TL:DR – EU Struggles to Diversify Supply of Critical Raw Materials by 2030

• The European Union is aiming to diversify its supply of critical raw materials by 2030.
• A European Court of Auditors report states the EU is unlikely to succeed without reducing dependence on China.
• China supplies 97% of the EU27’s imports of magnesium and other crucial minerals.
• The EU has signed trade deals, including one with Mercosur, to aid supply diversification.
• The EU’s Critical Raw Materials Act aims to decrease reliance on non-EU sources by setting consumption targets.
• 10 critical materials necessary for energy transition are not recycled in the EU.

EU’s climate goals at risk without China’s critical raw materials, EU auditors warn

The European Union is at risk of failing to diversify its supply of critical raw materials by the end of the decade, according to a new report from the European Court of Auditors (ECA) released on Monday. The report highlights the EU’s heavy reliance on China for imports of essential minerals necessary for the energy transition.

The European Commission has initiated 14 significant trade agreements to address this issue, yet the ECA warns that the EU27 is “unlikely to succeed in time.” This raises concerns regarding the bloc’s ability to transition to clean technologies like electric vehicle batteries and wind turbines.

EU’s Dependence on China for Raw Materials

China accounts for a staggering 97% of the EU’s magnesium imports, vital for hydrogen-generating electrolysers. The ECA report reveals additional dependencies: 39% for arsenic, 44% for baryte, 71% for gallium, 45% for germanium, 40% for graphite, and 31% for tungsten.

Keit Pentus-Rosimannus, an ECA official, stated, “Without critical raw materials, there will be no energy transition, no competitiveness, and no strategic autonomy.” She emphasised the need for the EU to improve its supply chain resilience.

Trade Agreements to Diversify Supply

The recently signed Mercosur trade agreement with Argentina, Brazil, Paraguay, and Uruguay aims to bolster the EU’s supply of critical raw materials, pending approval by the European Parliament. Additionally, European lawmakers are set to discuss the unfreezing of the US-EU trade deal, which includes provisions for minerals.

EU Executive vice president Stéphane Séjourné has acknowledged the bloc’s ongoing dependence on China and has proposed new measures to monitor raw material supplies. Séjourné described the importance of maintaining trade relations with China amid the US’s uncertain reliability as a partner.

Critical Raw Materials Act to Address Supply Chain Issues

The EU has adopted the Critical Raw Materials Act (CRMA) in 2024 to mitigate reliance on external sources, particularly China. The CRMA sets non-binding targets for 2030, including local extraction, processing within the EU, and the use of recycled materials.

Despite these efforts, the ECA warns that significant challenges remain. The ECA’s report suggests that introducing binding recycling targets for individual critical materials could help improve the EU’s situation, as currently many of these materials are not recycled at all.