Finance
'Slow' EU to unveil plan for cutting raw materials' reliance on China
Published by Global Banking and Finance Review
Posted on November 28, 2025
5 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 28, 2025
5 min readLast updated: January 20, 2026
The EU plans to reduce its reliance on China for critical raw materials with a new strategy, amid global competition and industry challenges.
By Julia Payne
BRUSSELS (Reuters) -The EU executive will unveil next week measures to cut the bloc's over-reliance on China for critical raw materials as Europe seeks to keep up with fierce global competition from the U.S. and Asia.
Despite years of warning signs that the old model of rules-based trade was coming to an end, accelerated by U.S. President Donald Trump's return to power, European governments have been asleep at the wheel, EU and industry officials said.
"Europe has become more vulnerable, also due to our dependency on third countries for our security and the supply of critical raw materials," European Central Bank chief Christine Lagarde said last week, citing other challenges ranging from rising U.S. tariffs to stiffening competition from China.
"Europe’s vulnerabilities stem from having a growth model geared towards a world that is gradually disappearing."
Beijing's threat of new curbs on rare earth exports to the West in October, on top of restrictions announced in April, has caused fresh panic in European car, clean energy and semiconductor sectors all heavily dependent on them.
EU's Industry Commissioner Stephane Sejourne said this week Europe was not just a collateral victim of trade tensions between the U.S. and China but "directly targeted".
The Economic Security Doctrine to be unveiled on Wednesday aims to make Europe's industry more self-sufficient and includes a plan for critical raw materials, called ResourceEU - mimicking the RePowerEU scheme of weaning itself off Russian oil and gas.
Yet curbing the EU's dependence on Beijing will be harder than ending its reliance on Russian natural gas. The materials are not easily substitutable like gas, and China is by far the cheapest and dominates both extraction and processing know-how.
Industry and EU officials said the EU will face the problem of how to pay for creating its own, critical raw materials and rare earths industry, often from scratch, from mines to extraction, processing and stockpiling.
A quick solution is to immediately allocate 3 billion euros from the EU's budget to the most urgent 25 of the 60 strategic projects in the rare earths and raw materials sector listed by the Commission, one EU official told Reuters.
The 25 projects would produce rare earths, gallium, germanium and lithium, the official said, adding the measures to be proposed should take care of that financing.
But longer term funding remains a challenge. To ensure their investments will pay off, companies seek guaranteed minimum prices or other guarantees - options the Commission is studying.
The EU is looking to the European Investment Bank, owned by EU governments, for funding and to the EU's Global Gateway plan - its version of China's Belt and Road scheme - to invest in projects that would benefit third countries and the EU.
The Commission will also include critical raw materials projects as eligible investments for an existing EU Innovation Fund. But industry remains sceptical.
"Time is against the EU. They have been too slow," Mika Seitovirta, an executive at mining firm Sibanye-Stillwater, told Reuters.
The Commission mindset has been "in the way", an EU official explained. "We are asking them to be more like project managers and to lift any obstacles."
GLOBAL COMPETITION
Industry executives warn the EU could lose out to the U.S. and other Western allies like Japan, Canada and Australia who are throwing billions of dollars behind global supply diversification efforts.
"We need to see fast-track permitting in Europe and Norway and the second point is price security," Alf Reifstad, CEO of Rare Earths Norway, told Reuters. Reifstad said he was also in talks with the U.S. though he prioritised the EU. Norway holds Europe's largest rare earth reserves.
The EU is working to secure resources in third countries in places like Brazil, Central Asia and most recently South Africa and Australia but political agreements have yet to translate into concrete investments.
The U.S. set industry expectations after the Pentagon signed a rare earths deal guaranteeing a minimum price and the U.S. recently poached European supplies and knowledge.
Recycling will be a major pillar to make up for the dearth of existing European mines and long development time for new production to come online.
"You need input materials for recycling. All options are on the table in terms of trade measures," the senior EU official with knowledge of the package said.
The Commission has also launched a pilot stockpile mechanism with some EU countries to jointly buy and store critical raw materials to get a better price and supply certainty.
But there will be no decisions on where, how and which materials to keep in storage until a new critical minerals centre, inspired by Japan, is up and running next year.
(Reporting by Julia Payne, writing by Jan Strupczewski; Editing by Mark John)
Critical raw materials are essential for the economy and are at risk of supply shortages. They are often used in high-tech applications and renewable energy technologies.
Self-sufficiency refers to a country's ability to produce its own critical raw materials without relying on imports from other nations.
The Economic Security Doctrine is a strategy proposed by the EU to enhance the bloc's industrial self-sufficiency, particularly in critical raw materials.
Rare earth elements are a group of 17 chemical elements used in various high-tech applications, including electronics, renewable energy, and defense technologies.
The European Investment Bank provides funding for projects across the EU, including those aimed at enhancing self-sufficiency in critical raw materials.
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