council adopted the Critical Raw Materials Act (CRMA) to secure the EU's access to essential and strategic raw materials. The Act aims to enhance extraction, processing, recycling, and diversification of import sources within the EU. It establishes annual consumption targets: 10% from local extraction, 40% processed within the EU, and 25% from recycled materials.

Compliance Requirements:

• Identification: Within 12 months of the law's enactment, EU member states will identify companies with over 500 employees and a global turnover exceeding 150 million EUR that manufacture strategic technologies (e.g., batteries, hydrogen, renewable generators).

• Risk Assessment: Identified companies must assess their supply chains every three years, detailing where strategic raw materials are extracted, processed, and recycled.
• Reporting: Member states may impose further regulations, including reporting obligations to the board of directors.
• Responsible Sourcing: Companies must promote responsible practices, including circularity and human rights, throughout their value chains.

EU Battery Regulation

Overview: On July 12, 2023, the EU adopted the new Batteries Regulation, replacing the current batteries directive of 2006. This regulation emphasizes the sustainable lifecycle of batteries, setting strict guidelines for the sourcing, manufacturing, and recycling of battery materials to uphold high environmental and ethical standards.

Compliance Requirements:

• Supply Chain Due Diligence: Implement a risk-based due diligence program for critical raw materials like cobalt, natural graphite, lithium, nickel, and their compounds. Ensure due diligence policies address key social and environmental concerns.
• Digital Product Passport (DPP): By February 18, 2027, companies must provide a DPP (via QR code) for each industrial (capacity > 2 kWh), EV, and LMT battery, facilitating transparency and traceability throughout their lifecycle.
• Extended Producer Responsibility: Starting August 18, 2025, new targets for collection rates and recycling efficiencies will become effective under Extended Producer Responsibility (EPR) requirements.
• Replaceable Batteries: From February 18, 2027, portable batteries must be designed to be easily replaceable by the end-user.
• CE Marking: As of August 18, 2024, all batteries, whether integrated into products or sold separately, must carry the CE mark in compliance with the regulation (carbon footprint and recycled content requirements will be introduced at a later stage). See the guidelines for the different battery categories below. 

U.S. New Clean Vehicle Tax Credit

Overview: The U.S. New Clean Vehicle Tax Credit, part of the Inflation Reduction Act passed on August 16, 2022, aims to boost electric vehicle (EV) adoption. Since its enactment, it has spurred approximately $100 billion in private-sector investment across the U.S. clean vehicle and battery supply chain. This new tax credit offers significant incentives: up to $7,500 for consumers and up to $40,000 for businesses. To qualify, vehicles must meet specific criteria, including the use of sustainably sourced critical minerals in their batteries. By tying financial incentives to sustainability, the policy encourages manufacturers to adopt responsible sourcing practices.

Compliance Requirements:

Foreign Entity Restrictions:

• Starting in 2024, clean vehicles must not contain any battery components manufactured or assembled by a foreign entity of concern (FEOC). A FEOC is any non-state actor that poses economic or security threats to the U.S., including businesses significantly influenced by the governments of Russia, China, North Korea, or Iran.
• From 2025 onward, critical minerals in batteries must not be extracted, processed, or recycled by a FEOC.

North American Manufacturing:

• Beginning in 2024, 60% of battery components must be manufactured or assembled in North America, increasing by 10% each subsequent year.
• Starting in 2024, 50% of critical minerals in the batteries must be extracted or processed in the US, by a country with a free trade agreement with the US, or recycled in North America.

Data & Reporting for Sustainably Sourced Critical Raw Materials

Whether you're an EU industrial battery manufacturer or a U.S. EV retailer, gaining a better picture of your supply chain end-to-end will keep you safe against disruptions and prepared for evolving regulations. Especially in the critical raw materials space where demand is high and supply can be volatile. 

Traceability software allows you to stay up-to-speed on your supply and compliance status, allowing for strategic, data-driven decisions to stay ahead of the game. But beware, not all traceability solutions are created equal. Here are some key capabilities you should keep an eye out for: 

Proof of Provenance

Due to the scarcity of critical raw materials, governments are increasingly vigilant about their origins. Maintaining a resilient and compliant supply chain necessitates geo-located, source-level data.

How BanQu Helps: BanQu captures verifiable data from the source, including the geo-location of every transaction to pinpoint the origins of raw materials. The platform is entirely device- and system-agnostic, designed from the ground up for seamless adoption by your suppliers and effortless integration with your existing supply chain systems.

Chain of Custody Tracking

Maintaining an accurate record of each exchange of custody from extraction to end-use establishes a clear audit trail of the sustainability, circularity, and durability of your products. For instance, a digital battery passport detailing a battery's lifecycle must include production specifics from suppliers to highlight recyclability characteristics.

How BanQu Helps: BanQu’s blockchain technology provides complete chain of custody tracking for your critical raw materials. This system ensures that every transaction and movement of materials is recorded immutably, offering unparalleled transparency and traceability. This visibility allows you to monitor every step of the supply chain including the foreign entities involved, with flagging features to alert on risks. Plus, the platform enables you to generate a DPP as a QR code, providing stakeholders with detailed information on the chain of custody and additional sourcing metrics.

Real-Time Reporting & Insights

Third-party spot audits and certification schemes simply won’t cut it anymore. You need real-time, fresh insights into the state of your supply chain to swiftly respond to disruptions and risks – especially in the volatile world of critical raw materials.

How BanQu Helps: BanQu offers real-time reporting and insights, empowering your business with up-to-date information on your supply chain. This capability allows for quick decision-making and proactive management of potential risks. Real-time data access ensures that your company can meet regulatory requirements and adapt to changes swiftly, maintaining your competitive edge.

BanQu: Traceability for Critical Raw Materials Supply Chains

BanQu is critical for your critical raw materials strategy. While data alone isn't a magic wand for all sourcing challenges, it's a powerful tool for making smarter, more strategic business decisions - while providing the proof necessary for regulatory compliance. Without data, you’re navigating blind, unaware of what’s happening on the ground in your supply chain. With BanQu, you gain a comprehensive view of supply chain practices, enabling you to enhance resiliency and sustainability. BanQu simplifies compliance with global critical raw materials regulations and helps boost your supply chain’s performance. Schedule a call today to unlock value across your critical raw materials supply chain. 

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