Europe faces a critical challenge in securing access to critical raw materials (CRMs) needed for green energy technologies while maintaining its stringent environmental, social, and governance (ESG) standards. Recent global supply chain disruptions, such as China’s export restrictions on rare earth elements, have highlighted Europe’s dependence on external suppliers for essential minerals used in wind turbines, electric vehicles, and green hydrogen technologies.
Africa: A Strategic Source for Europe’s Minerals
Africa holds roughly one-third of the world’s mineral resources, making it a natural partner for Europe in diversifying CRM supply chains. The European Union has signed strategic partnerships with resource-rich African countries—including Namibia, Zambia, Rwanda, and the Democratic Republic of the Congo (DRC)—to develop sustainable mineral and energy value chains. In Namibia, green hydrogen projects are also supported, which rely on CRMs like platinum group metals, nickel, and rare earth elements for electrolyser production.
However, progress in these partnerships has been inconsistent. While Namibia has attracted some EU-backed investments in green hydrogen, European companies remain largely absent from mining operations and mineral value addition projects. Meanwhile, China, the United Arab Emirates, Russia, Turkey, and even US firms such as KoBold Metals are advancing rapidly, securing copper, nickel, and lithium operations across Africa.
The ESG Dilemma
European policymakers assume that rigorous ESG standards give EU companies an advantage by demonstrating responsible business practices. Yet in practice, these standards have become a barrier, deterring European companies from investing in African mining operations. Strict ESG requirements often conflict with local priorities in African nations, which emphasize industrialization, job creation, and economic diversification over strict compliance with European environmental or social guidelines.
African governments value ESG principles and have developed sustainability frameworks and green taxonomies, but immediate economic needs often take precedence. In contrast, non-European actors prioritize infrastructure development, employment, and industrialization, aligning more closely with host-country priorities and outcompeting European firms in securing mining deals.
Misaligned Incentives and Investment Barriers
Several factors hinder European investment in Africa’s mineral sector:
1. Public Opinion:
European societies often perceive mining as environmentally harmful, making domestic policymakers wary of overseas investments. Local opposition to lithium projects in Portugal and Serbia demonstrates the challenges of balancing public opinion with the need for clean energy supply chains. Avoiding mining operations abroad does not reduce environmental impact; it merely shifts responsibility to other global actors with less stringent standards.
2. ESG Standards:
ESG frameworks guide companies to adopt sustainable, socially responsible practices and are crucial for mitigating risks, improving governance, and attracting funding. However, overly strict ESG requirements can slow investment and reduce competitiveness, particularly in countries that prioritize economic growth and job creation over rigorous environmental compliance.
ESG frameworks include both voluntary guidelines, like the OECD Guidelines for Multinational Enterprises, and mandatory regulations, such as the EU Corporate Sustainability Reporting Directive (CSRD). Compliance can improve funding eligibility and investor confidence, but excessively stringent standards may discourage European firms from participating in African CRM projects altogether.
Finding a Balance
To compete globally and secure CRMs independent of China, Europe must rethink its approach. ESG compliance should remain a priority, but policies must also consider African nations’ economic and industrial development goals. By aligning European environmental objectives with local priorities—such as infrastructure, employment, and value chain development—Europe could strengthen its access to vital minerals while maintaining credibility in sustainability.
The challenge lies in balancing environmental responsibility with strategic resource security. European firms must adapt to operate in African contexts where job creation and industrialization are critical. At the same time, policymakers should create frameworks that support ESG compliance without stifling investment or innovation.
Europe’s strict ESG-first approach, while ethically motivated, has unintentionally limited its influence in African mineral markets. To secure a stable, independent supply of CRMs for the green energy transition, the EU must align sustainability objectives with economic realities in Africa, creating a competitive, responsible, and mutually beneficial approach to mining and mineral value chains.
By striking the right balance, Europe can both uphold environmental and social standards and regain a foothold in the global race for critical raw materials.
