EU’s Bid to Break China’s Mineral Grip Hits Crisis as Flagship Projects Fight for Survival

Europe’s Attempt to Break China’s Supply-Chain Grip Is Running Out of Money

China Rare Earth Dominance

Europe’s ambitious attempt to loosen China’s grip over the raw materials powering electric cars, artificial intelligence, renewable energy and modern weapons is running into a potentially serious problem.

The companies expected to make the plan work say they need money — urgently.

Twenty-three of the 60 critical-mineral projects selected by the European Union as strategically important have issued an extraordinary warning to Brussels, saying some developments face acute financial pressure and could be in “immediate jeopardy”.

Their intervention raises uncomfortable questions about whether Europe can realistically achieve one of its most important economic-security objectives: reducing its dependence on China for minerals that have become indispensable to almost every advanced industrial economy.

The projects said that, 15 months after the EU began selecting its flagship developments, they were still being affected by financing difficulties, weak market access, permitting problems and what they described as a lack of coherence in the European approach.

Reuters reported that several other projects have already effectively been frozen.

One European lithium project has gone even further.

Viridian Lithium, once selected by Brussels as one of Europe’s strategic projects, collapsed earlier this year before its proposed French refinery could be built.

Its former chief commercial officer has now claimed that insufficient European financial support contributed to its failure.

That matters far beyond one failed company.

Because the entire strategy was supposed to prevent Europe from remaining dangerously exposed to China.

And the clock is already ticking.

Why Critical Minerals Have Become So Important

Modern economies rely on an extraordinary range of minerals that most consumers rarely think about.

Lithium is fundamental to many rechargeable batteries.

Graphite is crucial to battery anodes.

Rare earth elements are used in powerful permanent magnets.

Gallium has applications in semiconductors and advanced electronics.

Germanium is important for fibre optics, infrared technologies and semiconductor applications.

Cobalt, nickel, manganese, tungsten and other materials also play major roles across batteries, aerospace, defence, electronics and industrial manufacturing.

That means the struggle over critical minerals increasingly resembles the geopolitical struggle over oil during the 20th century.

Countries able to control extraction, refining and processing can potentially influence enormous sections of the global economy.

China recognised this strategic importance decades ago.

Europe is now trying to catch up.

The problem is that China does not merely possess mineral deposits.

Its greatest advantage lies further down the supply chain.

Chinese companies have built enormous capacity for refining, processing and manufacturing the materials that ultimately enter European factories.

The European Parliament has previously estimated that China controls roughly 75% of global rare-earth mining output and around 85% of processing capacity.

For some individual rare-earth elements, China's share of processing exceeds 95%.

Europe's exposure can be even greater further downstream.

The European Parliament said the EU obtains around 98% of its permanent-magnet demand and approximately 92% of its neodymium-iron-boron magnet demand from China.

Those magnets appear in everything from electric motors and wind turbines to advanced military equipment.

That makes dependence on China more than an economic problem.

It is increasingly viewed as a national-security problem.

China Has Already Shown It Can Restrict Supply

European concern intensified dramatically after Beijing began tightening export controls on strategically important materials.

China introduced restrictions on gallium and germanium in 2023.

Graphite controls followed.

Restrictions were subsequently extended to antimony, tungsten, bismuth and scandium.

Then, in April 2025, China introduced controls affecting seven rare-earth elements and associated permanent magnets.

The European Parliament said subsequent export volumes fell dramatically and warned that European industries including automotive manufacturing, aerospace, healthcare, renewable energy and defence could face disruption.

For Brussels, the message was difficult to ignore.

Europe had spent decades allowing highly specialised mining and processing capacity to migrate overseas while increasingly relying upon globalised supply chains.

That system worked reasonably well while international trade remained predictable.

It becomes far more dangerous when economic dependencies are deliberately used as geopolitical leverage.

That is precisely what European policymakers increasingly fear.

Brussels Had a Plan

The EU's answer was the Critical Raw Materials Act.

Its objectives are ambitious.

By 2030, the EU wants its domestic extraction capacity to cover at least 10% of annual consumption of strategic raw materials.

European processing capacity should reach at least 40%.

Recycling capacity should reach at least 25%.

And no more than 65% of the EU's annual consumption of any strategic raw material at any relevant processing stage should come from one single third country.

That final target is particularly important when discussing China.

To help achieve those ambitions, Brussels began designating particularly important developments as “Strategic Projects”.

In March 2025, 47 projects inside the EU were selected.

Another 13 projects outside the bloc were selected several months later.

Together they cover lithium, graphite, cobalt, copper, nickel, rare earths, gallium, tungsten and other strategically important materials.

Projects range from lithium developments in France and Portugal to rare-earth processing facilities, graphite mines and battery-recycling plants.

Outside the EU, projects were selected in countries including Canada, Brazil, Malawi, Zambia, Kazakhstan, South Africa, Norway, Greenland, Serbia and the United Kingdom.

The intention was straightforward.

Europe would build a network of mines, refiners, processors and recycling operations that could gradually create alternatives to Chinese supply.

But declaring a project strategically important does not necessarily pay for it.

That distinction is becoming painfully important.

23 Projects Are Now Sounding the Alarm

In an “Urgent Call to Action” sent to European Commission President Ursula von der Leyen and industry commissioner Stéphane Séjourné, 23 of the 60 strategic projects warned that action was required to unlock projects approaching final investment decisions.

They pointed specifically to liquidity pressure and difficult market conditions.

The document said projects continued to face problems surrounding finance, market access and permitting despite the political commitments made when Brussels unveiled the strategy.

It warned that some developments could face immediate jeopardy.

The individual companies behind the warning were not identified in the document seen by Reuters.

But an industry director involved in discussions with Brussels gave another worrying indication of the scale of the problem.

Several projects, the director told Reuters, had already been placed “on ice”.

Those promoters apparently chose not to sign the public call for action because they did not want to attract additional attention to their problems.

That means the 23 signatories may not represent the full extent of the difficulties.

The Collapse of Viridian Lithium Is a Warning

Perhaps the most striking example is Viridian Lithium.

The French project was supposed to construct a lithium-refining facility at Lauterbourg in Alsace.

The proposed plant represented roughly €295 million of investment and had ambitions to produce enough material eventually to support batteries for between 500,000 and one million electric vehicles annually.

The company had been selected as an EU Strategic Project in March 2025.

At the time, Viridian described the designation as strengthening its role in building a resilient European lithium supply chain.

Less than a year later, the company was heading towards liquidation.

By March 2026, the project had collapsed after financing could not be secured.

Former Viridian executive Luc Pez has now offered a particularly brutal assessment.

He told Reuters that private investors had been waiting for Europe to commit to the project but that the expected support never materialised.

Viridian had hoped eventually to supply around 10% of the EU's lithium requirements.

Instead, it disappeared.

Pez even described the company's designation as an EU Strategic Project as a “curse”.

That is a devastating description of a programme explicitly designed to help strategically important companies succeed.

Why European Projects Struggle to Compete With China

The problem is not simply that European investors do not understand the importance of critical minerals.

The economics can be extremely difficult.

Building a mine or refinery can require hundreds of millions — sometimes billions — of euros before meaningful revenue appears.

Projects can take years to obtain planning approval, environmental permits, financing and customers.

Then there is China's enormous existing industry.

Chinese producers often benefit from greater scale, integrated supply chains, established infrastructure and lower production costs.

That creates an unpleasant paradox for Europe.

When Chinese material is plentiful and inexpensive, new European projects may struggle to compete financially.

But when China restricts supply, Europe's lack of domestic production suddenly becomes an enormous strategic weakness.

Investors therefore have to commit enormous sums today to protect against a geopolitical risk that might only become financially obvious years later.

Traditional private capital does not always operate comfortably under those conditions.

That is why developers increasingly argue that governments must provide guarantees, long-term purchasing agreements, loans, equity investment or other mechanisms that make European production commercially viable.

Without those protections, strategically valuable projects can still make little financial sense.

Viridian demonstrated exactly how quickly that problem can become fatal.

Europe Says It Is Mobilising Money

The European Commission rejects the suggestion that nothing is happening.

It told Reuters that a framework capable of mobilising around €1.7 billion in financing for strategic projects had been established since December.

Brussels also says the Critical Raw Materials Act was never itself intended to function as a giant financing programme.

Instead, Strategic Project status is designed to help companies navigate permitting, access financing institutions and attract private and public capital.

The wider RESourceEU programme has expanded those ambitions.

The Commission has discussed billions of euros in additional investment support, including through InvestEU, the Innovation Fund and battery-related financing mechanisms.

Its plans include measures intended to improve long-term purchasing arrangements and make European critical-mineral projects more commercially viable.

The problem is speed.

Mining companies cannot pay wages, engineering contractors or development costs with future policy promises.

Projects approaching a final investment decision require real capital.

And they need it before their existing cash disappears.

That appears to be the message developers are now sending Brussels.

The Comparison With America Is Uncomfortable

The United States is confronting exactly the same Chinese dominance.

But its response has increasingly relied on much more aggressive financial intervention.

Reuters estimates the US has approved almost $40 billion in critical-mineral deals.

Against that figure, Europe's €1.7 billion financing framework looks comparatively modest.

The systems are not directly comparable and the headline figures encompass different forms of government support.

Nevertheless, the difference illustrates a broader strategic divide.

Washington increasingly appears prepared to treat critical-mineral capacity almost like defence infrastructure.

If the market will not independently produce sufficient domestic capacity, the government is willing to intervene.

Europe has traditionally relied more heavily upon regulation, incentives, development banks and coordination between national governments.

That approach can be slower.

In ordinary economic circumstances, slow and careful policymaking may be defensible.

In a geopolitical competition over supply chains, it can become a major disadvantage.

Europe's Own Auditors Have Already Raised Concerns

The latest warning from industry is also not emerging in isolation.

Earlier this year, the European Court of Auditors concluded that the EU's efforts to diversify critical-material imports had yet to produce meaningful results.

Auditors found that Europe remained highly dependent on a limited number of suppliers and warned that recycling and domestic processing remained inadequate.

Some critical materials had effectively no meaningful European recycling capacity.

High energy costs were also making European processing operations less competitive.

The findings suggested that simply signing mineral partnerships with countries outside Europe was not enough to guarantee meaningful diversification.

The latest industry warning therefore reinforces a problem already identified independently.

Europe has a strategy.

It has targets.

It has legislation.

It has lists of strategically important projects.

The missing ingredient may be the scale and speed of investment required to turn them into functioning mines and factories.

China Still Has an Enormous Lead

Despite Europe's efforts, China's position remains formidable.

Eurostat reported that China remained the EU's largest supplier of rare-earth elements in 2025, accounting for 46.8% of imports measured by weight.

That headline figure arguably understates the real strategic dependency because China's dominance is substantially greater in certain processed materials and permanent magnets.

China's advantage was built over decades.

It developed mining capacity.

Then refining.

Then processing.

Then magnet production.

Then battery supply chains.

Those industries subsequently fed enormous domestic manufacturing sectors producing electric vehicles, electronics, solar equipment and increasingly sophisticated military technology.

Europe cannot recreate that ecosystem simply by opening several mines.

Extraction is only the beginning.

Materials must be separated, refined and converted into usable industrial components.

That is exactly why projects such as Viridian's proposed lithium refinery were important.

A European mine that ships material overseas for processing still leaves Europe exposed.

The Stakes Go Far Beyond Electric Cars

Critical-mineral policy is sometimes described primarily as part of Europe's transition towards electric vehicles and renewable energy.

That is increasingly outdated.

Artificial intelligence infrastructure requires enormous quantities of advanced electronics and electrical equipment.

Data centres depend on sophisticated semiconductor and power systems.

Modern fighter aircraft, drones, missile-guidance systems, radar installations and communications equipment rely upon specialised metals and permanent magnets.

Wind turbines need rare-earth magnets.

Electric vehicles require lithium, graphite, nickel, cobalt and manganese in varying quantities depending upon battery chemistry.

Smartphones, medical equipment and industrial robots depend upon the same interconnected mineral supply chains.

The EU therefore faces a strategic contradiction.

It wants greater military independence.

It wants a competitive European electric-vehicle industry.

It wants to expand renewable energy.

It wants to compete in artificial intelligence.

And it wants to reduce economic vulnerability to China.

Every one of those ambitions increases the importance of secure access to critical materials.

The EU Does Not Need Complete Independence From China

There is also an important distinction between diversification and complete separation.

Europe is not realistically going to eliminate Chinese mineral supplies.

Nor would complete mineral self-sufficiency necessarily be economically desirable.

The EU's own legislation does not demand that.

Its target is instead to avoid relying on one foreign country for more than 65% of annual consumption of individual strategic materials at relevant stages of the supply chain.

That is fundamentally a resilience strategy.

Europe could continue importing Chinese material while simultaneously developing supply from Canada, Australia, Brazil, Africa, Greenland and domestic European sources.

The danger comes when no alternative exists.

A diversified market gives buyers choices.

A monopoly gives the supplier leverage.

Can Europe Still Fix the Problem?

Yes.

But the warning from the strategic projects suggests Brussels may have far less time than policymakers once believed.

Europe already possesses several important advantages.

It has sophisticated engineering companies.

It has major automotive manufacturers.

It has advanced universities and research institutions.

It possesses its own deposits of lithium, graphite, rare earths and other strategic materials.

It has strong relationships with resource-rich countries.

And it remains one of the world's largest consumer markets.

The problem is translating those advantages into commercially competitive industrial capacity.

That probably means accepting something European policymakers have historically found uncomfortable.

Strategic independence may be expensive.

A European rare-earth refinery may initially cost more than buying the same material from China.

A European lithium processor may require government-backed purchasing guarantees.

Mining projects may need concessional loans or state investment.

Strategic stockpiles cost money.

Processing facilities consume large amounts of energy.

There is no guarantee every project will succeed.

But the alternative is effectively relying upon China to provide critical inputs whenever Europe needs them.

That dependence also carries a cost.

It simply becomes visible during a crisis.

Brussels Now Faces a Test of Its Own Strategy

The Critical Raw Materials Act was designed because European governments concluded that existing supply chains had become dangerously concentrated.

Two years later, that diagnosis looks increasingly difficult to dispute.

China remains overwhelmingly powerful in several critical mineral markets.

Export controls have demonstrated how quickly that power can become geopolitical leverage.

Europe has responded by selecting dozens of mines, refineries and recycling facilities that are supposed to help build an alternative.

Now some of those very projects are telling Brussels they may not survive.

That leaves European leaders facing a straightforward choice.

They can treat critical minerals like conventional commercial projects and hope private investors eventually provide sufficient capital.

Or they can treat them as strategic infrastructure and intervene at a scale comparable with the geopolitical importance politicians repeatedly claim they possess.

Because Europe's dependence on China will not be broken by legislation alone.

It will be broken by mines that actually open.

Refineries that actually operate.

Factories that actually produce.

And supply chains capable of surviving the next geopolitical confrontation.

Right now, some of the companies Brussels selected to build those supply chains are warning that they may never get that far.