14 Raw materials initiative
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16053/08
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COM(08) 699
| Commission Communication: Raw materials initiative — meeting our critical needs for growth and jobs in Europe
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| Legal base | — |
| Document originated | 4 November 2008
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| Deposited in Parliament | 24 November 2008
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| Department | Business, Enterprise & Regulatory Reform
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| Basis of consideration | EM of 10 December 2008
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| Previous Committee Report | None
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| To be discussed in Council | First half of 2009
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
14.1 According to the Commission, access to, and affordability
of, raw materials are crucial for the sound functioning of the
Community economy, and it believes that, with rising energy costs
and the Community's dependence on energy imports already high
on the political agenda, the comparable challenges arising on
certain non-energy raw materials have not yet received full attention.
It notes that the Community has many raw material deposits, but
that on the one hand their exploitation and extraction face increased
competition from other land uses as well as technological limitations,
whilst on the other, imports of the strategically important raw
materials upon which the Community is highly dependent are increasingly
affected by market distortions.
The current document
14.2 It has therefore put forward this Communication as a first
step in enabling the Community to move towards a more resource-efficient
and sustainable approach to non-energy raw materials,[57]
and as a basis for it to form a common approach in international
discussion in this area. In doing so, it addresses the subject
under two main headings.
SUPPLY AND DEMAND OF NON-ENERGY RAW MATERIALS
14.3 The Commission notes that the Community is self-sufficient
in construction materials, and that it is one of the world's largest
producers of many industrial minerals, whilst in most cases remaining
a net importer. It adds that the Community relies heavily on secondary
raw materials, with the use of recycled scrap having increased
significantly in recent decades (and now representing 40-60% of
the input toward Community metal production), but it also points
out that access to scrap is becoming more difficult, partly because
many end-of-life products do not enter recycling channels but
are instead exported illegally outside the Community.
14.4 The Commission notes that the Community is highly
dependent on imports of metals, particularly of the "high-tech"
variety (such as cobalt, platinum and titanium), which are needed
only in small quantities, but are increasingly essential to the
development of technologically sophisticated products, not least
those boosting energy efficiency and reducing greenhouse gas emissions.
In particular, it identifies three main reasons why some of these
materials are particularly critical — their significant
economic importance for key sectors; the risk associated with
the high level of import dependence and concentration of supply
in particular countries, not least those which do not have a market-based
system, or which are politically or economically unstable; and
the current lack of substitutes.
14.5 The Commission also addresses the long-term
global market prospects. It says that, although there is no indication
of an imminent physical shortage of the majority of raw materials,
a number of fundamental changes are threatening the competitiveness
of European industry. For example, although the current financial
crisis has led to a slowdown, it believes there is likely to be
high pressure on demand in future, with supply lagging behind,
despite recent increases in exploration expenditure. In addition,
it suggests that many emerging economies are pursuing industrial
strategies aimed at protecting their resource base, and that these
include measures[58]
which distort international trade in raw materials and place many
Community sectors at a competitive disadvantage, particularly
where countries benefit from reduced or duty-free access to the
Community market for finished industrial products. Other factors
identified by the Commission include strategies pursued by emerging
countries aimed at securing privileged access to the raw materials
of resource-rich countries; violent conflicts in some producing
countries, often fuelled by competition for the control of natural
resources; vertical integration; and disregard for labour rights
and environmental protection.
14.6 The Commission concludes that it is important
that the Community should not miss the opportunity to make more
of its domestic capacities or develop substitutes. It notes that
there are still some regulatory constraints which jeopardise the
future development of the Community's extractive industry, and
it suggests that strategies are needed to safeguard access to
known and economically viable mineral deposits, and to enhance
resource efficiency, recycling and re-use. It adds that big economic
opportunities exist if a range of barriers — such as lack
of information, and inadequate waste management and collection
systems — for the further development of recycling markets
are overcome.
AN INTEGRATED STRATEGY
14.7 The Commission points out that countries such
as Japan and the United States have recognised their critical
dependence on particular raw materials, and are pursuing specific
policies to safeguard their supply. However, it says that, although
some Member States are also doing this, there has so far been
no integrated response at Community level, and it therefore proposes
that such a strategy should now be agreed. This would as a matter
of priority define critical raw materials for the Community, and
would be based on three pillars.
Ensuring access to raw materials from international
markets under the same conditions as other industrial competitors
14.8 The Commission says that the Community should
actively pursue raw materials diplomacy with a view to securing
access to raw materials, including more effective coordination
and coherence between its external policies, such as trade and
development, and the management of its strategic partnerships,
particularly with Africa, emerging oil-rich countries such as
China and Russia, and resource-dependent countries such as the
United States and Japan. In addition, it advocates increased international
cooperation, including awareness raising in such fora as the G8,
OECD, UNCTAD and UNEP and organisations such as the World Bank
and International Seabed Authority. It suggests that this might
include dialogues on deep sea mining and the Arctic region, and
on the security of international trade routes for raw materials.
14.9 The Commission also suggests that access to
primary and secondary raw materials should become a priority in
the Community's trade and regulatory policy, covering such areas
as rules on sustainable access, the elimination of trade-distorting
measures, the use of anti-dumping measures to address any such
distortions, the development of open and well-functioning raw
material markets, keeping the Community tariff regime under review,
and the full application of its competition rules.
14.10 The Commission also notes the importance of
development policy, given that many imported raw materials are
located in developing countries in Africa and elsewhere. In particular,
it suggests that this should include the encouragement of good
governance, the promotion of a sound investment climate which
helps to increase supply, and the promotion of the sustainable
management of raw materials.
Setting the right framework conditions within
the Community to foster the sustainable supply of raw materials
from European sources
14.11 The Commission says that, in order to facilitate
sustainable supplies of raw materials from European sources, it
is important to have the right framework conditions, with access
to land being a key requirement for the extractive industry. However,
it points out that this is being constrained by other land uses,
and that there is often a lengthy delay between discovery and
extraction. It also believes there is a need for an improved knowledge
base of mineral deposits within the Community, and that national
geological surveys should become more actively involved in land
use planning. It therefore proposes to provide a platform for
the exchange of best practice between Member States, and it also
recommends better networking between national surveys to improve
the interoperability and dissemination of data. In addition, it
will look into developing a medium to long term strategy for integrating
sub-surface components into the land service of Kopernicus,[59]
which it says can feed into and improve the quality of land-use
planning.
14.12 The Commission also points out that most relevant
Community legislation is horizontal, with the Natura 2000 programme
being of particular significance. It notes concerns over the sometimes
competing objectives between this programme and the development
of extractive industries, and says that, together with Member
States, it will be developing guidelines to address this, which
are expected to be finalised by the end of 2008.
14.13 Finally, the Commission says that it will promote
in its Seventh Framework Programme research projects which focus
on the extraction and processing of raw materials, using various
European Technology Platforms: that, in view of its importance
in some more remote regions, cohesion funding, particularly under
the European Regional Development Fund, is available to support
raw material exploration and exploitation; and that steps are
needed to address skill shortages and a lack of public awareness.
Reducing the Community's consumption of primary
raw materials, and decreasing relative import dependence
14.14 The Commission notes the importance of reducing
the Community's dependence on primary raw materials through resource
efficiency, recycling, substitutes and increased use of research,
and points to the long-term aim of decoupling resource use and
economic growth contained in the Thematic Strategy on the Sustainable
Use of Natural Resources.[60]
It also notes the further impetus being given to resource efficiency
and eco-innovative production processes through the recent Action
Plan on Sustainable Consumption and Production and the Sustainable
Industrial Policy.[61]
14.15 As regards more specific action, it says that:
- it is promoting research in
resource-efficient products and production, and that the Eco-Design
Directive includes provisions for the design of resource-efficient
products;
- the increased use of secondary raw materials
contributes to security of supply and energy efficiency, but that
many end-of-life products do not enter into sound recycling channels;
- it is necessary to ensure in relation to third
countries that treatment of waste should take place under fair
and sustainable conditions, with harmonised enforcement of the
Waste Shipment Regulation;
- the recycling of secondary raw materials will
be facilitated by the full implementation and enforcement of relevant
legislation, as well as by the new provisions of the Waste Framework
Directive;
- a fair and transparent market is essential to
boost the recycling of products and materials at a significant
economy of scale; and
- renewable raw materials are a scarce resource
for European industry, and national and Community policies in
this area have potential effects on industrial users: the Commission
will therefore monitor and report on the impact of increased demand
for biomass on biomass using sectors.
14.16 The Commission concludes by saying that it
intends to launch a European raw material initiative, embracing
ten selected action points from within this Communication. These
are set out in Annex A.
The Government's view
14.17 In her Explanatory Memorandum of 10 December
2008, the Minister for Economic Competitiveness and Small Business
(Baroness Vadera) says that the
UK broadly supports the proposed strategy, which she considers
will go some way to addressing the issues which have been identified.
14.18 As regards specific aspects of the strategy,
she says that:
- as well as helping to secure
the long term and sustainable supply of valuable raw materials,
the strategy recognises the environmental and social impacts of
increased world demand, and will encourage industry in Europe,
and globally, to become more resource efficient;
- the strategy provides an effective, market-led,
approach to future security of supply which respects sustainable
development principles, and should be integrated across a range
of important policy areas (for example, trade policy, research
and development and innovation, international development, industrial
policy, training and skills, land use and planning): also, it
will need actions at international, Community, national and local
levels, working with industry and other key stakeholders;
- the UK would have serious concerns about any
proposals which favoured an interventionist approach likely to
create market distortion, or increase trade barriers in the global
supply of raw materials: it therefore supports the strategy as
positively seeking to remove such practices;
- the strategy should recognise the essentially
finite nature of, and competing demands for, land: there are a
complex range of factors, alongside the need for raw materials,
which make demands on land, and which are increasing and evolving,
and the strategy should be seen in the long-term context of the
need to optimise land use and the range of factors influencing
decision-making in this area;
- in the UK, access to land for the extraction
of raw materials is controlled through the planning system in
a manner which aims to take full account of the need for sustainable
development, with land-use plans encouraging proper consideration
by planning authorities of competing uses, and forming the basis
for determining whether individual applications should be approved;
- many developing countries are critically dependent
on the conversion of their natural mineral wealth into more sustainable
opportunities, and the UK supports them getting a fair return
from this process and adding value, since this provides the potential
to reduce their dependence on international aid;
- a significant portion of mineral production in
developing countries is carried out by small scale operators who
are extremely vulnerable to reduced market opportunities: consequently,
any measures by the Community to ensure security of supply must
recognise the potential implications for developing country suppliers
and take into account Millennium Development Goals; and
- the strategy must recognise the importance of
conserving biodiversity, particularly protected habitats and species.
Conclusion
14.19 This document provides a useful analysis
of the challenges facing the Community in this area, and, for
that reason, we are drawing it to the attention of the House.
It also sets out a number of measures which could be taken to
address the various problems, but, as these appear to be uncontroversial
and couched in general terms, we do not think that the document
requires any further consideration. We are therefore clearing
it.
Annex A
RAW MATERIALS INITIATIVE
1. Define critical raw materials.
2. Launch of EU strategic raw materials diplomacy
with major industrialised and resource rich nations.
3. Include provisions on access to and sustainable
management of raw materials in all bilateral and multilateral
trade agreements and regulatory dialogues as appropriate.
4. Identify and challenge trade distortion measures
taken by third countries using all available mechanisms and instruments,
including WTO negotiations, dispute settlement and the Market
Access Partnerships, prioiritising those which most undermine
open international markets to the disadvantage of the EU. Monitor
progress by issuing yearly progress reports on the implementation
of the trade aspects, drawing, as appropriate, on inputs from
stakeholders.
5. Promote the sustainable access to raw materials
in the field of development policy through the use of budget support,
cooperation strategies and other instruments.
6. Improve the regulatory framework related to access
to land by:
- Promoting the exchange of best
practices in the area of land use planning and administrative
conditions for exploration and extraction.
- Developing guidelines that provide clarity on
how to reconcile extraction activities in or near Natura 2000
areas with environmental protection.
7. Encourage better networking between national
geographical surveys with the aim of increasing the EU's knowledge
base.
8. Promote skills and focussed research on innovative
exploration and extraction technologies, recycling, materials
substitution and resource efficiency.
9. Increase resource efficiency and foster substitution
of raw materials.
10. Promote recycling and facilitate the use of secondary
raw materials in the EU.
57 Although the main focus is on minerals, the Commission
says that the underlying analysis and proposed measures apply
to a high degree to other non-energy raw materials, such as wood. Back
58
Such as export taxes and quotas, subsidies, price fixing, dual
pricing systems, and restrictive investment rules. Back
59
Formerly the Global Monitoring for Environment and Security (GMES). Back
60
(27141) 5032/06: see HC 34-xviii (2005-06), chapter 3 (8 February
2006). Back
61
(29874) 12026/08: see HC 16-xxx (2007-08), chapter 4 (8 October
2008). Back
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