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Regulatory Changes Affecting The Metals Industry

  • Writer: Ben Chadwick
    Ben Chadwick
  • Mar 31
  • 7 min read

Updated: Apr 4


The metals industry is heavily regulated, with businesses required to comply with various environmental and safety laws to ensure sustainable trade. Two key regulatory frameworks currently affecting the industry are REACH regulations and the Carbon Border Adjustment Mechanism (CBAM). These regulations are designed to improve transparency, safety and sustainability but can also impose significant administrative and financial burdens on businesses. In addition, in the UK, listed and/or large companies have to report their carbon emissions in their financial statements under Streamlined Energy and Carbon Reporting (SECR).



Understanding REACH Regulations and Compliance

REACH (Registration, Evaluation, Authorisation, Restriction of Chemicals) is an EU regulation that has been in place since 1 June 2007 and was adopted in the UK from 1 January 2021. Its primary aim is to manage hazardous materials and chemicals safely, protecting human health and the environment. Companies must ensure they are REACH compliant by registering for substances that they import in quantities greater than one metric tonne per annum.


Whilst REACH compliance is designed to ensure safe trade, it has created significant challenges for businesses dealing with multiple substances, particularly in the metals industry. Importers of non-hazardous substances are still required to register, incurring substantial fees and administrative effort, despite these materials posing little to no risk to human health or the environment. One of the complexities of REACH certification is the registration of “multi-constituent” substances. For example, importers with registrations for Iron and Silicon might reasonably believe that this allows them to import Ferro Silicon, a combination of these elements. However, Ferro Silicon is considered a “multi-constituent” substance (as the main constituents are >10% but <80%), therefore it requires a separate registration, adding further regulatory hurdles and expense.



When Is The UK REACH Registration Deadline? 

In the UK, the full registration deadlines for UK REACH have been extended, with the largest importers (>1,000MT p.a.) required to register by 27 October 2026, and the lowest volume band (1-10MT p.a.) given an extension until 27 October 2030. However, importers must already be fully registered before importing any substances over 1MT p.a., unless they have:



  • Grandfathered their EU REACH registrations before 30 April 2021; or

  • Registered substances as a downstream user by 27 October 2021; or

  • Used a UK REACH registration of an Only Representative (representing the producer).



Failure to comply with REACH regulations can lead to severe consequences, including market restrictions, unlimited fines, imprisonment of up to two years, and reputational damage. At Westbrook Resources, we are fully REACH compliant in both the UK and the EU, via our Irish subsidiary company, allowing our customers to avoid the regulatory and financial burden of registrations therefore facilitating seamless trade. Contact us today to source fully cleared, REACH-compliant materials. 



The Impact of CBAM Regulations on the Metals Industry

The Carbon Border Adjustment Mechanism (CBAM) is a significant regulatory shift aimed at reducing carbon emissions by placing an additional tax on imported goods based on their carbon footprint. It is intended to encourage businesses to adopt more sustainable production methods, much like how the UK government incentivised the transition to hybrid and electric vehicles through punitive benefit in kind tax rates on petrol and diesel company cars. CBAM applies to a range of metal products including Iron, Steel, Aluminium and ferro alloys, with certain exclusions including:



However, even though these ferro alloys are exempt from CBAM individually, metal suppliers may still be asked to provide their emissions data. Producers of Iron and Steel may be collating this information to follow best practice and in preparation for any future changes to the scope of CBAM or SECR Reporting (Streamlined Energy and Carbon Reporting), but most likely as part of their Carbon Reduction Plans. This is because raw materials purchased from third parties used by Iron and Steelworks actually fall within the Scope 3 emissions category (i.e. emissions not under their control), which is currently excluded from both UK and EU CBAM and they are also outside the scope of mandatory SECR Reporting when producing their financial statements. However, the disclosure of Scope 3 emissions can be voluntarily included under SECR and in this instance, producers would need the emissions data for all of their raw material purchases. 


It is also important to note that whilst Scope 3 emissions are not currently relevant to CBAM or SECR, they are included in calculating a company’s overall carbon footprint and they generally make up a significant portion of this. Producers looking to achieve Net Zero or to become “carbon neutral” (e.g. under the internationally recognised carbon neutrality standard, PAS 2060) will need to include Scope 3 emissions in their calculations. Note that the main difference between Net Zero and carbon neutrality is the ability to offset all emissions with carbon credits in carbon neutrality but in Net Zero, off-set credits can only be used once it is not feasible to reduce actual emissions any further. Companies looking for ISO 14064-1 accreditations will also need to collate their Scope 3 emissions and include them in their carbon footprint figures (likewise under GHG Protocol). As such, emissions data is likely to be required for all metals and ferro alloys, irrespective of whether they are exempt from CBAM or not.



Challenges of CBAM Regulations

One of the major challenges of CBAM regulations is the requirement for actual emissions data. If suppliers fail to provide accurate figures, importers must rely on default values, which the EU limits to a maximum of 20% of total reported emissions. These default values will be revised and updates are expected to be highly punitive, leading to increased CBAM charges. As a result, producers and suppliers are under growing pressure to capture and report their emissions data accurately.


As the carbon border adjustment mechanism (CBAM regulations) take full effect, importers will look to reduce their liabilities, creating a knock-on effect on suppliers and producers. This will drive the industry towards lowering carbon footprints and improving environmental sustainability.



Key Differences Between EU and UK CBAM Regulations

The EU and UK have introduced their own versions of the Carbon Border Adjustment Mechanism (CBAM), but there are differences in the implementation, scope, and financial obligations.


1. CBAM Goods

  • Both the EU and UK CBAM apply to Iron, Steel, Aluminium, cement, fertiliser, and hydrogen. However, the EU CBAM also includes electricity, while the UK CBAM does not.


2. Timeline

  • The EU CBAM has a transition period until the end of 2025, with full implementation starting on 1st January 2026, although there is a proposal to delay this until 2027 (this has not been enacted at the time of writing).

  • The UK CBAM will be implemented from 1st January 2027 with no transitional period.


3. Scope of Emissions

  • The EU CBAM initially applies only to direct emissions on imported goods such as Aluminium, Iron and Steel (i.e. Scope 1 only). This is likely to change to include indirect emissions in the future.

  • The UK CBAM covers both direct and indirect emissions across all sectors from the start (i.e. Scope 1 and 2).

  • Scope 3 emissions, including transport to customer premises (and bought in raw materials for producers) are currently outside of the scope of both UK and EU CBAM but may also be included at a future date.


4. Financial Obligations

  • The EU CBAM requires importers to purchase and surrender CBAM certificates to cover the emissions of imported goods, pegged to the EU ETS (Emission Trading System) carbon price per tonne of carbon dioxide.

  • The UK CBAM will involve direct payment of a tax on emissions-liable imports pegged to the UK ETS (which is currently an independent trading scheme with different carbon prices from EU ETS; there is, however, potential for the UK ETS to be linked to the EU ETS in the future to preserve its integrity).


5. Minimum Threshold

  • The EU CBAM applies to consignments with a CBAM liability above €150 per shipment. Under new proposals, a de minimis threshold of 50MT of embedded emissions p.a. may be introduced to exempt smaller importers.

  • The UK CBAM applies to imports once a de minimis of £50,000 in CBAM charges has been met within a rolling 12-month period.


6. Default Values for Emissions

  • The EU CBAM allows default values for emissions but limits them to a maximum of 20% of total reported emissions.

  • The UK CBAM will allow using default values until at least 2031.


7. Reporting Frequency

  • The EU CBAM requires quarterly reporting during the transition phase and annual reporting from 2026 onwards.

  • The UK CBAM mandates annual reports in the first year (2027), switching to quarterly reports from 2028.



These regulatory differences highlight the importance of understanding both frameworks, especially for businesses importing CBAM materials between the UK and EU. Staying compliant requires careful tracking of emissions data and financial planning for potential CBAM-related costs. CBAM “taxes” into the EU are likely to increase significantly for some products once the scope is extended to include indirect (Scope 2) emissions. This is especially the case for imports of Aluminium, which incurs significant Scope 2 emissions during production (high electricity usage).



Conclusion

The evolving regulatory landscape presents both challenges and opportunities for businesses in the metals industry. REACH compliance remains a costly and time-consuming requirement, while CBAM regulations are set to drive significant changes in supply chain practices. To navigate these complexities and ensure entirely legal trading, businesses must ensure full compliance with both frameworks to avoid financial penalties and market restrictions. This will all come at a significant cost to larger importers.


UK importers bringing in CBAM materials from the EU are facing significant additional costs when CBAM taxes are introduced from 2027 potentially disrupting UK-EU trade or passing higher input costs on to UK steel works. For the benefit of the UK steel industry, and to protect EU ferro alloy producers, collaboration between the UK and EU should be promoted to exempt trade between them from the CBAM rules.


At Westbrook, we are committed to helping our customers meet all such regulatory requirements efficiently. Our REACH-compliant materials and commitment to building a database of emissions data including direct, indirect and even Scope 3 to ensure we have the information that our customers require for preparing their CBAM/SECR/GHG/Net Zero  reporting, both now and in the future.  Contact our expert team today to secure compliant, sustainable metals, ferro alloys and minerals for your operations.



Nick Jones, March 2025


 
 
 

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