Europe Cannot Afford to Leave its Critical Raw Materials Projects Unprotected

2025 has driven home Europe’s excessive dependence on China for critical raw materials, as the specter of export controls threatens the continent’s rearmament efforts and industrial base. The EU and its member states have finally stepped up their efforts to foster resilience. Expanding production and processing capacity both within Europe and abroad outside China are central parts of their agenda.

But while attention has rightly focused on getting projects off the ground, strikingly little thought has gone into what happens if they actually succeed. With its current approach, Europe risks spending scarce resources on supporting projects – only to see their output or even ownership slip out of its reach if and when they work out.

To be sure, fundamentally distorted markets remain the foundational challenge to breaking China’s stranglehold on global supply chains for many critical materials. China’s combination of technological prowess and state backing, as well as its ability to manipulate prices thanks to its current monopoly position, undermines business cases for alternative suppliers across the globe. Some recent initiatives notwithstanding, European industry players have shown little willingness to pay a premium for materials sourced from outside China, let alone coordinate to actively build new supply chains. Governments have hesitated to impose hard diversification requirements. The fragmentation of Europe’s financing landscape, with funding spread across member states, development banks and EU instruments, further complicates matters on the project side.

In short, there is no guarantee that Europe’s resilience efforts along current policy lines will bear fruit. But Europe is also remarkably unprepared for the scenario in which they do succeed. It has yet to establish adequate safeguards to ensure that the benefits of projects actually accrue to European supply security.

Europe’s Strategic Projects Remain Exposed to Non-European Buyers and Owners

The clearest instance of this are the so-called ​“strategic projects” under the EU Critical Raw Materials Act: currently 60 projects, 13 of which located outside of the EU, from which the EU promises itself near-term impact on supply resilience and for which it facilitates access to finance and offtake agreements. Having looked at a sample of 19 successful applications under the scheme, the EU Court of Auditors has sounded the alarm: it questions not only whether all projects would indeed be able to enter production by 2030 as envisaged, but also notes that seven projects lacked agreements with European offtakers, including four cases in which the projects were located outside the EU.

If these projects do deliver, there is every reason to expect that non-European actors will seek to secure their production, or even to acquire the assets outright. This is not a theoretical risk, as two recent episodes illustrate.

First, consider Belgium’s Solvay, a rare case of a company that has sustained substantial rare earth processing capacity in Europe, using raw materials from Australia and elsewhere. Europeans stood by haplessly in November last year as the firm signed two agreements under which materials from its plant in France would be shipped to the US.

Second, look at Australia’s Peak Rare Earths, which developed a major rare earths project in Tanzania and initially planned to process material in the United Kingdom. After years of political uncertainty due to Tanzanian resource nationalism under President John Magufuli and shifting investor sentiment, a key stake was sold to China’s Shenghe Resources in 2022. Following further takeover interest from the US, Shenghe ultimately acquired full control of the company in 2025. For Europe, avoiding similar outcomes must be a priority in a world in which competing bids are as likely to come from Washington as from Beijing.

The Peak Rare Earth saga is also instructive in terms of the challenges arising from the national politics of the countries in which projects are located. While political rhetoric in Europe’s global engagement emphasizes partnership and mutual benefit, leaders in resource-rich states have a track record of managing these assets in politically astute ways, both domestically and toward their foreign partners. While there were good reasons to question the equity of some of the agreements struck between the Democratic Republic of the Congo’s leaders with China and others, for example, the way that the country has reformed its mining code and renegotiated substantially more favorable deals since 2018 is a case in point. Governments are well aware of the leverage afforded to them by geopolitical competition, and they will use it.

What, Then, Should Europe Do?

First, it needs to upgrade its strategic projects framework. Promising ventures should receive greater support, including expedited treatment and actual financial backing. But this must be tied to binding, long-term commitments that their output will be available to European end users, as well as to explicit safeguards against the sale of assets to non-European actors. While measures to incentivize or, if necessary, enforce diversification of suppliers on the part of private businesses are necessary to foster demand and enable more viable business cases for project developers, a European public stockpiling scheme could serve as a backstop by which materials only get released to the rest of the world if European supply security is genuinely ensured.

Second, Europe needs to address the issue head-on with partner governments. It should make clear that it is committed to a partnership approach that supports local value creation beyond extraction — but also that such cooperation presumes reliable access to the resulting materials for European offtakers and sustained adherence to agreed terms. There is no need to replicate the callous approach of the Trump administration, which has for example signaled that its support even for life-saving HIV programs in Zambia could be made contingent on the country submitting to US demands on raw materials. But partners need to understand that these projects are a matter of vital European interest, and that reneging on agreements willingly and sovereignly entered would not remain without consequences.

If Europe is serious about securing its supply chains, this must be reflected in the design of its policies and partnerships. Unless it ensures that its efforts translate into secure, long-term access, it risks doing the hardest part — and leaving the rewards to others.

This piece was originally published by Agenda Pública on April 9, 2026.