The head of Europe’s leading raw-materials agency has issued a stark warning: while the EU works to reduce dependence on China, delays in expanding processing capacity could expose the continent to new strategic vulnerabilities. Speaking at a recent industry briefing, the official highlighted that Europe’s risk is not limited to reliance on Chinese supply chains. If the EU lags behind the United States and Asia in developing mid-stream processing, it could inadvertently create new dependencies, undermining its goal of strategic autonomy. The briefing, comes as the EU moves into a decisive phase of implementing the Critical Raw Materials Act.
From Policy Ambition to Industrial Reality
Over the past two years, Europe’s raw-materials strategy has evolved from broad intentions to clear quantitative targets. Yet a significant gap remains between policy ambition and industrial execution. Despite rising demand driven by renewable energy, electric vehicles, and advanced manufacturing, the EU continues to import the majority of its processed metals, rare-earth compounds, and battery materials. Domestic processing capacity is no longer a matter of industrial pride—it is critical for security, affordability, and resilience.
Structural Barriers and Global Competition
Experts point to Europe’s permitting system as a major bottleneck. Strategic projects often face years of environmental review and appeals, discouraging investment. Meanwhile, the United States has mobilized massive subsidies for upstream and mid-stream processing through the Inflation Reduction Act and defense initiatives. Asian refiners in Japan and South Korea continue to advance technological upgrades and secure long-term supply contracts. In this environment, Europe risks becoming a price-taker rather than a price-maker in critical raw materials.
Partnerships Are Not a Substitute for Domestic Capacity
The EU’s reliance on partnerships with the United States, Canada, and Australia is valuable, but it cannot replace the need for indigenous processing. Without developing domestic refining and metallisation, Europe simply trades one dependency for another. Mining alone is insufficient; extracted raw materials would still need to be shipped abroad for processing, reintroducing supply chain risk. Processing is also where significant value creation occurs, impacting downstream competitiveness in automotive, aerospace, defense, and electronics sectors.
Financial Support and the Race for Implementation
The EU is preparing financial instruments, including investment guarantees and co-funding mechanisms, to accelerate industrial capacity. However, speed is critical. Several companies have warned they may locate processing units abroad if domestic conditions remain slow and costly. This trend is already evident in battery materials, where investments in North America outpace Europe due to better incentives.
The Strategic Imperative
Europe now faces a pivotal moment. The coming decade will test the continent’s industrial resilience amid growing energy transition demand, geopolitical fragmentation, and technological competition. Without a rapid expansion of processing capacity, Europe risks missing the chance to reindustrialize around strategic metals.
The ambition is clear: Europe aims for raw-material autonomy. The challenge lies in deploying capital, permitting reform, and political will fast enough to turn policy into tangible industrial strength.
