The European Union is considering legally binding measures that would compel industrial buyers to reduce their dependence on Chinese raw materials, signalling a decisive shift in EU industrial policy. What was once a strategy based on incentives and voluntary diversification is now moving toward enforcement, as geopolitical rivalry and supply-chain vulnerability push Europe to reassess its exposure to external processing dominance.
The logic behind the proposal is clear. Despite years of warnings and strategic roadmaps, Europe remains heavily reliant on China for critical materials and intermediates. Beijing controls a dominant share of global refining capacity for rare earths, graphite, manganese and key battery precursors, leaving European manufacturers in sectors such as electric vehicles, semiconductors, magnets and advanced electronics with few immediate alternatives.
By exploring mandatory diversification targets, Brussels aims to disrupt this structural dependency. Binding requirements would oblige companies to source a defined share of raw materials from European or allied suppliers, even if this raises short-term costs. Policymakers argue that supply security and industrial resilience now outweigh the price advantages of concentrated sourcing from China.
However, the approach is controversial. Industry groups warn that a rapid decoupling from Chinese inputs could inflate production costs, reduce competitiveness and disrupt already strained supply chains. Smaller manufacturers, in particular, may struggle to absorb higher input prices or rapidly redesign procurement strategies without significant financial support.
To soften the impact, the EU is linking diversification obligations with a broader support framework. Initiatives such as the REsourceEU package, demand-aggregation mechanisms and new industrial-financing tools are designed to accelerate domestic mining, refining and recycling while easing the transition for manufacturers. The goal is to build European capacity in parallel with tighter sourcing rules, rather than forcing industry to adapt in isolation.
If enacted, these measures would mark a fundamental reordering of Europe’s industrial ecosystem. Companies would need to secure new raw-material partnerships, invest more aggressively in recycling and participate directly in European mineral projects. The central question now is not whether Europe will intervene, but how far it is willing to go—and whether industry can adjust quickly enough to a more assertive, security-driven raw-materials strategy.
