European Union (EU) imports of ferro-tungsten and ferro-niobium are heavily concentrated, with China and Brazil supplying the largest shares of those markets in 2025. Yet these and two other strategically important ferroalloys are excluded from the current scope of the EU Carbon Border Adjustment Mechanism (CBAM). 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.
This difference matters to European producers facing carbon-related costs under the EU Emissions Trading System (EU ETS) while competing with imports. It also raises questions about how the bloc’s carbon border policy relates to efforts to expand domestic processing capacity and reduce reliance on concentrated foreign suppliers.
Import concentration and strategic supply risks
European trade data for 2025 show that China accounted for 68% of EU ferro-tungsten imports by value, while Brazil supplied 83% of ferro-niobium imports. These figures highlight the concentration of supply in two important ferroalloy markets.
These materials have demanding industrial uses. Tungsten alloys support tooling and high-performance manufacturing, while 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; these materials can also support defence-related supply chains.
The supply 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. Under the current CBAM framework, the treatment of these ferroalloys is not consistent: strategically important products 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 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.
This distinction does not mean that every excluded product has a higher carbon footprint than covered alternatives. Actual emissions depend on production technology, energy sources and facility efficiency. However, comparable industrial processes can receive different carbon-cost treatment according to the product’s customs classification.
For European manufacturers, the difference creates uncertainty about how far CBAM can support domestic production while limiting carbon leakage. The mechanism’s existing product boundaries reflect earlier scope decisions, rather than a comprehensive ranking of ferroalloys by emissions intensity or strategic importance.
Investment considerations for European processing
The current exclusions also influence 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 on long-term offtake agreements, supply-security premiums, recycling opportunities, government support and the technical specifications required by industrial customers.
For developers, reliable raw material supplies and access to specialised markets may matter more than any anticipated benefit from carbon border measures. Investors must also consider the carbon costs borne by European operations and the competitive position of imported products that remain outside CBAM. These factors are particularly relevant to projects intended to reduce reliance on concentrated supply chains while establishing commercially viable processing capacity in Europe.
Potential focus of future CBAM 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.
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 are likely 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 will help determine whether future CBAM revisions can better support Europe’s decarbonisation and critical raw materials objectives.
