EU's Critical Minerals Goal 'Out of Reach'

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

Europe runs the risk of running out of critical minerals needed for many key industries from renewable energy to consumer electronics, defence and electric vehicles (EVs) because it is not doing enough to fast-track homegrown projects.

2030 Targets Unrealistic

The European Union's (EU's) ambitious 2030 targets for critical minerals are "out of reach" according to a sobering report from its own auditors. 

The region is not doing enough to secure its own supplies and remains dangerously reliant on supplies of critical minerals from non-EU players such as China, Turkey and Chile, according to the European Court of Auditors (ECA).  EU action on import diversification is "not producing tangible results," bottlenecks hinder domestic production and recycling is "still in its infancy," the ECA noted in its special report: Critical raw materials for the energy transition -- Not a rock-solid policy. Against this backdrop, many EU-supported projects are unlikely to succeed in time, the auditors stated. The ECA, formed in 1975, is the EU's official, external auditors tasked with improving the way the EU's finances are managed as well as auditing other key policy areas and combating fraud.

"Without critical raw materials, there will be no energy transition, no competitiveness, and no strategic autonomy," said Keit Pentus-Rosimannus, the ECA Member responsible for the audit. "Unfortunately, we are now dangerously dependent on a handful of countries outside the EU for the supply of these materials. It is therefore vital for the EU to up its game and reduce its vulnerability in this area."

Dangerously Overreliant

Most of the necessary minerals are mined and processed outside the EU, and supply is often concentrated in either one or a handful of non-EU countries. For example, China provides 97% of the EU's magnesium (used in hydrogen-generating electrolysers), 71% of gallium and more than 40% of its germanium, baryte and natural graphite. Turkey supplies 99% of the EU's boron (used in solar panels) and 61% of antimony, while Guinea supplies 61% of its aluminum, and Chile supplies 79% of its lithium. In all, the audit highlighted that more than 25% of EU supply (2016-2020) for 18 out of 26 critical raw materials that are important for the energy transition are concentrated in one country.

The Critical Raw Materials Act

In 2024, the EU enacted the Critical Raw Materials Act (CRMA) in order to address its vulnerabilities in this area. It set out a 2030 target that no more than 65% of the EU's annual consumption of any of 17 strategic raw materials comes from a single third country. It also aims to extract at least 10% of strategic raw materials, process at least 40% of them and recycle at least 25%. The audit looked at where the CRMA is today in terms of progress and found that its success is lagging, stating that "there is still a long way to go to meet the targets and the EU will struggle to secure the supply of the strategic raw materials it needs by the end of the decade". The audit examined the following key areas:

External Sources and Diversification

At the processing stage, four strategic raw materials, which are relevant for the energy transition (lithium, magnesium, gallium and rare earth elements) currently exceed this (65%) threshold. In the case of extraction, more than 65% of the EU's boron supply comes from one non-EU country - Turkey. Efforts to diversify imports have yet to produce tangible results, the auditors noted. For instance, the EU has signed 14 strategic partnerships on raw materials over the last five years, seven of them in countries with low governance scores. Imports from these partner countries fell between 2020 and 2024 for around half of the raw materials examined. Some other EU actions are at a standstill, such as the negotiations with the U.S. which were paused in 2024, while others are yet to materialize, such as the recent EU-Mercosur agreement with CRM-rich Argentina, Brazil, Paraguay and Uruguay.

Domestic Extraction & Processing

The EU needs to boost domestic extraction of strategic materials to cover 10% of its consumption by 2030 but the reality is that exploration activities are underdeveloped.  And even when new deposits are found, it can take up to 20 years for an EU mining project to become operational. This makes any concrete contribution by the 2030 deadline hard to imagine. Processing capacities--for which the EU aims to reach 40% of its consumption by 2030--are shutting down, partly due to high energy costs that can seriously hamper competitiveness. The EU may be trapped in a vicious circle, the ECA stated, where a lack of supply hinders the development of processing projects, which in turn reduces the impetus to secure supply.

Recycling

The CRMA sets out that at least 25% of the EU's strategic raw materials should originate from recycled sources by 2030. But the outlook is not promising: As things stand, seven out of 26 materials needed for the energy transition have recycling rates of between 1% and 5%, while 10 are not recycled at all. Furthermore, most EU recycling targets are not specific to individual raw materials. As a result, they fail to incentivise the recycling of individual materials--especially those that are harder to extract, such as rare earth elements in electric drives or palladium in electronics. They also fail to encourage the use of recycled materials. European recyclers suffer from high processing costs, the small quantities available, and technological and regulatory barriers which hinder their competitiveness.

Recommendations

The audit outlines five key recommendations that should be implemented in the next two years to speed up Europe's critical minerals vulnerabilities. 

1. Strengthen the foundations of the EU's raw materials policy
2. Ensure that efforts to diversify imports lead to more secure supply of critical raw materials
3. Address the financing bottlenecks which hamper the progress of critical raw materials production in the EU
4. Make better use of the sustainable resource management to reduce dependence on primary critical raw materials
5. Increase the added value of EU strategic projects

Key Takeaways

• The EU's ambitious 2030 targets for critical minerals are "out of reach."
• EU efforts on import diversification are not producing tangible results.
• Bottlenecks hinder domestic production, and recycling is still in its infancy.

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