EU Critical Raw Materials Supply Security: Self-Sufficiency Goal and Reality Gap

I. The EU's Critical Raw Materials Predicament in the Global Supply Chain Context

Critical raw materials are the physical foundation of the EU's green and digital transition—from power batteries to semiconductors, from wind turbines to solar panels, the upstream inputs of these technologies are highly concentrated in a few countries. The International Energy Agency predicts that by 2050, demand for lithium will grow by 470% to 800%, while demand for graphite and nickel will increase by 130% to 250%. However, the EU itself has limited mineral reserves and even weaker processing capacity—over 90% of natural graphite refining depends on China, and more than 75% of cobalt refining is also concentrated in China.

This highly concentrated supply chain structure has been increasingly awakened by geopolitical risks in recent years. China has repeatedly demonstrated its ability to use critical minerals as a strategic lever—imposing export restrictions on rare earths in 2009 and 2012, and further expanding export controls on critical minerals in 2023 and 2025. Meanwhile, major economies such as the United States, Japan, and Canada are competing for resources more aggressively through domestic investment and third-country partnerships, putting unprecedented competitive pressure on the EU.

II. Internal Strategy: Strategic Projects Struggling to Close the Self-Sufficiency Gap

The Critical Raw Materials Act, adopted in 2024, sets ambitious targets for the EU: by 2030, meet at least 10% of domestic extraction needs, 40% of processing needs, and 25% of recycling needs annually. The Act also selects 60 "strategic projects," covering the entire chain from mining to recycling.

However, according to Bruegel's analysis, these strategic projects are almost impossible to achieve the above targets under the current timeline. The projects generally have long development cycles, high local opposition, limited financing channels, and most are concentrated in a few raw materials (such as copper and lithium), with insufficient coverage of rare earths, graphite, and other categories with higher supply chain vulnerability. Coordination within the EU internal market in the field of critical raw materials is far from mature—member states have launched their own plans, leading to overlapping partnerships, wasted resources, and weakened overall bargaining power when negotiating with third parties.

The European Court of Auditors' assessment is even more scathing: this policy framework is "not set in stone." Relying solely on domestic extraction and recycling cannot resolve the EU's structural dependence in the short term.

III. External Tools: Trade Agreements Are More Effective Than Strategic Partnerships

The external dimension of the EU's critical raw materials strategy includes two types of tools: "strategic partnerships" signed with resource-rich countries, and free trade agreements containing critical raw materials clauses.

Bruegel conducted an empirical assessment of trade data from the existing 14 strategic partnerships and found that these partnerships did not produce observable incremental effects on the EU's corresponding raw material imports after signing. In stark contrast, FTAs containing critical raw materials clauses brought significant import growth—mainly due to tariff reductions, non-tariff barrier cuts, and improved investment protection frameworks.This finding carries important policy implications: strategic partnerships remain largely at the level of political declarations, lacking enforceable trade rules; while FTAs can provide legally binding commitments and market access, thereby truly reducing supply chain costs and stabilizing supply expectations. Currently, resource-rich countries such as Chile, Canada, and Australia have signed FTAs covering critical raw materials with the EU, while many resource-rich African and Latin American countries still lack such arrangements.

IV. US-Japan Competition: Different Paradigms of Supply Chain Security

The strategies of the United States and Japan in the field of critical raw materials stand in stark contrast to those of the EU. The US provides direct subsidies to mining projects at home and in allied countries through the Inflation Reduction Act and the Defense Production Act, and promotes the "Minerals Security Partnership" (MSP), requiring participating countries to establish downstream processing capabilities. Japan, under the banner of "economic security," uses the Japan Organization for Metals and Energy Security (JOGMEC) to make equity investments in overseas mines and locks in long-term supply through intergovernmental agreements.

Both models emphasize direct control over upstream assets, rather than relying solely on trade agreements. The EU lags significantly in this regard—its critical raw materials strategy focuses more on rule frameworks and multilateral dialogue, lacking a systematic overseas mining investment mechanism. In high-risk, high-potential regions such as the Democratic Republic of the Congo (DRC) and Indonesia, the willingness and capacity of EU companies to invest are weaker than those of Chinese and Japanese firms.

V. Policy Adjustment Directions: Focusing on Risk, Strengthening Governance, and Prudent Engagement in Price Intervention

Based on the above analysis, the EU urgently needs to adjust its critical raw materials policy in the following three dimensions:

First, align investment priorities with real supply risks. The current distribution of the 60 strategic projects is severely mismatched with the EU's dependency—categories such as rare earths and graphite, which are highly dependent on a single source, receive far insufficient funding and project support. The EU should establish a dynamic risk profile to guide capital flows to the most vulnerable nodes.

Second, enhance the governance efficacy of trade agreements and strategic partnerships. Strategic partnerships should introduce quantifiable cooperation goals, such as joint exploration, technology transfer, and investment security guarantees, with regular assessments of implementation effectiveness. At the same time, the EU should accelerate FTA negotiations with lithium, cobalt, and rare earth resource countries, making critical raw materials provisions a priority agenda.

Third, prudently address the US-led price floor proposal. The US is promoting a price floor mechanism for critical minerals aimed at preventing the impact of Chinese overcapacity on market prices. The EU should exercise restraint on this issue, prioritizing bilateral offtake agreements and multilateral cooperation platforms (such as establishing "mineral clubs" with resource countries) to stabilize price expectations, rather than fully replicating US intervention measures.

ConclusionThe security of supply of critical raw materials is no longer merely a resource issue, but a comprehensive arena of geopolitics, industrial competition, and global governance. If the EU cannot accelerate simultaneously on both the implementation of domestic projects and the establishment of external rules, the pace and cost of its green transition will be locked in by external forces. Trade agreements have proven to be the most effective tool, but they are far from a panacea—only by deeply integrating domestic investment, overseas deployment, and rule networks can the EU hold the line on strategic autonomy in this increasingly competitive new track.

*Source: Bruegel policy brief *Competing for inputs: how the European Union can improve critical raw materials supply security* (July 2026, No. 15/2026).*