The European Union’s Carbon Border Adjustment Mechanism (CBAM) does not currently cover four strategically important ferroalloys. EU imports of ferro-tungsten and ferro-niobium are heavily concentrated, with China and Brazil supplying the largest shares of those markets in 2025. The CBAM scope covers ferro-manganese, ferro-chromium and ferronickel, while ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium fall outside the relevant Chapter 72 scope.
This product boundary affects European producers that face carbon-related costs under the EU Emissions Trading System (EU ETS). It also links to questions about how the bloc’s carbon border approach intersects with plans to expand domestic processing capacity and reduce reliance on concentrated foreign suppliers. Under the current framework, strategically important products can remain outside CBAM even when their production involves energy-intensive, high-temperature metallurgical processes.
Concentration in EU imports for tungsten and niobium
European trade data for 2025 show that China accounted for 68% of EU ferro-tungsten imports by value. Brazil supplied 83% of EU ferro-niobium imports. These figures point to supply concentration in two ferroalloy markets that are described as strategically important.
Tungsten alloys are used for tooling and high-performance manufacturing. Niobium is used in specialised steels and other advanced materials. Vanadium and molybdenum contribute to steel performance and are used in construction, transport and other industrial sectors, with the materials also noted as relevant to defence-related supply chains.
Critical Raw Materials Act context
The supply picture is tied to the EU’s Critical Raw Materials Act, which aims to strengthen European supply chains and reduce reliance on individual third countries for strategic raw materials. The current CBAM framework is described as not consistent in its treatment of these ferroalloys. Strategically important products can remain outside the mechanism despite their energy-intensive production processes.
The exclusion is presented as a factor that can affect competition between European manufacturers and overseas suppliers. EU producers may bear carbon-related costs through the EU ETS while imports of ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium are not subject to a CBAM certificate obligation under the current scope. The difference in treatment depends on customs classification rather than an assumption that excluded products always have higher emissions than covered alternatives.
Carbon-cost differences tied to customs classification
The distinction between covered and excluded products can lead to different carbon-cost treatment for comparable industrial processes. Actual emissions are described as depending on production technology, energy sources and facility efficiency. Even where industrial processes are similar, product classification determines whether CBAM obligations apply at the border.
For European manufacturers, this creates uncertainty about how far CBAM can support domestic production while limiting carbon leakage. The mechanism’s existing product boundaries are described as reflecting earlier scope decisions rather than a comprehensive ranking of ferroalloys by emissions intensity or strategic importance.
Implications for investment in processing capacity
The exclusions also influence investment decisions for specialised processing. Companies considering European tungsten conversion, niobium-alloy production or other specialised ferroalloy processing cannot assume that strategic importance alone will provide CBAM protection against competing imports. Project economics may instead depend on long-term offtake agreements, supply-security premiums, recycling opportunities, government support and customer technical specifications.
For developers, reliable raw material supplies and access to specialised markets may be more significant than anticipated benefits from carbon border measures. Investors are also expected to consider the carbon costs borne by European operations alongside the competitive position of imported products that remain outside CBAM. These factors are described as particularly relevant for projects intended to reduce reliance on concentrated supply chains while establishing commercially viable processing capacity in Europe.
Possible direction for future CBAM product reviews
Extending CBAM coverage to additional ferroalloys would require policymakers to weigh competing priorities. A broader scope could make carbon-cost treatment more consistent and potentially support European processing, but adding products would increase administrative complexity and could raise input costs for downstream manufacturers. Excluding strategically important materials could also weaken incentives for domestic investment where carbon costs materially affect competitiveness.
Future discussions are expected to focus increasingly on individual product codes and their industrial applications rather than treating the ferroalloy sector as a uniform category. The exclusions for tungsten, vanadium, molybdenum and niobium illustrate a broader limit of the current framework: carbon regulation, strategic dependence and industrial competitiveness do not always align at the EU customs border. How policymakers address these gaps is described as relevant to whether future CBAM revisions can better support Europe’s decarbonisation and critical raw materials objectives.