According to a report by European News Network on September 4th, the EU is attempting to use the next seven-year budget to accelerate its transition away from dependence on China's processing and refining capabilities in key raw materials sectors. However, for the EU to achieve this goal, it needs not only to find new sources of minerals but also to invest substantial funds to help resource-rich countries develop their own processing industries. If funding is not available, resource-rich countries will still choose China as their partner.
This commentary was written by Nora Kurzdefer, a senior researcher at the Munich Security Conference. The article states that the EU is advancing long-term budget negotiations from 2028 to 2034, with critical raw material supply chains being one of the key topics. Resources such as rare earths, lithium, and cobalt are important for various sectors including electric vehicles, batteries, defense industry, digital industries, and artificial intelligence. The EU hopes to reduce the concentration of these supply chains.
The article states that China currently holds a significant position in the fields of rare earth separation, graphite processing, cobalt sulfate production, and some nickel refineries. Even if Europe can obtain ore from other countries, it will be difficult to establish a new supply system without adequate processing capabilities.
Therefore, in recent years, the EU has been actively courting resource-rich countries in Africa, Asia, and Latin America, with the aim of expanding its sources for critical minerals. However, these countries now no longer wish to simply play the role of 'mining and exporting'. Instead, they demand that foreign capital establish processing facilities locally, transfer technology, and share the investment risks.
The article takes cobalt as an example. The annual trade volume of cobalt ore worldwide is only a few hundred million dollars, but the value of batteries and electric vehicles produced from this material can reach hundreds of billions of dollars. Resource-rich countries increasingly want to keep more profits and industrial links within their own countries, rather than continuing to remain at the lowest end of the value chain.
This also exposes the policy contradictions within the EU itself.
When the EU passed the 'Key Raw Materials Act' in 2024, it promised to help partner countries develop their domestic industries. However, among the six strategic projects currently underway in Brazil, Kazakhstan, Madagascar, Malawi, South Africa, and Zambia, four still focus primarily on resource extraction, while processing is carried out in other countries, with some even being organized in Europe. Two more projects involving local processing are also lagging behind, still waiting for financial and technical support from the EU.
The article states bluntly that Brussels verbally emphasizes helping resource-rich countries increase their local value addition, but the actual projects still follow the traditional resource development model. If this gap persists, the credibility of the EU as a long-term industrial partner may be damaged.
Therefore, the author argues that the EU should allocate clearer financial support in the next budget cycle, specifically for the capacity building of resource countries, technology transfer, and sharing of investment risks.
But this means that Europe must pay a higher cost. Compared to directly importing minerals, building processing plants overseas, providing technology, and sharing risks requires much more funding. The article acknowledges that trying to eliminate China’s advantage in the value chain of key raw materials is “costly,” and the question is whether Europe is willing to pay that price.
If the EU cannot provide sufficient funding, resource-rich countries will not continue to wait indefinitely. The article states that these countries are likely to seek other partners, with China being the most likely candidate.
It is worth noting that, despite the article repeatedly emphasizing so-called ‘dependence’ on China, the author still acknowledges that for many years to come, China will remain an ‘indispensable participant’ in the value chains of many key raw materials.
