Europe’s reliance on importing the majority of raw materials for electric vehicle (EV) production is proving increasingly unsustainable, leaving its economy vulnerable. This week, the EIT Raw Materials Summit convened in Brussels for the first time since the EU’s landmark Critical Raw Materials Act (CRMA) was approved in March. The event emphasized shifting focus from policy to actionable steps.
One of Europe’s significant challenges is attracting enough investment to meet the anticipated demand in a fiercely competitive international market. Low investment rates in the global mining sector threaten the energy transition, widening the supply gap for the critical metals and minerals essential for decarbonization. Top mining industry executives have highlighted this “humungous” supply gap, noting that investment levels are “hundreds of billions of dollars below” what is needed.
The numbers underscore the magnitude of the issue. The World Bank predicts that the green transition could require up to 500% more critical raw materials by 2050, amounting to 3 billion metric tons of new base materials for EVs, renewable energy installations, and storage solutions. The deficit extends beyond upstream supply to downstream industries and their capacity to deliver.
Europe is particularly susceptible, depending on imports for over 75% of its needs. The European Commission estimates that by 2030, the EU will need 18 times more lithium and five times more cobalt than in 2020.
To achieve its 2040 climate targets, Europe must enhance recycling, increase imports, and extract more domestic resources. These measures are essential to ensure a resilient supply chain. Policymakers are acutely aware of the potential impacts, which is why the CRMA was fast-tracked. The EU aims to source 10% of its mined needs and 40% of its processed needs domestically by 2030, while recycling should supply 25%.
Significant new investment is required to meet these goals. Eurometaux, the association of European non-ferrous metals producers and recyclers, stated in April that achieving strategic raw material production targets will necessitate opening at least 10 new mines, 15 processing plants, and 15 recycling plants.
Mining is a long-term commitment, with major projects taking up to 20 years to commence operations and requiring billions in capital expenditure. The process encompasses initial exploration, licensing and permitting, public consultation, securing a social license to operate, construction, and operational costs. Beyond financial investment, Europe must also build its skills and expertise, investing in the workforce needed for a modern high-tech industry.
To be competitive and attract the right investors, Europe urgently needs to bridge the gap between technical and commercial challenges. Long-term financing agreements focused on good governance, infrastructure, and risk mitigation are essential.
A European Critical Minerals Fund could foster sustained investment, along with clear, binding investment criteria and guidelines. All actions must adhere to the highest standards to secure and maintain a social license to operate.
Uniform and consistent standards governing European mining are crucial. Clear standards will enable productive consultation and engagement among communities, companies, and stakeholders, and allow for appropriate review and updating over time.
In summary, commitment and action are necessary. While a bold new policy framework is welcome, it will not suffice alone to meet Europe’s decarbonization objectives. A diverse range of stakeholders must collaborate to develop a viable roadmap that builds consensus, meets commercial expectations, and helps deliver a sustainable future.
