ANNEX II Critical raw materials

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ANNEX II

Critical raw materials

Section 1

List of critical raw materials

The following raw materials shall be considered critical:

Section 2

Calculation of economic importance and supply risk

where:

s denotes the NACE (2-digit level) sectors of the economy;

As is the share of end use of the assessed raw material in a NACE (2-digit level) sector (using Union values when available, global shares otherwise);

Qs is the value added of the relevant sector at the NACE (2-digit level), as a share of the total economy;

SIEI is the substitution index related to economic importance.

where:

i denotes an individual substitute material;

a denotes an individual application of the raw material;

SPPi,a; EI is the Economic Importance performance parameter of each substitute material, i, compared to the assessed raw material, based on technical performance, including functionality, and cost performance, for each application, a;

Sharea is the share of the raw materials in an end-use application;

Sub_sharei,a is the sub-share of each substitute material within each application.

where:

GS denotes the global annual production of the assessed raw material;

EU_sourcing denotes the actual sourcing of the supply to the Union, i.e. Union domestic production plus Union imports from third countries or from OCTs;

HHI is the Herfindahl-Hirschman Index (used as a proxy for concentration of supply across countries);

WGI is an index based on the scaled World Bank Worldwide Governance Indicators (used as a proxy for country governance);

tc is the trade parameter adjusting WGI, which shall be determined taking into account potential export taxes (possibly mitigated by a trade agreement in force), physical export quotas or export prohibitions imposed by a country, c.

EoLRIR is the end-of-life recycling input rate, meaning the ratio of secondary material inputs (recycled from old scrap) to all inputs of a raw material (primary and secondary);

SISR is the substitution index related to supply risk;

IR is import reliance.

where:

c denotes the countries supplying the assessed raw material;

Sc is the share of country c in the supply (GS or EU_sourcing) of the assessed raw material;

WGIc is an index based on the scaled World Bank Worldwide Governance Indicators of country c;

tc is the trade parameter of a country adjusting the WGI, which shall be determined taking into account potential export taxes (possibly mitigated by a trade agreement in force), physical export quotas or export prohibitions imposed by a country c.

where:

i denotes an individual substitute material;

a denotes an individual application of the candidate material;

SPPi; SR is the Supply Risk performance parameter of each substitute material, i, based on its global production, criticality and economic significance (primary product, co-product, by-product);

Sharea is the share of the candidate materials in an end-use application;

Sub_sharei,a is the sub-share of each substitute material within each application.

The calculations of the formulas in this Section shall be based on an average of the most recent five years for which data is available. The priority, quality and availability of data shall be taken into account.