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EC Critical Raw Materials Act is major boost for Euro Manganese

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Euro Manganese Inc. [ASX:EMN | TSXV:EMN] has welcomed the European Commission’s proposed Critical Raw Materials Act published on March 16, 2023, which outlines how the European Union intends to ensure a secure and sustainable supply of critical raw materials that are essential in supporting the energy transition. The company said it supports this proposed legislation and believes its Chvaletice Manganese Project in the Czech Republic is likely to benefit as outlined below.

High-purity manganese (battery grade) is to be included as a strategic raw material. “Manganese – Battery Grade” was added to the list of critical raw materials identified in the Act, which are those considered to be of high economic importance and high supply risk to the EU.

“Manganese – Battery Grade” was also identified as a strategic raw material, which recognises its importance in meeting Europe’s decarbonisation efforts and in defence and space applications.

Europe currently relies on imports of high-purity manganese to meet 90% of its demand. The Euro Manganese Chvaletice Project expects to deliver almost 50 Kt of high-purity manganese metal per year when in full production, meeting approximately 25% of European demand and helping the EU reduce its trade reliance on this strategic raw material.

The Chvaletice Project supports the EU requirement for local extraction, processing, and use of recycled raw materials. The Act sets out clear benchmarks for domestic mining, processing and recycling. By 2030, of all critical raw materials consumed in the EU each year:

  • 10% to be mined from European Union sources;
  • 40% to be processed within the European Union; and
  • 15% to come from recycled materials.

Euro Manganese says it believes the Chvaletice Project satisfies all three of these requirements. The project’s high-purity manganese products will be extracted and refined in the Czech Republic. Furthermore, as the project involves reprocessing manganese contained in historic mine waste to produce high-purity manganese for the EV battery supply chain, its products may also qualify as recycled materials. In addition, Euro Manganese has begun evaluation of re-purification of manganese rich by-products from battery recycling.

The new concept of Strategic Projects in the EU

The Chvaletice Project meets criteria for recognition as a Strategic Project. To strengthen the EU’s raw materials value chain, the CRMA establishes the concept of Strategic Projects, which are those that will make a meaningful contribution to the security of the EU’s supply of strategic raw materials. Other recognition criteria include:

  • Project is technically feasible and production volumes can be estimated with a sufficient level of confidence.
  • Project will be implemented sustainably: minimization of environmental impacts, use of socially responsible practices, creation of quality jobs, and meaningful engagement with local communities.
  • Project will have cross-border benefits beyond the Member State concerned.

A European Critical Raw Materials Board will be established to evaluate applications for recognition as a Strategic Project. The Board will submit an opinion to the Commission who will then issue a decision on the recognition of a project as a Strategic Project within 60 days.

Of note for Euro Manganese, the Commission may prioritise the processing of applications for projects active on specific stages of the value chain to ensure a balanced representation of Strategic Projects for all strategic raw materials and to achieve the mining and processing benchmarks identified in the Act.

The only manganese resource in the EU

As the only known manganese resource in the EU at this time, Euro Manganese believes the Chvaletice Project should be prioritised. The company says it intends to submit an application for recognition of the Chvaletice Project as a Strategic Project as soon as the application process opens.

Strategic Projects qualify for priority permitting status. The CRMA outlines a “one stop shop” where Member States will designate a single national authority responsible for facilitating and coordinating the permit-granting process. Strategic Projects are to be given priority status and for projects that entered the permitting process before being designated as Strategic Projects.

Support for access to funding and facilitating offtake agreements for Strategic Projects. The CRMA proposes to bring Member States and the Commission together with relevant financial institutionsand InvestEU to discuss and help coordinate access to funding for Strategic Projects and to facilitate offtake agreements.

Sources of capital identified in the Act include:

  • The European Investment Bank (“EIB”) and the European Bank for Reconstruction and Development (“EBRD”);
  • Private financial institutions;
  • Member State instruments and programs, including national banks and institutions; and
  • Relevant European Union funding and financing programs.

Of note is the Commission has recently adapted State Aid rules to allow further flexibility for Member States to grant aid, including for the production of critical raw materials related to key net-zero technologies.

Dr. Matthew James, President & CEO of Euro Manganese, explained further: “Securing access to critical raw materials to support the energy transition has never been more important. We welcome the European Commission’s proposed Critical Raw Materials Act and the opportunities it presents for the Chvaletice Manganese Project. We remain focused on advancing the Chvaletice Project in order to provide the European battery value chain with a low-carbon, secure source of supply of high purity manganese.”

Podcast: Q&A with Euro Manganese CEO Dr Matt James

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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