Sustainable Supply Chain Development of Critical Materials: Weaknesses and Obstacles

For many years, the European Union has been striving to take a leading role in the ecological transition process. To this end, in 2019 the European Commission presented the Green Deal, a set of sustainable development initiatives aimed at making the European market more competitive and efficient.

The path to achieving the ambitious goals set out in this Commission proposal, however, presents many obstacles, which are gradually being addressed by the European Union in order to make the Green Deal goal a tangible reality.

The first substantial difficulty, starting from the very beginning of the production process, concerns the operation of the supply chain of materials critical to energy and digital transformation. Indeed, there are numerous obstacles that this first stage of the ecological transition process presents, starting with the search for deposits of rare raw materials. In fact, the so-called exploratory phase can be time-consuming and requires large, high-risk investments, which project a low probability of success, and even then require a long wait before beginning to generate profit. The mining phase is certainly not then simpler or less expensive, and even before work begins many bureaucratic hurdles must be overcome in order to obtain the required permits. Reservoirs of critical materials are also rare on European soil, and therefore the Union is forced to import these materials from abroad, often without the possibility of diversifying the list of importing countries, and thus ending up relying on a few nations (at the moment mainly China and South Africa), finding itself in a weak position of dependence with respect to them. In addition to the considerable transportation costs and all the other obstacles, bureaucratic and fiscal, that trade with third countries implies, this dependence in fact generates a real weakness in the scenario of international relations (painful lesson of this principle was taught by the war in Ukraine, when the European Union had to manage the rupture of relations with the world’s largest exporter of natural gas). To solve these problems, as well as to modernize and make more efficient the supply chain of critical materials for energy and digital transformation, the European Commission has developed the strategic plan called the Critical Raw Materials Act.

Green Deal bibliography

Green Supply Chain