EU faces uphill battle to meet critical raw materials goals

The EU might struggle to meet its 2030 critical raw material targets as limited domestic output, long mine development timelines and continued reliance on imported feedstocks threaten efforts to reduce supply-chain dependence, according to a July 14 study by German economic research group, the ifo Institute.

The study, which assessed the EU's position across critical raw material value chains, said the bloc's current production footprint remains small at every stage, creating a "structural tension" at the heart of European raw materials policy.

Under the Critical Raw Materials Act, the EU is targeting domestic extraction of 10%, processing of 40% and recycling of 25% of its annual consumption of strategic raw materials by 2030. These materials are considered essential for sectors including batteries, semiconductors, renewable energy and defense.

However, the study found that in 2024, EU production accounted for only 5% of global mining output for four of the 27 critical raw materials examined, while the bloc recorded no production for nine of them.

Even where Europe has relatively stronger mining positions, including rhenium and strontium, it remains a minor global producer, the report said. The situation at the refining stage is only "marginally better," with stronger EU shares in selenium and zinc but almost no refining of gallium or magnesium, both of which are needed for strategic technologies.

The report said new mining projects are unlikely to provide a near-term fix, as mine development can take up to 18 years from exploration to production. As a result, domestic extraction alone is unlikely to allow the EU to meet its 2030 targets or address immediate supply risks.

Refining dependency

The ifo Institute said expanding refining capacity could help reduce Europe's exposure to dominant processing countries, particularly China. But it warned that refining alone would not eliminate import dependence, as EU refineries would still need imported ores and concentrates.

Policies focused mainly on processing, thereby shifting risk upstream from refined products to mined feedstocks, the study said.

Lithium illustrates the problem. Australia accounts for 42% of global mined lithium, while China accounts for 16%, but around 94% of Australian spodumene is exported to China for processing. This leaves China controlling 65% of global refining capacity for battery-grade lithium hydroxide and lithium carbonate, according to the report.

The study said the EU will therefore need to scale domestic refining while also securing diversified upstream supply from overseas producers.

Geology and partnerships

Europe has considerable geological potential, with known deposits of many critical raw materials across the continent, the report said. But many deposits have not been assessed for economic viability, limiting policymakers' ability to judge what can realistically be developed.

Data gaps also remain a barrier. In Germany, for example, deposit-level data is held by the 16 federal states rather than centrally, complicating EU-wide analysis.

The study said the EU's most urgent short-term priority is securing diversified upstream imports. Since 2021, the bloc has concluded 14 strategic partnerships with countries including Canada, Chile, Kazakhstan, Namibia, the Democratic Republic of Congo and Zambia.

However, the report said these agreements have so far secured access "on paper" rather than actual supply volumes. To convert partnerships into production, projects will need financing, risk-sharing, and firm-long-term offtake commitments.

The study also found limited scope for tariff-based support, noting that EU applied most-favored-nation tariffs already equal World Trade Organization ceilings in 96% of cases where bound tariff data was available.

The ifo Institute concluded that no single policy lever will be sufficient. Domestic mining, refining, recycling, import diversification, better geological data and stronger demand-side investment signals will all need to advance together if the EU is to close the gap with its 2030 targets.

Platts, part of S&P Global Energy, assessed CIF Europe battery-grade lithium carbonate at $20,000/metric ton July 13, stable day over day and up $500/mt week over week. Lithium hydroxide was assessed at $19,000/mt, also stable day over day but up $1,000/mt week over week.