EPBA welcomes in principle any initiative from the Commission to strengthen the competitive framework for industries in the EU by reducing the dependence on raw materials supplies from third countries.

Considering the highly challenging nature of diversifying the EU’s imports of critical raw materials, EPBA supports in particular:

▪ Article 5 on the implementation of “Strategic Projects,” contributing to building strategic raw materials capacities across all value chain stages;

▪ Article 24 on the Commission setting up and operating a system of joint purchasing of strategic raw materials for interested businesses;

▪ Article 33 on Strategic Partnerships between the EU and supplying third countries, improving the EU’s security of supply; ▪ The overall effort of the Commission and the Member States to be as transparent and accessible as possible in sharing information.

We are concerned, however, about some of the current provisions in the current draft of the Critical Raw Materials Act. Article 1 of the CRMA sets a binding limit of 65% of the annual consumption of strategic raw materials to be imported from a single third country. The battery industry is strongly dependent on a limited number of non-EU countries across different world regions to extract and process its raw materials. The current proposal does not specify how the target thresholds should be divided among Member States or businesses. It also remains unclear which stages within the supply chain this exactly applies to, which actors in the supply chain have the final responsibility for the origin of both raw materials and intermediate goods and what the role of intermediate sellers would be in reaching this target. Therefore, significant more details on how to accomplish this must be included in the CRMA.

In addition to the binding target threshold on imports, Article 1 sets non-binding benchmarks for the extraction and the processing of strategic raw materials from domestic sources. Although these targets are voluntary, the Commission pushes for solid efforts to reach them. It remains unclear how the Commission plans to work towards achieving these targets. Furthermore, the Commission should more clearly express that the targets are, in fact, non-binding and therefore, flexible.

The lack of concrete guidelines on reaching the aims and objectives in the CRMA is a recurring concern throughout the text. Currently, the CRMA encompasses an incomplete framework, relying on 32 delegated and implementing acts to fill gaps regarding the technical aspects of the obligations. Companies will need sufficient capacities, resources and support to swiftly implement those necessary measures. This is the case for e.g. Articles 3 and 4 on the raw materials within the scope of the CRMA, Articles 5 to 7 on strategic projects and Article 25 on circularity.

Furthermore, Article 23 on company risk preparedness puts an excessively high administrative burden on large manufacturers that yet have to be identified by the Commission. This provision obliges those companies to perform an audit, including mapping the origin of the strategic raw materials being used and a stress test of the supply chain of the respective strategic raw materials. To cater for legal certainty, the criteria on which the Commission selects these companies and the requirements for performing the audit need to be clarified. Additionally, companies deserve to know the exact purpose of such an audit and the access to this potentially sensitive information.

Also, since some other non-EU countries have key positions as an exporter of battery-grade raw materials, the proposed target thresholds for imports would ultimately reduce the availability and increase the price of portable batteries, which, considering the ever-increasing importance of portable batteries, would be harmful to energy security and the functioning of the internal market. In some cases thus, the diversification will simply not be possible without considerable collateral impact.

Lastly, we would like to express our concern about the lack of clarity in Article 45 and its punitive measures. Which infringements will be subject to which punitive actions and who will be punished? This seems particularly relevant considering the non-binding nature of Article 1 as indicated by Commissioner Breton recently.2 In conclusion, we are concerned about the lack of more concrete initiatives and financial elements to fully compete in the field of EU raw material autonomy with the U.S. Inflation Reduction Act.

We kindly ask you to consider the abovementioned points for the further procedure.

Thank you,

Carole Bachmann,

Secretary General of EPBA

email: cbachmann@kellencompany.com

EPBA Transparency Register Number: 71549072613-57