2025 highlighted Europe’s excessive dependence on China for critical raw materials, as the specter of export controls threatens the bloc’s rearmament efforts and its industrial base. The EU and its member states have finally stepped up their efforts to bolster resilience. The expansion of production and processing capacity, both within Europe and outside China, is a central element of its agenda.
However, while attention has rightly focused on getting projects off the ground, surprisingly little attention has been paid to what will happen if they actually succeed. With its current approach, Europe risks spending its scarce resources on supporting projects, only to see their production or even ownership slip away if they come to fruition.
Undoubtedly, fundamentally distorted markets remain the main challenge to breaking China’s hold on global supply chains for many critical materials. The combination of Beijing’s technological prowess and state backing, as well as its ability to manipulate prices thanks to its current monopoly position, saps the commercial viability of alternative suppliers worldwide. Despite some recent initiatives, European industry players have shown little willingness to pay a premium for materials sourced outside of China, much less to coordinate actively to build new supply chains.
Governments have been reluctant to impose strict diversification requirements. The fragmentation of the European financial landscape, with funding spread across member states, development banks and EU instruments, complicates matters from a project perspective.
“Europe is not prepared for the scenario in which its efforts in critical raw materials succeed”
In short, there is no guarantee that Europe’s efforts to strengthen resilience, under current policy lines, will bear fruit. But Europe is also not prepared for the scenario in which these efforts succeed. It has yet to establish adequate safeguards to ensure that the benefits of the projects truly translate into European supply security.
European strategic projects remain exposed to non-European buyers and owners
The clearest example of this is the so-called “strategic projects” under the EU’s Critical Raw Materials Act: currently sixty projects, thirteen of which lie outside the EU, for which the EU promises a short-term impact on supply resilience and provides access to financing and offtake agreements. After reviewing a sample of nineteen applications accepted under the program, the European Court of Auditors has sounded the alarm: not only does it question whether all projects will reach production by 2030 as planned, but it notes that seven projects lacked agreements with European buyers, including four cases where the projects were located outside the EU.
If these projects come to fruition, there are ample reasons to expect non-European actors to try to lock in their production, or even to acquire assets directly. This is not a theoretical risk, as two recent episodes illustrate.
First, consider the Belgian company Solvay, a notable case of a firm that has maintained substantial rare-earth processing capacity in Europe, sourcing feedstock from Australia and other places. Europeans were left on the sidelines in November of last year when the company signed two agreements under which materials from its plant in France would be shipped to the United States.
“Following increased acquisition interest from the U.S., Shenghe eventually gained full control of the company in 2025”
Second, turn to Peak Rare Earths, an Australian firm that developed a major rare-earths project in Tanzania and initially planned to process the material in the United Kingdom. After years of political uncertainty driven by Tanzania’s resource nationalism under President John Magufuli and shifts in investor confidence, a key stake was sold to Chinese Shenghe Resources in 2022. After further U.S. acquisition interest, Shenghe ended up acquiring full control of the company in 2025. For Europe, preventing similar outcomes must be a priority in a world where competitive bids can come from both Washington and Beijing.
The Peak Rare Earths saga is also instructive about the challenges posed by the domestic policies of the countries where projects are located. While political rhetoric about Europe’s global role emphasizes collaboration and mutual benefit, leaders of resource-rich states have a history of managing these assets with political savvy, both domestically and in their dealings with foreign partners. Although there were good reasons to question the fairness of some agreements reached between leaders of the Democratic Republic of the Congo and China and others, for instance the way the country reformed its mining code and renegotiated substantially more favorable terms since 2018, it remains a telling example. Governments are fully aware of the leverage afforded by geostrategic competition, and they will use it.
Europe must shield production and harden its deals with partner countries
First, it must strengthen its framework for strategic projects. Promising initiatives should receive greater support, including expedited processing and real financial backing. But this must be tied to long-term, binding commitments that European end users will actually receive the production, as well as explicit safeguards against selling assets to non-European actors. While measures to promote or, if necessary, impose diversification by private companies are needed to spur demand and enable viable business models for project promoters, a European public storage plan could serve as a safety net, whereby materials would only be released to the rest of the world if European supply security were genuinely guaranteed.
“Partners must understand that these projects are a matter of vital interest for Europe, and that failing to honor voluntarily and sovereignly agreed deals would not go unpunished”
Second, Europe must address the matter squarely with its partner governments. It must make clear that it is committed to a collaborative approach that supports local value creation beyond extraction, but also that such cooperation presupposes reliable access to the resulting materials for European buyers and sustained compliance with the agreed terms. There is no need to imitate the ruthless approach of the Trump Administration, which has suggested that its support for life-saving HIV programs in Zambia could be contingent on the country bowing to U.S. demand for minerals. Yet partners must understand that these projects are a matter of vital interest for Europe, and that failing to honor voluntarily agreed deals would not go unpunished.
If Europe takes the security of its supply chains seriously, this must be reflected in the design of its policies and alliances. Unless it guarantees that its efforts translate into secure, long-term access, Europe risks doing the hard part and letting others reap the benefits.
