The increasing significance of critical raw materials

Author: Teemu Turunen

Estimated reading time: 5 minutes

As we pivot away from fossil fuels towards cleaner energy systems, adept utilization and management of materials become increasingly important. For instance, the expansion prospects of many key technologies face constraints due to the escalating demand for critical raw materials. Concurrently, waste and by-products are emerging as noteworthy reservoirs of raw materials, underscoring their newfound significance.

As technological advancements progress, the demand for new types of raw materials continues to grow. To anticipate future needs, the European Union has launched the Raw Materials Initiative (RMI) program, designed to tackle raw material-related challenges at the EU level. As part of this initiative, a procedure for defining critical materials has been established. Criticality assessment considers various factors, with a primary focus on both the risk of supply disruption and the economic significance of the raw material.1

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34 critical raw materials

According to the EU criteria, 17 out of the 34 identified critical raw materials have been classified as strategically important: their demand is increasing while their risk of supply disruptions is assessed as higher. The list includes common raw materials such as copper (see figure below).

It is important to note that classifying a raw material as non-critical does not mean that its availability and significance to the EU economy can be ignored. Increasing knowledge and potential developments in EU and global markets may affect the list of critical raw materials in the future.1

34 Critical Materials

EU-defined critical raw materials (strategic raw materials in pink)1

Impact of geopolitical tensions

When assessing future trends and needs, it is crucial to understand that geopolitical competition for critical raw materials is increasing. Logistics chains are global, and the EU finds itself increasingly competing for limited resources with China, the United States, and the global South.

The EU has taken notice of the situation, and in November 2023, preliminary agreement was reached on EU legislation concerning critical raw materials. It aims to achieve the following impacts1:

  • Increase and diversify EU’s critical raw material supplies
  • Strengthen the circular economy and recycling
  • Support research and innovation on resource efficiency and development of substitute materials
  • Strengthen Europe’s strategic independence

A broader EU goal by 2030 is to reduce its dependence on third countries for critical raw materials1. The objective has been concretized into four sub-goals, as presented in table.

EU goals to reduce its dependence on third countries for critical raw materials1

How to prepare for risks associated with critical materials?

In a study conducted by Germany’s Federal Institute for Geosciences and Natural Resources (BGR) and PricewaterhouseCoopers (PwC), an analysis was conducted on how non-German companies secure their raw material supplies. The study also focused on the strategies currently employed by these companies and their intentions for future use, as well as the opportunities and challenges associated with these strategies. The following 11 raw material strategies were identified in the study3:

  • Commodity price hedging
  • Passing on increased raw material prices to the customer
  • Storage
  • Diversification of suppliers
  • Long-term contracts
  • Procurement groups consisting of a few companies
  • Improvement of material use
  • Recycling
  • Material substitution
  • Vertical integration
  • IT solutions in decision-making

As noted above, some strategies focus on stabilizing prices or contractually preparing for uncertainties. However, it is essential to increase self-sufficiency concretely. Therefore, key strategies include improving material use, recycling, and material substitution.


  1. Critical raw materials act – Consilium (
  2. Bobba, S., Carrara, S., Huisman, J. (co-lead), Mathieux, F., Pavel, C. (co-lead), European Commission, Critical materials for strategic technologies and sectors in the EU – a foresight study, 2020 DocsRoom | European Commission (
  3. German Mineral Resources Agency (DERA) and PricewaterhouseCoopers, Köster, H, et ai. 2022 Securing raw material supply: Benchmarking of measures of foreign manufacturing companies and recommendations for action
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