The EU’s carbon border mechanism, the Carbon Border Adjustment Mechanism (CBAM), covers some ferroalloys but not others, leaving four strategically important materials outside its current scope. Ferro-manganese, ferro-chromium and ferronickel are covered, while ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium are excluded from the relevant Chapter 72 scope. This creates a regulatory gap for materials used in advanced manufacturing and industrial supply chains.
EU Imports Show Concentrated Ferroalloy Supplies
European trade data for 2025 show concentrated supply in two important ferroalloy markets. China accounted for 68% of EU ferro-tungsten imports by value, while Brazil supplied 83% of ferro-niobium imports. Both materials are used in demanding industrial applications.
Alloys based on tungsten support tooling and high-performance manufacturing, while niobium is used in specialised steels and other advanced materials. Vanadium and molybdenum also contribute to steel performance and are used in construction, transport and other industrial sectors. These materials can also support defence-related supply chains.
This supply dependence is relevant 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. Yet CBAM does not apply consistently across these ferroalloys. Products with strategic importance can remain outside the mechanism even when their production involves energy-intensive, high-temperature metallurgical processes.
Different Carbon-Cost Treatment for Covered and Excluded Products
The exclusion of selected ferroalloys can affect competition between European manufacturers and overseas suppliers. EU producers may incur carbon-related costs under the EU Emissions Trading System (EU ETS), while imports of ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium do not carry a CBAM certificate obligation under the current scope. The difference does not mean that every excluded product has a higher carbon footprint than covered alternatives.
Actual emissions vary according to production methods, energy sources and facility efficiency. However, the regulatory distinction means comparable industrial processes can receive different carbon-cost treatment depending on a product’s customs classification. For European manufacturers, this creates uncertainty over the extent to which CBAM can support domestic production while limiting carbon leakage.
The mechanism’s existing product boundaries reflect earlier decisions about its scope, rather than a comprehensive ranking of ferroalloys by emissions intensity or strategic importance. As a result, carbon costs can differ across materials even where their production processes are comparable. These boundaries also shape the competitive position of EU manufacturers relative to imports.
Exclusions Shape Investment Conditions
The current exclusions also affect investment decisions. 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 more heavily on long-term offtake agreements, supply-security premiums, recycling opportunities and public-sector support, as well as the technical specifications required by industrial customers.
For developers, reliable raw-material supplies and access to specialised markets may be more decisive than any expected benefit from carbon border measures. Investors must also account for carbon costs borne by European operations and the competitive position of imported products that remain outside CBAM. These considerations are particularly relevant to projects intended to reduce dependence on concentrated supply chains while establishing commercially viable processing capacity in Europe.
Future Reviews May Address Individual Ferroalloys
Extending CBAM coverage to more 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. Keeping strategically important materials outside the mechanism could also weaken incentives for domestic investment where carbon costs materially affect competitiveness.
The policy challenge is to balance carbon leakage prevention, strategic supply security and the competitiveness of European industry without imposing disproportionate costs on manufacturers that depend on specialised alloys. Future discussions may increasingly focus 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 limitation 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 will help determine whether future CBAM revisions can better support Europe’s decarbonisation and critical raw materials objectives.