Europe’s green and digital ambitions are built on a growing contradiction. The continent wants to lead the world in electric vehicles, batteries, renewable energy, and advanced manufacturing—yet it has failed to secure the industrial link that makes all of this possible: mid-stream refining. Mining matters. Recycling is essential. Strategic partnerships help. But refining is the true engine of a resilient raw-materials supply chain. And this is precisely where Europe remains most exposed.
Europe’s refining deficit stands as its most serious industrial vulnerability. Even where domestic mining projects advance, Europe remains overwhelmingly dependent on China to transform raw ores into usable materials. China processes over 60% of the world’s lithium chemicals, more than 70% of cobalt, over 90% of manganese, nearly all spherical graphite, and close to 90% of rare-earth oxides. These are not optional inputs—they form the physical backbone of batteries, wind turbines, electric motors, grid infrastructure, and defense systems.
Why Refined Materials Decide the Fate of Europe’s Industry
Without refined materials, Europe’s clean-tech economy simply cannot function. Lithium hydroxide enables modern battery cathodes. Nickel sulphate and cobalt intermediates are required for high-performance cells. Rare-earth separation is essential for permanent magnets used in wind turbines and EV motors. Purified graphite is indispensable for battery anodes.
When nearly all of these critical materials are processed outside Europe, industrial autonomy becomes an illusion. Europe may assemble cars and batteries, but the chemical heart of these technologies beats elsewhere—largely in China, where integrated state policy, energy availability, and decades of targeted investment have built overwhelming mid-stream dominance.
Energy Costs: The Silent Killer of European Refining
The refining challenge is not ideological; it is governed by physics and economics. Converting raw minerals into battery-grade chemicals requires massive energy inputs, advanced metallurgical technologies, complex permitting, and long-term financing. Europe’s electricity prices—often three to five times higher than those in China—make many refining projects structurally uncompetitive before construction even begins.
Even with strong environmental standards and transparent governance, the reality remains brutal: high energy costs distort the economics of mid-stream processing and repel private investment at precisely the scale Europe needs.
Gigafactories Without Feedstock: A Structural Imbalance
Europe now announces new battery gigafactories at a rapid pace. Refining projects, by contrast, remain rare, politically sensitive, and financially fragile. Public attention and political capital flow toward visible final manufacturing, but the low-profile chemical plants needed to supply those factories are neglected.
Without mid-stream infrastructure, Europe risks building a battery and EV industry that is permanently dependent on imported refined materials. The result is industrial growth without industrial sovereignty.
Lithium, Nickel, and Cobalt: Resources Without Refineries
Lithium illustrates the problem with painful clarity. Europe hosts promising hard-rock deposits in Portugal, Spain, Germany, Finland, and the Czech Republic. Several could enter production. Yet these mines will produce only concentrates—not battery-grade lithium chemicals. To convert concentrates into lithium hydroxide or carbonate, Europe needs large-scale refineries. Today, almost all such refining occurs in China, with smaller hubs in Chile and Australia. Within Europe, only a few pilot plants and early-stage proposals exist.
Nickel and cobalt follow the same pattern. Europe extracts limited quantities of both metals but lacks significant capacity to convert them into battery-grade sulphates. The EU remains heavily dependent on Indonesia and China for key nickel and cobalt intermediates.
Rare Earths: Europe’s Most Dangerous Strategic Exposure
Rare-earth processing represents Europe’s most extreme vulnerability. Despite known deposits in Sweden, Norway, and Greenland, the continent has virtually no commercial separation capacity—especially for heavy rare earths. As a result, Europe depends almost entirely on China for the magnets that power offshore wind turbines, EV motors, robotics, and defense technologies.
This is not just an industrial weakness; it is a strategic and security liability.
Systemic Consequences Across the Entire Economy
The consequences of Europe’s refining gap are far-reaching. Battery manufacturers face constant geopolitical risk. Automakers remain vulnerable to supply disruptions. Renewable-energy developers struggle with price volatility and uncertain delivery schedules. Defense industries rely on overseas materials that are critical to national security.
From climate policy to industrial sovereignty, every strategic objective is now exposed to upstream vulnerabilities.
How Europe Lost Its Mid-Stream Capabilities
At the root of the refining gap lies decades of political hesitation to treat metals processing as strategic infrastructure. Environmental sensitivities, social resistance, complex permitting systems, and high energy prices discouraged long-term investment. But the global landscape has changed.
China’s export controls on graphite, gallium, and germanium signal the arrival of mineral diplomacy as a permanent feature of global trade. Indonesia’s nickel processing mandates show how resource-rich nations now demand local value creation. The United States, through the Inflation Reduction Act, is rapidly constructing its own refining ecosystem with aggressive subsidies. Europe, meanwhile, risks strategic marginalization.
Three Strategic Pillars to Close the Refining Gap
To rebuild its mid-stream backbone, Europe must act on three decisive fronts.
First: Energy competitiveness. Without stable, affordable power, no refinery can survive. Europe must rapidly expand dedicated renewable power for industrial clusters, unlock long-term power purchase agreements, and introduce strategic energy pricing for critical processing infrastructure.
Second: Permitting reform. Refining plants must benefit from fast-track approval regimes similar to those proposed for strategic mining. Environmental protection should remain strict, but administrative paralysis must end. Europe cannot afford eight-year approval timelines while global competitors build in under two.
Third: Financial scale. Private capital alone will not carry the risk of structurally uncompetitive projects. Europe needs sovereign-level industrial finance capable of underwriting risk, guaranteeing loans, and providing long-term tax advantages. Isolated financing initiatives are useful signals—but they remain far below what the challenge demands.
A Regional Refining Strategy for a Continental Power
No single EU member state can build a complete refining ecosystem alone. Europe must adopt a regional industrial model: lithium refining in Portugal, Spain, and Finland; nickel and cobalt conversion in Scandinavia; graphite processing in Portugal and France; rare-earth separation in Sweden; and advanced metallurgical clusters across Germany, Poland, and the Balkans. Only coordinated specialization can support a fully functional European mid-stream network.
The Defining Industrial Test of the Green Transition
The refining gap is Europe’s most urgent—and least understood—industrial crisis. Without mid-stream capacity, the green transition will remain structurally dependent on external powers. Europe can still lead the future of batteries, clean energy, and advanced manufacturing—but only if it builds the industrial backbone that future requires.
