EU to set up central buying agency for critical minerals-draft law

By Eric Onstad and Foo Yun Chee

LONDON/BRUSSELS (Reuters) - The European Union aims to set up a central purchasing agency for critical materials such as lithium and rare earths and force member states to speed up permitting for new mines and processing plants, according to draft legislation.

The Critical Raw Materials Act (CRMA), which is due to be publicly released on March 14 and was seen by Reuters on Tuesday, aims to ensure the EU has access to materials needed to meet the bloc's target of moving to net zero greenhouse gas emissions by 2050.

Both the EU and United States are seeking to curb their dependence on China, which supplies about 95% of the EU's rare earths.

In September last year, the EU said it would address the issue through the introduction of the CRMA, which also targets other key materials such as lithium, cobalt and manganese needed for electric vehicles (EVs) and wind turbines.

"It is necessary to take measures to ensure access to a secure and sustainable supply of critical raw materials in order to safeguard the union's economic resilience and strategic autonomy," the draft CRMA act said.

The CRMA would set up a new agency, the European Critical Raw Materials Board, to coordinate action, so by 2030 the EU can internally produce at least 10% and process at least 40% of strategic materials needed each year, the draft said.

Sweeping and cooperative measures were vital among the 27 EU members, it said.

"Uncoordinated national measures to ensure a secure and sustainable supply of critical raw materials have a high potential of distorting competition and fragmenting

the internal market," the draft said.

CENTRAL BUYING AGENCY

Due to the often opaque nature of markets in many critical materials, the EU would hope to strengthen its hand by setting up a central buying agency.

"The Commission shall set up a system... that is able to aggregate the demand of interested union buyers and then negotiates on their behalf with sellers globally," the draft CRMA said.

Any purchasing system would comply with EU competition law, it added.

The CRMA also seeks to address complaints by businesses wanting to build new mines and processing plants about a cumbersome and lengthy process of getting permits.

Under the new legislation, the EU could name certain projects as strategic, which would mean they would get streamlined permitting and access to financing, including possible state funds, it said.

Strategic mine projects would have to get permits within 24 months and processing facilities would get them in a maximum of 12 months, the draft CRMA said.

The CRMA would also set the stage for potential strategic stockpiles by first requiring member states to report existing stocks before deciding on the needed levels of any EU wide stockpiles, it added.

The EU would also require sellers of critical minerals in the bloc to display an environmental footprint to allow potential customers to buy sustainable products if they wish.

(Reporting by Eric Onstad in London and Foo Yun Chee in Brussels; Editing by Sharon Singleton)