CRITICAL MINERALSEU and U.S. Critical-Minerals Strategies: Same Goal, Different Methods
The United States and the European Union are both working to reduce their dependence on China for critical minerals, but they’re taking markedly different approaches. As both powers pursue critical-mineral independence through different means, the EU may struggle to keep up with the US’s more assertive policy.
The United States and the European Union are both working to reduce their dependence on China for critical minerals, but they’re taking markedly different approaches. As both powers pursue critical-mineral independence through different means, the EU may struggle to keep up with the US’s more assertive policy. This matters to Australia as a trading partner of both those economies.
Critical-mineral reserves are geographically concentrated, as is the capacity to refine and process them. China controls more than 90 percent of global processed supply of key energy minerals. More worryingly, the EU still sources all of its heavy rare-earth elements from China. These elements are the building blocks of advanced manufacturing, including fifth generation weapons systems and advanced industrial componentry.
Intense supply-side market concentration leaves buyers of critical minerals vulnerable to disruptions and market manipulation. China’s punitive use of export controls has demonstrated the validity of global concerns about these vulnerabilities, and Europe has suffered collateral damage during US–China trade spats.
To reduce dependence on China, the US and the EU have been developing new supply strategies. Significant differences exist between these approaches.
The EU’s approach, centered around its 2024 Critical Raw Materials Act (CRMA) has three goals: to attract, streamline and facilitate investment in strategic projects within and outside the EU; to strengthen economic security domestic measures, such as mechanisms for screening foreign direct investment and rules on foreign subsidies; and to introduce sustainability standards for traceability along EU supply chains, including through the Corporate Sustainability Due Diligence Directive, the EU Battery Regulation, the Digital Product Passport system. It also explicitly enshrines the CRMA’s sustainability objectives.
The EU approach seeks to balance security with sustainability while serving the higher goal of strategic autonomy.
In contrast, the almost entirely security-driven US strategy is focused on public–private partnerships, price controls, long-term offtake agreements and direct government investment in commercial projects, particularly targeting the defense sector.
Such intervention, at odds with the market-driven US economy, is justified on national security grounds. Critical minerals, alongside tariffs, form part of a broader strategy to reinforce supply-chain security and balance China’s historical market dominance.
A 2024 memorandum of understanding between Australia and the EU seeks to enable Australian companies to apply for EU strategic projects under the CRMA, which facilitates improved access to existing funding mechanisms and beneficial co-financing arrangements. This memorandum was reinforced by Australia’s 2025 declaration of intent with the European Investment Bank.
