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Europe

Report Sounds Alarm on EU Critical Minerals Supply Chain Risk

What Happened

A recent report from the European Court of Auditors warned that EU policy is failing to achieve the bloc’s strategic raw materials objectives for 2030 (10% extraction and 40% processing within EU, no more than 65% supply from a non-EU state, and 25% recycling capacity). EU policy differentiates between raw materials, critical raw materials (34 of them), and strategic raw materials (17) on the basis of their economic and strategic importance.

The EU is currently falling short on all fronts:

  • Foreign suppliers continue to dominate the supply chain of certain key minerals (Chile with 79% of lithium supply and China with 97% of magnesium, for example). The report notes that EU policy as outlined in the 2024 Critical Raw Materials Act is failing to reverse these trends.
  • Financing remains ad hoc and scattered across different EU levels and programs.
  • A technology gap is hampering efforts to foster domestic processing within the EU.
  • Regulatory complexity (environmental, social, administrative) is pushing back the horizon for projects.

The report recommends the following to get targets back on track:

  • Rework EU critical minerals policy regarding input trade data, targets, and project tracking.
  • Ensure that diversification efforts result in secure sources of supply.
  • Address financial bottlenecks in critical raw materials production.
  • Improve recycling and value-add of EU strategic projects.

 

Why It Matters

The European Court of Auditors report echoes the evolution of critical minerals policy on the other side of the Atlantic, which boils down to a gradual realization, still unfolding, that market forces alone won’t fix structural imbalances in critical minerals supply chains. State intervention was central in creating the imbalances (subsidies, market capture, and resulting technological advantage) and state intervention is the only way to redress them. This is what Washington has evidently concluded with its decisive investments in secure supply of tungsten and other minerals; its purchase of direct stakes in rare earths players; and now talk of establishing America’s ‘first-ever’ critical minerals stockpile (assuming World War II never happened). The report illustrates how the EU remains a step behind, and given the recent arc of trans-Atlantic relations, there is no guarantee that US efforts will ensure secure EU supply (a reality that likely informs the second recommendation). Unless Brussels clears the regulatory path and develops its own fiscal bazooka to onshore supply, primarily in refining, the 2030 targets will come and go unrealized.