Europe’s minerals dilemma: between the Bully and the Dragon?

The global race for critical minerals is accelerating. From lithium and cobalt to nickel, copper, and rare earth elements, these resources are no longer seen only as inputs for renewable energy technologies. They are increasingly treated as strategic assets linked to geopolitical power, defence capabilities, and the rapid expansion of AI infrastructure. 

Global powers are deploying industrial policy, diplomatic pressure, public finance, and, increasingly, coercive measures to secure access to and control over mineral supply chains. This trend reflects not just policy shifts but a deeper transformation of the international rules-based order. 

The United States has stepped up efforts to reshape mineral supply chains, increasing pressure on resource-rich countries such as Ukraine(opens in new window) , the Democratic Republic of Congo(opens in new window) , and Zambia(opens in new window) , while openly pursuing control over strategically important territories such as Greenland. At the same time, in February 2026, Washington convened a ministerial meeting(opens in new window) with more than 50 governments to coordinate access to critical minerals and reduce dependence on China, while ramping up loans, guarantees, and, notably, public equity investments to support mining and processing projects. China, meanwhile, continues to dominate large parts of the global value chain for critical minerals – particularly in refining and processing. China accounts for(opens in new window) around 44 per cent of copper, 70 per cent of lithium, 78 per cent of cobalt, 96 per cent of graphite, and 91 per cent of rare earths refined output, and has demonstrated its ability to disrupt markets through export restrictions(opens in new window) .

Resource-rich countries are also asserting greater control over their mineral wealth. Zimbabwe(opens in new window) has introduced restrictions on raw materials and lithium concentrates exports, following Indonesia(opens in new window) ’s earlier ban on nickel exports, as governments seek to capture more value from their resources.

In this rapidly shifting geopolitical landscape, Europe appears to face two options: align with the US’s state-led strategy of expanding mineral supply through public subsidies and investment in selected companies and industries, or attempt to compete with China’s vast industrial scale and technological capabilities. Yet neither model is easily replicated in Europe. The EU lacks the fiscal firepower and relatively low energy costs of the US, while it cannot match China’s industrial scale, massive subsidies, and deeply integrated manufacturing ecosystems. This should point to a third option: reducing structural dependence on critical minerals through demand reduction, recognising that some supply is still needed, but that overall demand can be reduced and focused on the energy transition.

Europe’s current response, however, moves in the opposite direction. Through the Critical Raw Materials Act (CRMA(opens in new window) ) and the recently announced RESourceEU Action Plan(opens in new window) , Brussels seeks to secure mineral supply by accelerating extraction projects both within and outside Europe, mobilising public and private finance, and easing social and environmental safeguards. Meanwhile, the demand side of the equation remains largely overlooked.

From climate action to fighter jets and data centres

For decades, access to minerals has been a core objective of EU industrial and trade policy, primarily in the service of economic growth. Only more recently has this agenda been reframed through the lens of climate policy. When the European Green Deal(opens in new window) was launched in 2019, the EU Commission emphasised that the coming decade would be decisive for limiting global warming. With REPowerEU(opens in new window) in 2022, critical minerals were discussed mainly as key inputs for scaling renewable energy technologies and reducing dependence on Russian fossil fuels.

While the energy transition remains a major driver of mineral demand in Europe, the range of strategic sectors competing for these resources is expanding, and priorities are shifting. Minerals are now framed not only as inputs for renewable energy technologies, but also as essential for military purposes and the rapidly expanding infrastructure underpinning artificial intelligence, in addition to their already extensive use in traditional industries. 

This convergence reflects the overlapping uses of these minerals. Wind turbines, solar panels, electric vehicles, and data centres all rely on materials such as copper, aluminium, and rare earth elements. Meanwhile, cobalt, lithium, and manganese – essential for battery production – also appear on NATO’s list of defence-critical raw materials(opens in new window) . Gallium, for instance, is used both in military equipment, such as fighter aircraft, and in the semiconductors that power data centres.

As demand from multiple strategic sectors grows within Europe and globally, competition for the same minerals is likely to intensify. The International Energy Agency(opens in new window) has warned that several sectors, including defence, clean energy technologies, and data centres, will increasingly compete for access to these resources. Such competition could slow the deployment of renewable energy if military or AI applications are prioritised, while the deep pockets of big tech companies divert critical minerals and energy infrastructure towards profit-driven goals rather than the energy transition.  

This dynamic is increasingly reflected in EU policy. The CRMA has identified defence and aerospace alongside clean technologies as strategic uses of critical minerals. The RESourceEU Action Plan,(opens in new window) announced in December 2025, goes further by prioritising specific minerals – particularly rare earth permanent magnets and critical minerals for batteries – reinforcing a growing alignment of EU policy with the priorities of the military, AI infrastructure, and automotive industries. 

The growing emphasis on defence requires strict oversight, transparency, and accountability to ensure that security concerns do not override environmental and social safeguards and human rights, delay the energy transition, or exacerbate geopolitical tensions.  

The result is not simply a shift in priorities away from the energy transition, but a structural expansion of demand. Critical minerals are now expected to underpin a growing number of industries simultaneously, raising crucial questions: When supply becomes constrained, which sectors will be prioritised? Who ultimately benefits from, and who bears the costs of, this competition? 

De-risking mining with public money

The RESourceEU Action Plan aims to reduce Europe’s reliance on imports of minerals from any single country by between 30 per cent and 50 per cent by 2029 by expanding domestic mining, processing, and recycling. A central pillar is to ‘de-risk’ strategic projects to attract private investment and accelerate deployment. In practice, this shifts a significant share of financial risk from private investors to public institutions, using public funds to cushion potential losses for corporations and make projects more attractive to capital. This increases investors’ influence over which projects are developed and reduces democratic oversight of how public resources are allocated. 

To this end, the European Commission plans to establish a ‘critical raw materials financing hub’ to coordinate EU funding instruments and channel support to selected projects. The EU aims to mobilise € 3 billion within the next year, largely by repackaging existing financial instruments rather than creating new funding streams. The hub is expected to coordinate resources from existing programmes such as InvestEU, the Innovation Fund, and the Battery Booster. In the international race shaped by aggressive industrial policy, € 3 billion is unlikely to significantly shift global supply dynamics. In recent months, the US has approved more than $ 30 billion(opens in new window) in loans, guarantees, and equity investments for mining and processing through several federal agencies. Chinese overseas investments in metals and mining linked to the Belt and Road Initiative reached a record $ 32.6 billion (opens in new window) in 2025 alone, 94 per cent of which comprised equity investments. Against this backdrop, the EU’s approach risks spending too little to compete globally while still exposing public funds, resulting in a strategy that is neither competitive nor transformative. 

Development banks also play an increasingly important role. In 2025, the European Investment Bank(opens in new window) (EIB) committed to providing up to € 2 billion per year in financing for critical raw materials projects. 

Several project developers have already benefited from this growing ecosystem of public finance support.

While public investment can play a role in enabling strategic industries, the growing use of public funds to support mining and processing projects raises important questions about governance and accountability. Through instruments such as InvestEU, the EU seeks to attract private investors by using the EU budget, sometimes combined with collective borrowing on capital markets, as collateral to absorb financial risks and help guarantee returns.

As SOMO has previously noted: “At its core, the scheme is a risk-transfer model where public money is used as a safety net for private profits, with limited democratic accountability over how much risk is publicly covered, and how and where financing is deployed.”

In sum, this publicly funded de-risking institutionalises an uneven system. Losses are shifted onto the EU budget, often increasing public debt, while profits remain in private hands.

The EU as a portfolio manager of critical minerals

Another key element of the RESourceEU Action Plan is the proposed creation of a European Critical Raw Materials Centre. If implemented as planned, the centre would mark a significant shift in the EU’s role in mineral supply chains. Rather than simply regulating markets, EU institutions would gain greater leverage over how critical minerals are sourced, allocated, and circulated. 

The proposed mandate would allow the centre to monitor strategic projects, coordinate stockpiling with member states and industry, organise joint purchasing, and facilitate connections between suppliers and industrial buyers. Several of these tools are already being tested, including a Raw Materials Mechanism(opens in new window) to aggregate demand and facilitate joint purchasing by European companies, as well as a pilot programme for strategic stockpiling. 

Taken together, these instruments would give the EU an unprecedented role in allocating access to scarce and strategically vital resources. Yet key aspects, including the centre’s governance, the criteria for allocating minerals, and safeguards for transparency and public oversight, remain undefined. This risks favouring the largest corporate players, particularly in the defence, automotive, and tech sectors, which are likely to exert disproportionate influence over which projects are supported and who gains access to limited supplies.

Stockpiling(opens in new window) , meanwhile, may help buffer temporary supply disruptions. However, it can be costly and complex, given the diversity of refined minerals and could transfer financial burdens to taxpayers if prices fall. Without sufficient domestic production capacity, stockpiling could reinforce external dependence on dominant suppliers rather than reduce it. Ultimately, these tools risk deepening Europe’s structural vulnerabilities if demand for critical minerals continues to grow.

Securing supply, ignoring demand

The measures under the Critical Raw Materials Act and the RESourceEU Action Plan point to a clear policy direction: expanding the supply of critical minerals. The EU strategy prioritises accelerating mining and processing projects, mobilising public finance to de-risk investments, streamlining permitting procedures, and strengthening international agreements to diversify supply chains. 

Circularity is presented as part of the solution, but, in practice, the approach relies less on reducing material consumption and the impacts of mining than on securing additional supply. This logic was made explicit when EU Commission President Ursula von der Leyen announced (opens in new window) RESourceEU: “It starts with the circular economy. Not for environmental reasons. But to exploit the critical raw materials already contained in products sold in Europe.” (emphasis added). In other words, circularity is treated as an extension of extraction by other means, rather than a strategy to limit it.

The European Court of Auditors(opens in new window) has warned that “[t]he potential of sustainable resource management is not fully used” by the EU. Legislative measures to substitute critical minerals remain weak, while national circularity plans required under the CRMA risk delays due to slow adoption of implementing acts. 

At the same time, recycling rates for many critical raw materials remain extremely low. Several minerals are recycled at rates of only 5 per cent or less, while others – including lithium, gallium, and silicon metal – are not recycled at all. 

Electronic waste, moreover, contains significant quantities of critical minerals, yet collection rates remain far below EU targets. In 2022, the EU collected only 62 per cent of electronic waste, well below the 85 per cent target set under the Waste Electrical and Electronic Equipment Directive.

While improving collection and recycling is essential, this addresses only part of the problem. These measures recover materials after they have already been used; they do little to reduce the overall scale of demand. Sufficiency(opens in new window) measures – reducing energy and materials use while meeting human needs within planetary boundaries – offer far greater potential for climate action, equality, and social well-being. 

Evidence increasingly supports this shift. The UN Environment Programme’s International Resource Panel(opens in new window) finds that curbing excessive consumption in high-income economies could reduce global resource use by around 30 per cent by 2060, while also lowering inequality and improving well-being. For example, it shows that reducing the need for mobility and enabling shared and active transport could halve the material stock required for mobility systems, while also cutting energy use by 50 per cent and greenhouse gas emissions by 60 per cent. 

Research from the International Energy Agency(opens in new window) shows that targeted measures, such as reducing the number of large vehicles, could lower global demand for battery minerals by around 18 per cent by 2030. Other studies(opens in new window) on Europe’s transport sector suggest even greater potential: smaller batteries, less reliance on private cars, and alternative battery chemistries could reduce demand for battery metals by 30 per cent to 50 per cent. 1

These findings highlight a key pillar missing from Europe’s critical minerals strategy: reducing demand to strengthen resilience and limit geopolitical exposure. 

Rethinking resilience and security

Europe’s response to the global scramble for critical minerals is rapidly evolving. Through new financing mechanisms, strategic partnerships, trade agreements, and emerging institutions designed to steer supply chains, the EU is positioning itself as a more active stakeholder in the geopolitics of critical minerals. 

Yet this strategy rests on a narrow understanding of resilience. Security cannot be reduced to securing access to ever more resources. A supply-driven strategy risks exacerbating environmental harm, fuelling social and geopolitical conflicts, delaying the energy transition, and locking Europe into volatile supply chains. 

What is missing is a serious restructure of demand. A truly resilient strategy would prioritise reducing material use, improving resource efficiency, and transforming and setting limits to the sectors that drive mineral consumption, particularly mobility, defence, digital infrastructure, and energy systems.

This implies not only technological change, but systemic shifts in how these sectors are organised and what they are designed to deliver and for whom.

Ultimately, European mineral resilience is not only about securing more – it is also about needing less.