European Critical Minerals Initiatives: Legal And Strategic Perspectives

I. INTRODUCTION

The global economy is undergoing a profound transformation driven by the twin imperatives of decarbonisation and digitalisation. At the heart of this transformation lies a class of materials whose strategic importance has surged in recent years: critical minerals. Although definitions vary across juris dictions—and should not be confused with "rare earths," which form only one subset of critical minerals—each region maintains its own list, including the European Union (EU), the United States (US), the United Kingdom (UK), and Australia. Essentially, critical minerals—ranging from lithium, cobalt, and rare earth elements to graphite, copper and nickel—are indispensable to technolo gies underpinning the energy transition (electric vehicles (EVs), wind turbines, solar panels, and battery storage systems), as well as to defence applications, aerospace, and advanced electronics, making them not only economically vital but also geopolitically sensitive.

Supply chains for many of these critical minerals are fraught with vulnera bilities. Extraction is often geographically concentrated in a handful of jurisdic tions, while refining and processing may take place in entirely different re gions—frequently with limited capacity—before materials are shipped else where for end-use manufacturing and consumption. The COVID-19 pandemic, the war in Ukraine, and tensions between North America and Europe on one side and Russia and China on the other have further underscored the fragility of global supply chains. At the same time, the environmental and social costs of mining—particularly in jurisdictions with weak governance—have raised concerns about sustainability and ethical sourcing. In response, governments across the globe have begun to reassert themselves in the critical minerals space, not merely as regulators but also as strategic actors and financiers.

On March 16, 2023, the European Commission presented its proposal for a Critical Raw Materials Act (CRMA),¹ which was subsequently adopted in amended form in 2024 following negotiations with the European Parliament and the Council. The CRMA was heralded as a flagship measure intended to secure "a secure, diversified, affordable and sustainable supply of critical raw materials" for the EU's green and digital transition.² Framed as a direct re sponse to the US's Inflation Reduction Act (IRA)—whose US$400 billion pack age of tax credits and funding incentives reshaped global competition for clean-tech investment—the CRMA is part of a wider European effort that also encompasses the Net Zero Industry Act (NZIA) and a growing array of Member State-level incentive schemes.

The CRMA encapsulates the intensifying global competition for critical raw materials (CRMs)—particularly those deemed "strategic" due to their role in key industrial sectors—within the broader context of Europe's industrial transfor mation and its pursuit of strategic autonomy. The declared aim of the CRMA is to mobilise public and private finance, accelerate permitting for certain desig nated "Strategic Projects," and strengthen Europe's capacity to process, recy cle, and substitute CRMs. In addition to incentives to attract investment in min ing, processing, and recycling projects in the EU, the EU has also tightened its protective toolkit—through foreign direct investment (FDI) screening, state aid rules, and new rules on foreign subsidies—to shield domestic industries and ensure strategic autonomy.

Whether this mixture of incentives and protections can reconcile market realities with the EU's ambitious critical minerals and net-zero targets remains uncertain. According to the International Energy Agency's (IEA) Global Critical Minerals Outlook 2025, two structural challenges continue to shape the trajec tory of the critical minerals sector: (1) the intensifying concentration of supply chains (particularly in refining and processing) and (2) the fragility of invest ment momentum.³ Despite robust demand growth in the world—lithium de mand rose by nearly 30% in 2024, while nickel, cobalt, graphite, and rare earths saw increases of 6–8%—expansion of supply has been disproportionately concentrated in a handful of jurisdictions.⁴ Between 2020 and 2024, over 90% of refined supply growth for key battery metals came from a single country: China for cobalt, graphite, and rare earths, and Indonesia for nickel.⁵ The average market share of the top three refining nations rose from 82% to 86%, with projections indicating only a marginal decline by 2035.⁶ Mining shows a simi lar trend, with the top three producers of key energy minerals accounting for 77% of global output in 2024, up from 73% in 2020.⁷

This concentration has heightened vulnerability to supply shocks. The IEA's resilience analysis reveals that if the largest supplier of battery metals and rare earths—and its demand—were removed from the market (China for lithium, cobalt, graphite, and rare earths, and Indonesia for nickel), remaining supply would meet only 35–65% of global demand by 2035.⁸ Recent export restrictions—such as China's ban on gallium, germanium, and antimony ex ports to the US,⁹ its export controls on seven heavy rare earths,¹⁰ and the four month suspension of cobalt exports by the Democratic Republic of Congo (DRC)¹¹—underscore the geopolitical risks embedded in these supply chains.¹²

At the same time, investment momentum has weakened. After two con secutive years of double-digit growth, global investment in critical minerals rose by just 5% in 2024, with real growth (adjusted for inflation) at a mere 2%.¹³ Exploration spending plateaued, and start-up funding showed signs of slow-down, particularly for new entrants.¹⁴ While lithium exploration increased by 30%, spending on nickel and cobalt exploration fell by over 30%, reaching five-year lows.¹⁵ The subdued price environment—lithium prices have fallen by over 80% since 2023—has further deterred investment in diversified regions, with several projects canceled or placed under care and maintenance.¹⁶

It follows that, laudable though its objectives are, the CRMA must be as sessed against the practical and legal obstacles that stand in the way of im plementation. Incentives alone will not suffice without a coherent framework to allocate risk, coordinate national and EU-level measures, and address inves tor concerns over regulatory certainty.

The remainder of this article examines these issues in detail. It is made up of four substantive parts and a conclusion. Part II maps the global drivers un derpinning the race for critical minerals, highlighting the geopolitical, techno logical, and economic forces shaping demand. Part III analyses the EU's legal approach in detail alongside the national layers of incentives deployed by Member States. Part IV explores the interplay between incentives and protec tive instruments—such as state aid control, FDI regulation, and ESG due dili gence—and how these shape strategic coherence. The article concludes by reflecting on the extent to which Europe's approach can provide the invest ment certainty and risk allocation mechanisms needed to boost its critical minerals sector.

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Footnotes

1. Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/ 1020.

2. Press Release, European Comm'n, "Critical Raw Materials: Ensuring Secure and Sustainable Supply Chains for EU's Green and Digital Future" (Mar. 16, 2023).

3. IEA, "Global Critical Minerals Outlook 2025," at 6 (May 2025).

4. Id.

5. Id.

6. Id. at 7.

7. Id.

8. Id. at 98.

9. IEA, "Strengthening the Export Control of Relevant Dual-Use Items to the United States" (Dec. 2024), https://www.iea.org/policies/26794-strengthening-the-export-control-of-relevant-dual-use-items-to-the-united-states.

10. IEA, "Export Controls on Certain Medium and Heavy Rare Earth Items" (Apr. 2025), https://www.iea.org/policies/26796-export-controls-on-certain-medi um-and-heavy-rare-earth-items.

11. Ange Adihe Kasongo & Sonia Rolley, "Congo Bans Cobalt Exports for Four Months to Curb Oversupply," Reuters (Feb. 25, 2025).

12. IEA, supra note 3, at 36.

13. Id. at 6.

14. Id.

15. Id. at 69.

16. Id. at 6.

Originally published by The Foundation Journal for Natural Resources and Energy Law.

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