EU urged to link critical minerals strategy with enlargement, ESG standards

The EU should integrate its critical raw materials strategy with enlargement efforts in Ukraine and the Western Balkans, but must pair any new mining investments with strict environmental and governance standards to avoid backlash and accusations of an extraction-focused partnership, the European Union Institute for Security Studies warns in a new brief published July 23.

The brief states that the technologies underpinning the EU's green transition, digital transition and rearmament depend on a narrow set of materials whose supply and processing remain concentrated in a handful of foreign countries.

"This poses a critical challenge for European economic security," the EUISS said.

The EU's 2024 Critical Raw Materials Act (CRMA) aims to reduce dependencies through diversification, resilient value chains and strategic partnerships. The report argues that EU enlargement partners can help, noting that Ukraine holds major deposits of graphite, titanium and manganese, as well as lithium, cobalt, nickel, magnesium, baryte and rare-earth elements.

According to the brief 26 of the 34 critical raw materials identified by the EU can be found in Ukraine, though some deposits remain underground and the economic viability of exploiting some resources has yet to be fully confirmed due to incomplete survey data. It also cited constraints from Russia's war and occupation of Ukrainian territory.

In the Western Balkans, EUISS notes Serbia's significant copper, borate and lithium reserves. Bosnia and Herzegovina and North Macedonia hold deposits of bauxite, aluminum, cobalt, copper, manganese, nickel and antimony, it notes, while Albania contributes additional deposits of copper, cobalt, feldspar and nickel.

The brief notes that Serbia's Jadar lithium-boron project and Ukraine's Balakhivka graphite deposit have been recognized as strategic projects under the CRMA, enabling coordinated support for financing and commercial partnerships due to their importance to European battery and clean technology supply chains.

But it warned that access to raw materials alone is not enough. For enlargement to deliver in this strategic area, it stated partnerships must include investments in localized value chains spanning refining, processing and component manufacturing, and be "underpinned by the application of environmental, social and governance (ESG) standards."

"Even if this may modestly extend the lead times for new projects, it is essential to avoid the perception that the EU is a (neo-)colonial entity primarily interested in raw commodity extraction," the report said.

"Extraction trap" risk

The EUISS said that ESG implementation remains challenging where governance is weak, institutional capacity is limited and public trust is low. As demand for critical raw materials grows, it warns that supply security could take precedence over governance, widening the gap between formal compliance and implementation.

"For local communities, where the investors come from is ultimately secondary to the social, environmental and economic consequences of mining," it said. "If projects associated with the EU are perceived as falling short of the standards the Union promotes within the single market, support for enlargement may suffer."

In particular, the brief pointed to public controversy around mining projects in the region, including Rio Tinto's Jadar project in Serbia, where surveys found opposition to lithium mining rising from 55.5% in mid-2024 to 63.5% in March 2025. In November 2025, Rio Tinto placed the project into care and maintenance, dealing a significant blow to EU ambitions for a large-scale domestic critical mineral supply.

The report also argued the EU should avoid lowering standards to compete with other powers. It warned that a US memorandum agreed with Ukraine in April 2025 granted US companies preferential development and offtake rights and could tempt the EU to lower standards "to secure a greater role in future critical raw materials projects."

Recommended actions include developing the linkage between economic security and enlargement through strategic CRM investment backed by public financing, insisting on ESG and rule-of-law reform, and supporting localized value chains that include processing, manufacturing and recycling. It concluded that the goal is long-term "yield," given mines can take more than 16 years to reach production, and that CRM partnerships should be embedded in broader governance reforms.

Platts, part of S&P Global Energy, assessed CIF Europe battery-grade lithium carbonate at $20,000/mt on July 22, stable both on the day and on the week. Lithium hydroxide was assessed at $19,000/mt, also stable on the day and on the week.