EU Proposes Agency to Secure Critical Minerals Amid Global Competition

European Parliament lawmakers voted last week to propose an agency empowered to buy stakes in raw materials companies when necessary to protect EU supplies. The proposed agency would also establish EU stockpiles and track supplies throughout the bloc. The proposal follows efforts by Donald Trump's administration and Japan to secure minerals needed for defence and clean technologies.

Mohammed Chahim, the Dutch social democratic lawmaker leading the proposal, said the agency would help Europe reduce dependence on minerals from China for batteries and green technologies. Chahim said the proposal would also reduce Europe's vulnerability when prices for critical elements fall. Chahim said European projects are highly sensitive to global prices, which international players can manipulate. Chahim said investments to secure mineral supplies have made the US and Japan much less vulnerable.

The Trump administration has invested heavily in developing supply chains, including through stakes in rare earth producers. Last summer, the Pentagon invested $400 million for a 15% stake in US rare earth producer MP Materials. The Pentagon also provided a $150 million loan. The Pentagon signed a 10-year agreement establishing a minimum price of $110 per kg for neodymium-praseodymium that MP Materials stores or sells. Neodymium-praseodymium combines rare earths used in permanent magnets for technologies including electric vehicles and robotics. Bernd Schäfer, head of industry group EIT RawMaterials, warned that Europe could become dependent on US rare earth metals as Europe has become dependent on China.

The proposed Critical Raw Materials Centre would receive €2 billion under the EU's next long-term budget. The centre would follow the model of Japan's Organization for Metals and Energy Security, a government body seeking stable, affordable energy and mineral supplies. Chahim acknowledged that competing with Japanese and US efforts would require additional money from private investors, national governments and the European Investment Bank. Chahim said the project would have little prospect of success if funding remained at €2 billion.

The EU has concentrated supply-chain efforts on identifying strategic mining, processing and recycling projects. Those projects qualify for accelerated permitting but have no guarantee of public funding. The EU selected 46 additional strategic projects earlier this month, supplementing the existing 60 projects receiving those benefits.

The European Commission abandoned a plan to introduce legislation proposing a centre this autumn. Chahim instead took the unusual approach of working with officials and other lawmakers on substantial amendments to the revision of the Critical Raw Materials Act. The existing act establishes minimum targets for mining, extraction and mineral processing within the EU.

Member states must also approve the proposed agency and equity investments in exceptional circumstances before those measures can proceed. Chahim said Germany, Spain and some other countries had expressed scepticism. However, Chahim said those countries were now willing to engage.