EU's Bold Raw Materials Strategy: Why Europe's Push to Cut China Ties Could Reshape Global Supply Chains

The European Union is ramping up efforts to break its dependence on China for critical raw materials, unveiling a €3 billion strategy that could, for the first time, force industries to diversify their supply chains by law. This is more than just a trade maneuver—it’s a tectonic shift in how Europe secures the resources that power everything from EV batteries to MRI machines.

EU rare earths supply chain strategy

Why This Matters

Raw materials are the lifeblood of modern economies. Without them, the EU’s ambitions for green tech, electric vehicles, and digital transformation grind to a halt.
Europe is alarmingly dependent on China. For permanent magnets—a key component in everything from wind turbines to car batteries—over 85% come from China.
Geopolitics is making supply chains fragile. China’s readiness to “weaponize” exports, as seen in recent chip and rare earth bans, exposes Europe to economic blackmail.
This new EU strategy is more than a warning—it’s a blueprint for industrial survival. If companies don’t act, Brussels may legislate diversification, marking a dramatic intervention in market freedoms.

What Most People Miss

It’s not just about rare earths—it’s about every critical input from lithium to scrap aluminum. The EU is moving to restrict the export of scrap metals and incentivize recycling, which could spark global shifts in secondary materials markets.
The price of independence isn’t cheap. The EU is openly ready to subsidize purchases from pricier, non-Chinese sources—a pragmatic admission that strategic autonomy comes at a cost.
The UK and US are lagging behind. The UK’s £50m plan pales before the EU’s €3bn commitment, and the US is still grappling with similar vulnerabilities.
Boards are now accountable. EU procurement chiefs must report to their boards on diversification plans, a subtle but powerful nudge toward supply chain transparency and resilience.

Key Takeaways

The EU is serious about de-risking. This is no longer “business as usual”—expect new rules, funding, and potentially, legal mandates.
Major new investments are coming. Two pilot projects—a molybdenum extraction in Greenland and a lithium mine in Germany—are already receiving funds.
Market shocks are the new normal. Recent chip bans and rare earth threats underscore how quickly supply can be choked off.
Europe’s industrial model must adapt. As one industrialist bluntly put it, “the EU might as well apply to be a province of China” if it doesn’t act—harsh, but a wake-up call.

Timeline: How We Got Here

2020: Over 78% of EU lithium imports come from Chile; almost all permanent magnets are sourced from China.
2023-2025: China threatens and partially implements export bans on chips and rare earths in response to Western political moves.
Dec 2025: EU unveils €3bn ReSourceEU strategy, warns industries legal mandates are on the table if they don’t diversify.

Pros and Cons of the EU Approach

Pros:
- Greater supply chain resilience
- Boost for European mining and recycling industries
- Reduces geopolitical leverage of adversaries
Cons:
- Higher costs for manufacturers and consumers
- Potential trade tensions with China
- Implementation and enforcement challenges

Action Steps for Industry

Map your supply chain—know your exposure to Chinese materials.
Engage with EU funding opportunities for diversification and recycling.
Prepare for regulatory changes—don’t wait for laws to force your hand.

Expert Commentary

“If the EU doesn’t act, it risks becoming a ‘province of China’ in terms of industrial inputs,” warned Stefan Scherer, CEO of AMG Lithium. That’s not hyperbole—it’s a reflection of how deep the dependency runs.

“Open markets are being exploited to our disadvantage, leaving us firefighting crisis after crisis,” says EU Trade Commissioner Maroš Šefčovič. The message: it’s time to play tough.

The Bottom Line

The EU’s new strategy is a watershed moment— not just for Europe, but for global supply chains. The real test will be whether industry moves fast enough to avoid the legislative hammer. Either way, the era of cheap, risk-blind global sourcing is over. The scramble for secure, sustainable resources is on—and the rules of the game have changed.

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