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. Ferro-manganese, ferro-chromium and ferronickel are covered, while ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium fall outside the relevant Chapter 72 scope.
The CBAM coverage gap affects how European producers compete when they face carbon-related costs under the EU Emissions Trading System (EU ETS). It also links to efforts 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 of EU imports in 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 concentration risks in two key ferroalloy markets.
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 potential relevance to defence-related supply chains.
Critical Raw Materials Act context for CBAM coverage
The import concentration picture 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. The current CBAM framework treats these ferroalloys inconsistently in relation to their strategic role. Strategically important products can remain outside the mechanism despite energy-intensive production processes.
This mismatch can affect how carbon policy aligns with supply security objectives. It also shapes how European industry evaluates the role of carbon border measures alongside broader efforts to diversify inputs. The source material links these issues directly to the CBAM product boundaries set under the current scope.
Different carbon-cost treatment for covered versus excluded alloys
The exclusion of selected ferroalloys can change competitive conditions 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 source material states that exclusion does not automatically mean every covered alternative has a lower carbon footprint. Emissions depend on production technology, energy sources and facility efficiency. It also notes that comparable industrial processes can receive different carbon-cost treatment based on product customs classification.
Implications for investment in processing capacity
The current exclusions influence investment decisions for specialised processing projects in Europe. 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 rely on long-term offtake agreements, supply-security premiums, recycling opportunities, government support and technical specifications required by industrial customers. Developers may place more weight on reliable raw material supplies and access to specialised markets than on anticipated benefits from carbon border measures.
Investors also need to account for carbon costs borne by European operations and the competitive position of imported products that remain outside CBAM. The source material highlights that these factors are particularly relevant for projects intended to reduce reliance on concentrated supply chains while establishing commercially viable processing capacity in Europe.
Potential direction of 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.
The source material also says excluding strategically important materials could weaken incentives for domestic investment where carbon costs materially affect competitiveness. Future discussions are expected to focus more 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 limits within the current framework described as misalignment between carbon regulation, strategic dependence and industrial competitiveness at the EU customs border. The way policymakers address these gaps is presented as relevant to whether future CBAM revisions can better support Europe’s decarbonisation and critical raw materials objectives.