The ongoing energy transition requires a large-scale and accelerated switch to renewable energy generation and the electrification of transportation and industry, in order to reduce greenhouse gas emissions. Those technologies will result in a significant increase in demand for a range of minerals and metals, including copper and aluminium (for electricity transmission), cobalt, nickel, lithium, lead, manganese and graphite (for batteries), rare earths (for permanent magnets used in wind turbines and electric batteries) and even steel (for use in wind turbines). The International Energy Association (IEA) estimates that offshore wind requires 200 tonnes of critical minerals per TWh of power generation, onshore wind 130 tonnes/TWh, or photovoltaic solar 120 tonnes/TWh, as compared to 7 tonnes/TWh for coal or 8 tonnes/TWh for gas. That implies a huge increase in mineral demand.
This poses a number of challenges. Many of those minerals are relatively scarce, costly to extract, and their mining, processing and transportation to consumer markets present ESG issues and can be carbon intensive. The latter factors are particularly important because they might to an extent undermine public support for the energy transition and for switching away from fossil fuels.
In that context, industry and policy makers are increasingly attentive to the potential for recycling and the circular economy to reduce primary mineral demand, thereby reducing energy demand and carbon emissions, and potentially shortening and simplifying supply chains.
This ties in with a more general policy push towards a circular economy – a model of production and consumption which seeks to keep resources in use for as long as possible by facilitating their durability, reuse, regeneration and recycling and disincentivising their obsolescence and disposal. The EU has been at the forefront of this movement, but the UK and other developed economies are also increasingly promoting circular economy policies and goals.
One of the central features of EU’s Green Deal package was its Circular Economy Action Plan, which was supplemented by a raft of legislative proposals for implementing that plan. Some of these recently entered into force in the EU. Meanwhile, the central UK government and the devolved administrations have adopted strategies, plans, policies or bills relating to the circular economy in each of the UK’s constituent nations.
While the existing circular economy framework for minerals is currently couched in quite general and aspirational terms, the direction of travel in both the EU and the UK is clear. More granular requirements on the minimum recycled content of newly manufactured products, targets for re-manufacturing, repair, recycling and reuse, as well as rules on waste collection and recovery are to be anticipated (and in some cases are already set out in legislation).
The EU’s circular economy for minerals
The existing framework
The existing circular economy framework set out in the Waste Framework Directive 2008 (as amended) (“WFD”) includes some general requirements, including EU Member State level recycling targets, but relatively few of these specifically target minerals. Those that do are non-prescriptive and therefore confer a wide discretion for Member States to determine how to deal with the circularity of minerals. The WFD requires Member States to:
- take measures to prevent waste generation and in doing so to specifically “target products containing critical raw materials” (Art.9(1)(c));
- reduce waste generation in processes related to industrial production, extraction of minerals, manufacturing, construction and demolition, taking into account best available techniques (Art.9(1)(f));
- ensure that their competent authorities establish one or more waste management plans which should contain special arrangements for “waste containing significant amounts of critical raw materials” (Art.28(3)(c)); and
- ensure the establishment of sorting systems for construction and demolition waste for among other things, “mineral fractions (concrete, bricks, tiles and ceramics, stones)” (Art.11(1)).
The indirect nature of these requirements means that obligations relating to the circularity of critical raw materials are jurisdiction-specific, and there has been a relatively low level of harmonisation in relation to minerals re-use generally (although binding targets exist for certain specific sectors – see below).
The waste resulting from prospecting, extraction, treatment and storage of mineral resources is covered by the Mineral Waste Directive 2006/21/EC (as amended) (“MWD”). It requires EU Member States to ensure that operators draw up a waste management plan for the minimisation, treatment, recovery and disposal of extractive waste, taking into account the principle of sustainable development; as well as to encourage the recovery of extractive waste by means of recycling, reusing or reclaiming such waste, where this is environmentally sound in accordance with existing environmental standards. These rules cover the materials removed to gain access to the commercial mineral resources, rather than the mineral resources themselves (e.g., topsoil, overburden waste rock and tailings).
Other EU sector-specific legislation, such as the Directive on waste electrical and electronic equipment (“WEEE”) 2012/19/EU, imposes Member State level targets on the collection and recycling of WEEE in certain categories. A regime for the separate collection and treatment of WEEE is set up pursuant to the WEEE Directive whereby producers are responsible for funding these activities, as well as for the cost of information campaigns for consumers, data gathering and reporting on relevant metrics. The Batteries Directive 2006/66/EC follows a very similar pattern in relation to recycling targets and the extended producer responsibility for the separate collection and the treatment of batteries.
The direction of travel
As part of the Circular Economy package, several measures have been introduced in the EU to promote circularity in specific industry sectors, including some impacting on minerals and critical raw materials.
Among these, the recently adopted Batteries Regulation 2023/1542 (which will repeal and replace the Batteries Directive mentioned above), is significant. It contains a dedicated chapter with sustainability measures, which include requirements to incorporate in newly manufactured batteries a minimum percentage of recycled cobalt, lead, lithium or nickel. The targets vary based on the battery and mineral type, but range between 60% and 85% recycled content. Importantly, these requirements are applicable directly to manufacturers rather than being imposed on Member States, meaning economic actors in the supply chain will be directly responsible for their achievement and will not be allowed to sell or use non-compliant batteries after a certain date. These requirements are in addition to the recycling efficiency targets imposed by the Regulation which require recycling of between 65% and 80% by average weight by 2025, depending on the type of battery (progressively increasing until 2031). Significantly, there are targets for the recovery of raw materials, ranging from 50% to 90% by 2027, but increasing to between 80% and 95% recovery by 2031 for each of cobalt, lead, lithium or nickel.
Another significant proposal is for a regulation on ecodesign for sustainable products (2022/0095(COD) which is currently making its way through the advanced stages of the legislative process. While a final text is yet to be published, the original proposal envisages that the European Commission will adopt secondary legislation imposing ecodesign requirements for specific product groups which would include obligations regarding recycled content, possibility of remanufacturing and recycling; and possibility of recovery of materials. As the proposal is yet to be adopted and it will serve as a framework for subsequent statutes, no further clarity is available at present, but it is to be expected that requirements similar to those under the Batteries Regulation 2023/1542 will be imposed also in relation to various other product categories, including as to minimum recycled raw materials content in new products. As with the Batteries Regulation, compliance will be a requirement for placing new products on the market.
Further, in its 2020 Communication on Critical Raw Materials, the Commission recognised the need to reduce dependency on primary critical raw materials through circular use of resources, sustainable products and innovation. It noted that the existing framework was insufficient and that “secondary production makes only a marginal contribution” towards the critical raw materials needed in renewable energy technologies or high-tech applications,.
Acting on that, the Commission has published a proposed regulation on the end-of-life, collection, recycling and recovery of critical raw materials (“Critical Raw Materials Act”), which covers a variety of materials including lithium, copper, manganese and cobalt. The proposed Act contains a range of measures to increase the use of recycled critical raw materials in manufacturing, including:
- allowing Member States to take recycled content into account in public procurement criteria (Art.25(1);
- requiring those placing on the market permanent magnets exceeding 0.2kg to publish online the share of neodymium, dysprosium, praseodymium, terbium, boron, samarium, nickel and cobalt recovered from post-consumer waste present in the permanent magnets incorporated in the product (Art.28(1)(c)); and
- enabling the Commission to adopt minimum recycled-content requirements from 2030 (Art.28(3)).
There are also proposed measures to improve the recyclability of critical raw materials, including a requirement to increase the technological maturity of recycling technologies for critical raw materials (Art.25(1)(d)) and to support the collection of waste containing critical raw materials with a view to recycling/reuse. That includes a requirement for Member States to implement measures to increase the collection of waste with high critical raw materials recovery potential and ensure their introduction into the appropriate recycling system (Art.25(1)(a)). The proposal, which was adopted by the Commission in March 2023, is currently making its way through the legislative process.
There are various other published or expected proposals for new legislation forming part of the Circular Economy package. The European Commission is consulting on a revision of the EU WEEE Directive, which could result in a further tightening of recycling and recovery requirements. The Waste Framework Directive is also in the process of being amended for the second time in just five years, with a targeted revision aimed at textiles and food waste. However, it is likely that further revisions of the Directive will be introduced the short-to-mid-term to promote the objective of the circular economy.
The UK’s circular economy for minerals
The existing framework
In the UK, various circular economy measures were integrated into legislation via The Waste (Circular Economy) (Amendment) Regulations 2020 (the “Circular Economy Regulations”), which introduced into The Waste (England and Wales) Regulations 2011 a requirement for waste management plans to contain special arrangements for “waste containing significant amounts of critical raw materials” (Sch.1, Pt.2) and measures to prevent critical raw materials from becoming waste (Sch.1, Pt.5). The Circular Economy Regulations also amend The Environmental Permitting (England and Wales) Regulations 2016 (the “EP Regulations”) so that environmental permits authorising a waste incineration plant or landfill are deemed to contain a condition that the operator must not accept waste metal if it has been separately collected for re-use or recycling (Sch.9-10).
The direction of travel
The circular economy has been the subject of numerous recent policy announcements in each of the UK’s constituent nations. England’s Waste Prevention Programme, published on 28 July 2023, commits to exploring the role that product passports could play in relation to a product’s critical mineral content (e.g. rare earth elements, cobalt and lithium). In Wales, the Beyond Recycling 2021 strategy emphasises the importance of reducing the consumption of raw materials. Scotland introduced a Circular Economy Bill on 13 June 2023, although it contains no specific provisions on critical minerals. Northern Ireland’s Circular Economy Strategy – which was subject to a consultation process in early 2023 - contains only a vague policy aim of capitalising on the opportunity to create a Circular Economy for critical minerals, without committing to legislate on the topic.
On the other hand, the UK government announced in its Critical Minerals Strategy—and subsequently in the 2023 Critical Minerals Refresh—that it will be exploring regulatory interventions to promote the re-use, recycling and recovery of critical minerals, through expected consultations on waste electrical and electronic equipment (“WEEE”) and end-of-life batteries.
On 24 August 2023, the UK government published a call for evidence on the scope and priorities for the UK Battery Strategy. While it emphasises the importance of the circular economy and recycling and recovery of raw materials used in them, no concrete measures appear to be proposed at this stage (other than a bi-lateral agreement with the US to cooperate in this area). It is likely that the responses to the call for evidence will feed into a future consultation on revisions to the applicable UK regulatory regime.
It is clear from these examples that the circular economy regulatory and policy framework for critical minerals is rapidly evolving. These developments are replicated across many other jurisdictions, and should be considered in the context of heightened competition between consumer nations for access to minerals and materials that will be crucial for the energy transition.
It is important for companies in the renewables, batteries and metals / materials sectors to accompany this changing regulatory landscape. They are likely to be directly affected. However, it is also an important consideration for those in the mining sector, because demand for primary minerals will eventually be affected by any increase in recycling or reuse of existing materials.
The current potential for recycling to substitute primary minerals is relatively limited because of the recent rapid growth in large scale batteries and renewables – there are relatively small volumes of recoverable materials. However, in 10 to 20 years, those recoverable minerals will experience similar accelerated growth rates. If their recycling potential is maximised, that could constitute a significant proportion of new demand for those minerals. However, industry and policy makers need to act now to ensure that today’s products are eventually recyclable, and that recycling processes are in place in good time.
If they achieve that, the E.U., U.K. and other consumer nations may have access to a relatively energy efficient, secure and low impact source of the minerals they will need for the next generation of clean energy technologies.