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Critical Raw Materials - What are they?

Critical Raw Materials - What are they?

market insights

October 19, 2019

According to the last assessment carried out by the European Union in 2017, materials such as vanadium, cobalt, tungsten, silicon metal, niobium, phosphorus and 20 more are considered critical. Do we really know why are they considered critical? Let’s find out.

An ever growing population puts pressure on natural resources to meet its demand. Technological developments are directly related to an increase in the use and consumption of minerals. Many of these minerals have very limited reserves and they are located in a small number of areas globally. Thus, the criticality of minerals for an economy depends on each country and economic moment.

Countries accounting for largest share of global supply of CRMs adapted from the European Commission Criticality Assessment 2017

Why is this group of minerals important?

Critical minerals are very important for the economy of the European Union because they integrate the value chain of the manufacturing industry and in turn the development of new technologies. For instance, a smartphone can contain on average 62 different metals. In addition, critical minerals are indispensable for the development of clean technologies such as solar panels, wind turbines, electric vehicles (EVs), among many other applications.

Globally 70% of platinum production is concentrated in South Africa, and 46% of the palladium production comes from Russia. These elements belong to the Platinum group elements (PGEs) and they are used as catalysts in fuel cells and other high-tech applications.

The production of batteries for EVs requires cobalt, lithium, nickel and manganese. The demand for cobalt is expected to increase by a factor of 2.1 from 2018 reaching 0.27 million tons per year by 2030 and in the same period demand for nickel is expected to rise by a factor of 1.5 reaching 3.30 million tons. From the mentioned metals, cobalt is to date the only one considered as critical. It is mostly because approx. 70% of the cobalt produced globally comes from the Democratic Republic of Congo (DRC) and the refining facilities are highly concentrated in China with approx. 60% of the global supply in 2018.

When is a mineral considered critical?

The restricted geological location, mineral occurrence in the country’s territory, substitution and recycling are some factor that determine the criticality of a mineral. Therefore, a critical mineral is one that is of high relevance to an industry and where the supply of the material faces a high risk of restriction. For example, the DRC faces political instability and many internal problems that can jeopardize the supply availability of cobalt. The risk could be either in the form of physical unavailability or higher prices.

The European Union assessment methodology defines these variables as the Economic Importance and the Supply Risk of the mineral.

The economic importance represents the importance in terms of applications in end products associated with an industrial sector such as construction, manufacturing, etc. and thus its contribution to the EU's gross value added. On the other hand, supply risk refers to the risk of disruption in the supply of the material. It considers the geographical location of the primary supply, commercial aspects, governance performance, and EU’s import reliance.

Critical Raw Materials for the EU 2017 adapted from the European Commission criticality assessment for raw materials 2017

The identification of these minerals helps to create a strategic plan to reduce dependence on the supply of these raw materials. Countries can draw up strategies to encourage recycling and new investments in mining activities. On the other hand, companies can reduce their risk of supply through increasing their supplier pool, agreement on long-term contracts with suppliers and encouraging investments in R&D to find substitutes to ensure the supply or reduce the reliance on these raw materials.

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  1. Brian Rohrig, Smartphones, ChemMatters, 2015.

  2. The APS panel on public affairs & the materials research society, Energy critical elements: Securing Materials for Emerging Technologies, 2010.

  3. World Economic Forum and Global Battery Alliance, A Vision for a Sustainable Battery Value Chain in 2030 Unlocking the Full Potential to Power Sustainable Development and Climate Change Mitigation, 2019.

  4. European Commission, Criticality assessment for raw materials, 2017.