The EU’s Carbon Border Adjustment Mechanism (CBAM) covers some ferroalloys but excludes ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium from the relevant Chapter 72 scope. Ferro-manganese, ferro-chromium and ferronickel are included. The difference leaves a regulatory gap for materials used in advanced manufacturing and industrial supply chains.
Ferroalloy imports show concentrated supply
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.
These materials serve demanding industrial uses. Tungsten alloys are used in tooling and high-performance manufacturing, while niobium goes into specialised steels and other advanced materials. Vanadium and molybdenum contribute to steel performance and are used in construction, transport and other industrial sectors; these materials can also support defence-related supply chains.
The supply concentration 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 the current CBAM framework does not treat these ferroalloys consistently. Strategically important products can remain outside the mechanism despite production involving energy-intensive, high-temperature metallurgical processes.
Different CBAM treatment creates uneven carbon costs
The exclusions 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 excluded ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium do not carry a CBAM certificate obligation under the current scope.
This difference does not mean that every excluded product has a higher carbon footprint than covered alternatives. Emissions vary according to production methods, energy sources and facility efficiency. However, comparable industrial processes can receive different carbon-cost treatment depending on the product’s customs classification.
For European manufacturers, the distinction creates uncertainty about how far CBAM can support domestic production while limiting carbon leakage. The existing product boundaries reflect earlier scope decisions, rather than a comprehensive ranking of ferroalloys by emissions intensity or strategic importance.
Exclusions factor into European processing investment
The current exclusions also shape 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 from competing imports.
Instead, project economics may rely more on long-term offtake agreements, supply-security premiums, recycling opportunities, government support and the technical specifications industrial customers require.
For project developers, reliable raw-material supplies and access to specialised markets may matter more than any expected benefit from carbon border measures. Investors also need to account for carbon costs at European facilities and the competitive position of imported products that remain outside CBAM. These factors are particularly relevant to projects seeking to reduce reliance on concentrated supply chains while establishing commercially viable processing capacity in Europe.
Future reviews may examine ferroalloys individually
Extending CBAM to more ferroalloys would require policymakers to balance competing priorities. Broader coverage 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 domestic investment incentives 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 rely on specialised alloys.
Future discussions may focus increasingly on individual product codes and industrial applications, rather than treating ferroalloys as a single uniform category. The exclusions for tungsten, vanadium, molybdenum and niobium illustrate a broader 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.