The European Commission wants to make Europe less dependent on rare materials and other critical raw materials. It is allocating a budget of €3 billion for this purpose. Among other things, the program includes restricting the export of waste that can be recycled for valuable materials essential to the green transition, such as rare-earth metals and lithium, which are necessary for EV batteries.

By restricting exports of waste containing these materials, the EU aims to strengthen its strategic autonomy, as it is currently too dependent on imports from China for many critical raw materials used in, for example, EVs, wind turbines, and computer chips. China accounts for approximately 70% of global mining and 90% of the refining of these materials.

Various projects

Over the next twelve months, the EU will therefore allocate €3 billion to support several strategic projects as part of the RESourceEU action plan. Approximately €2 billion of this is provided through the European Investment Bank and will be mobilized for InvestEU. This investment program offers loans, venture capital, and private debt financing, explicitly targeting the critical raw materials value chain.

The money will go to projects involving the extraction, processing, and recycling of raw materials in Europe and partner countries. There are already two priority projects: the Vulcan’s lithium extraction project in Germany and Greenland Resources’ Malmbjerg molybdenum project.

Approximately 300 million euros have been earmarked via Battery Booster for projects in the upstream value chain of battery raw materials, such as the extraction and processing of lithium and nickel, which are crucial for EV batteries.

The remaining amount, about 700 million euros, will be made available from the Innovation Fund to develop advanced technologies for the extraction, processing, and recycling of critical raw materials.

European Raw Materials Center

A ‘European Center for Critical Raw Materials’ is also to be set up early next year to assess needs and help coordinate joint purchases and stockpiling to ensure supply. Through a Raw Materials Platform, companies can pool their needs, purchase jointly, and secure purchase agreements. In addition, work is also underway on a system that guarantees a minimum price. The first joint purchasing round will start in March 2026.

Finally, the Commission also wants to strengthen its partnerships with like-minded third countries with which it has signed strategic alliances, as was recently the case with South Africa. Talks are also being initiated with Brazil with a view to reaching such an agreement.

Jointly purchase and export restrictions

The package also includes measures to better protect European industry from geopolitical tensions and price shocks, including through stronger market monitoring and protection against hostile interference.

In early 2026, the Commission will launch a pilot project in which Member States will jointly purchase raw materials and build up stocks. Exactly which Member States will be involved has not yet been announced.

The Commission will also propose, in early 2026, restricting the export of scrap metal if it can be recycled into raw materials. And from September 2026, old lithium-ion batteries and black mass will also be officially classified as hazardous waste, meaning they can no longer be exported to countries outside the OECD.

Big bogeyman China

The aim of all these measures and investments is therefore to halve the EU’s dependence on a single supplier by 2029. According to the Commission, recycling alone could cover up to 20% of European demand for permanent magnets, a product that China recently restricted exports of and on which many European companies depend – it is, among other things, an essential component for EV motors.

The EU’s counteroffensive comes as China has further tightened controls on rare earth exports since early October. Technology and expertise for mining and processing these metals will now be shared only after approval, making it more difficult for foreign companies to process them outside China.

However, products outside China that contain rare earth metals sourced from China or are manufactured using Chinese processes are also subject to this regulation, meaning that foreign exporters of such products must apply for an export license from the Chinese Ministry of Commerce.

In general, according to the Commission, China is using subsidies and artificially low prices to eliminate competitors to achieve a near-monopoly. However, Western companies continue to buy from Chinese suppliers due to cost advantages, despite geopolitical risks. High energy prices and strict environmental regulations make production in the EU more expensive, making it difficult to compete.

“Our action plan will only work if our European companies play the game,” said Stéphane Séjourné, European Commissioner for Industry and one of the Commission’s vice-presidents, at the presentation of RESourceEU.

“If we see that this is not the case, we will make diversification [of raw material sources] a legal requirement.” RESourceEU is “a driver of our industrial sovereignty and a cornerstone of European economic security, amid the global race for the materials our industries need most.”