The EU’s critical raw materials maze: Why methodology won’t save the Green Deal

The European Court of Auditors (ECA) has just released a sobering reality check on the European Union’s (EU) critical raw materials (CRM) policy. The special report, to which the European Commission has replied, confirms what many observers quietly acknowledge: the EU is struggling to match its CRM ambitions with reality. But while the ECA report identifies the challenge, it goes on to propose technical fixes and falls short on recommending the strategic and industrial choices that would actually reduce dependence on China and a handful of suppliers. So, while the findings on the EU’s ’dangerous dependencies’ are accurate, the path forward requires less methodological sophistication and more industrial pragmatism.

The auditors rightly reiterate how stark Europe’s dependence remains. The EU still relies heavily on single non-EU suppliers for key inputs, particularly China. With 97% of magnesium and 71% of gallium, among many others, coming from a single source, strategic autonomy seems an unrealistic aspiration. This shouldn’t be disheartening, because reducing this dependence is indeed a long-term goal. That is the starting point of any honest conversation about Europe’s green and digital transitions. However, some nuances need to be brought into the discussions of how to get there. 

Methodology is unlikely to save the day  

The ECA criticises the domestic soft targets set out in the report (10% for mining, 40% for processing, 25% for recycling in the EU, based on annual consumption and a dependence of no more than 65% for any CRM on a single country by 2030) as they are “non-binding” and “lack justification” on methodological grounds. Indeed, they are meant to orient investment and policy rather than represent hard benchmarks. But this needs further qualification: simply elaborating further on methodology, sophisticated as it may be, may still not bring the EU closer to its stated objectives. Instead, what it requires is a move to ‘action’ in terms of investments and private-sector engagement, rather than ‘more strategising’. 

Mining as an activity versus the EU as a bureaucracy

Similarly, it is true that new mining projects in the EU can take up to 15-20 years to become operational due to complex permitting, other regulatory challenges and community opposition. In other parts of the world, and for similar reasons, it also takes up to 10-15 years, compounded by the lack of infrastructure or financing, adding  yet another layer of complexity. The long lead time between discovery and production reflects the nature of the mining sector, rather than the EU’s bureaucratic burden, though arguably steps can be taken to mitigate the latter. Moreover, given that most high-yielding mines for many minerals have already been, or are being exploited, this lead time is only likely to get longer. 

Is processing a strategic choice for the EU’s growing clean energy industrial demands?

The report flags that high energy costs have already led to closures or shelving of plans for energy-intensive processing facilities in Europe. This jeopardises the 40% domestic processing target. The question here is twofold: firstly, when will European energy prices be competitive enough for industry to stay afloat? This is pertinent as it affects industries well beyond CRMs. Secondly, even if energy prices do come down, is it really ‘strategic’ for the EU, which is not richly endowed in green energy, to prioritise refining activities on its own territory over other industrial needs such as EV battery production or green steel?

Instead of struggling to bring refineries to Europe, where there are known challenges around NIMBYism (Not in My Backward) and other environmental issues, the EU could diversify its supply of refined minerals by working with third countries in Africa, Latin America and beyond. A more realistic approach may be to build on and use refining and processing capacity in third countries, other than China, so that European midstream and downstream firms can tap into more resilient, geographically diversified value chains. This is already envisaged in the CRM deals that the EU has signed with several countries. 

In practice, however, that may require working with Chinese firms in third countries, as we have already argued, rather than trying to exclude them at all costs. Strategic autonomy, therefore, shouldn't mean excluding China, who have the technology and capital, but rather find ways to leverage its presence and capabilities to build more resilient supply chains.

If I were to give recommendations to the Commission

Many of the ECA’s recommendations focus on strengthening the analytical underpinnings of EU CRM policy. It calls for more reliable and transparent lists of critical and strategic raw materials, clearer justifications for targets, robust methodologies for weighting materials, and better tracking of the impact of EU funding on supply. These may seem reasonable asks, and the EU is already very good at these technical exercises.

These recommendations, however, raise questions about whether Europe can audit and model its way out of CRM dependence through stronger methodology. The real challenge, rather than methodology, is the political economy of acting on it – deciding where to put scarce financial and diplomatic capital, which trade-offs to accept, and how to work with partners whose own priorities will not neatly fit EU templates.

The report also recommends systematically assessing whether EU trade agreements and strategic partnerships actually improve supply security, and using these assessments to design future agreements and replicate ‘what works’ before making new ones. This is certainly a valid recommendation, and in an ideal world, this feedback loop would guide policy. However, in the world we currently are in, there are too many moving parts that the EU does not control - Trump tariffs, volatile Chinese growth, and shifting politics in partner countries. In such circumstances, the quest for ‘what works’ should not become a source of paralysis. As the Draghi report also highlights, the EU needs strategic decisions with investments at scale, even under uncertainty, rather than policy inaction in pursuit of evidence-based decision making.

In terms of financing bottlenecks, the ECA certainly puts its finger on it. Indeed, catalysing investments, including in third countries such as in Africa, is vital, but progress in engaging the private sector has been limited to high commercial and reputation risks. Though if there is indeed merit in questioning the strategic thinking on processing of these minerals in Europe, it would also be necessary to explore avenues for innovative co-financing with non-EU partners, including China, in third countries, given not only the EU’s limited depth in pocket on the one hand and the capabilities of the other side. 

The ECA report is meant to be a reality check, and it serves that purpose. Ultimately, however, the way out is less about strengthening methodology and more about questioning the political economy. What the EU needs to bring about resilient supply chains is recognising the trade-offs, acting strategically, leveraging international capabilities, including China’s, and crucially breaking institutional inertia to coordinate and facilitate investments, not endless strategising on drawing boards.

The views are those of the authors and not necessarily those of ECDPM.