EU faces uphill battle to meet critical raw materials targets: auditors report

The EU risks falling short of key supply targets under the Critical Raw Materials Act (CRMA) because it remains heavily reliant on imports and has made limited progress in scaling domestic production, refining and recycling, according to the European Court of Auditors, the top audit institution of the EU.

In a new report released Feb. 4, the ECA found that the EU is still highly dependent on a small number of non-EU supplier countries, leaving supply chains exposed to disruption.

It said the CRMA's impact is further weakened by gaps in the underlying data and by targets that are not always supported by robust evidence -- limitations that make it harder to track progress and guide investment.

Diversification lags

The ECA said EU efforts to diversify supply -- through trade agreements, strategic partnerships and roadmaps -- have "yet to produce tangible results" in terms of measurable supply security, and that quantifiable information on outcomes is currently lacking.

Under the CRMA, member states must ensure that by 2030 no more than 65% of any of 17 strategic raw materials comes from a single non-EU country. The ECA said four strategic raw materials central to the energy transition -- lithium, magnesium, gallium and rare earth elements -- already exceed that threshold at the processing stage.

"While the Commission monitors implementation progress in general, it does not monitor the effect of these initiatives on supply," the ECA said, adding that limited results reflect missing or delayed roadmaps and a lack of specific projects designed to deliver raw materials to the EU.

Domestic constraints

On the domestic side, the report found exploration and processing remain underdeveloped. Europe lacks sufficient processing capacity and continues to struggle to finance greenfield mineral exploration.

The ECA also highlighted lengthy and complex permitting as a major cause of delays for mining and refining projects, warning that these bottlenecks -- combined with financing challenges -- could prevent projects from scaling quickly enough to meet the EU's 2030 objectives.

Recycling potential underused

The ECA said the EU is not fully using recycling and sustainable resource management to reduce import dependence.

While the CRMA sets a non-binding target for at least 25% of strategic raw materials to come from recycled sources by 2030, the auditors said that market and regulatory barriers continue to undermine recycling's commercial viability as a critical raw materials source.

The report suggests that binding targets, alongside measures to improve the economics of recycling, could help accelerate the development of domestic secondary supply.

The new ECA report comes as global competition intensifies for securing reliable supplies of critical minerals, including lithium, cobalt and rare earth elements, which are essential for battery production, wind turbines and solar panels.

Platts, part of S&P Global Energy, assessed CIF Europe lithium carbonate price at $18,500/mt Feb. 3, down $500/mt day over day and $200/mt lower week over week. The CIF Europe lithium hydroxide price was assessed at $17,800/mt, down $1,200/mt day over day, and $800/mt lower week over week.