Delays in mining projects and insufficient refining capacity could undermine the European Union’s ambitions to lead in the clean energy sector and achieve greater strategic autonomy, warns a new report from Systemiq, supported by Breakthrough Energy and analyzed by The Energy Transitions Commission.
Released on December 10, the report, titled “Critical Raw Material Supply-side Innovation Roadmap for the EU Energy Transition”, highlights that the global supply of critical raw materials (CRMs) is expected to fall short by 2035, especially as clean technologies accelerate over the next 10 to 15 years.
The report notes that while advances in battery chemistries, material innovations and improved recycling rates may reduce primary raw material needs, a significant supply gap is projected for most CRMs in a net-zero scenario by 2035. Copper, lithium and graphite are expected to face the most severe shortages, with demand exceeding supply by 40%, 110%, and 80%, respectively.
Despite recent drops in lithium prices—battery-grade lithium carbonate dropped by 32% and lithium hydroxide by 39% since January 2024—global supply challenges remain. The report also points to the heavily concentrated nature of global CRM supply chains. For example, Indonesia controls about 40% of global nickel production, while the Democratic Republic of Congo mines around 70% of cobalt and China dominates the global production of all CRMs.
EU’s declining mining and refining output
The report highlights a significant challenge for the EU, noting a dramatic decline in the region’s mining and refining output, from 25% to under 7% over the past 40 years. This has increased the EU’s reliance on imports. While the EU has an established industry for copper, nickel and cobalt mining and refining, the region lacks domestic capacity for lithium, graphite, and rare earth element (REE) production on a large scale. As a result, the EU remains almost entirely dependent on imports for these critical materials.
Additionally, the EU is currently off track in meeting the targets set under the Critical Raw Materials Act (CRMA), which came into force earlier in 2024. The CRMA outlines objectives for the EU to source 10% of its annual CRM consumption from domestic mining, 40% from processing, and 25% from recycling by 2030. The CRMA also limits the EU’s dependence on any single external country for strategic raw materials to 65%.
The report points out that most EU CRM projects announced in recent years are still in the early stages, facing local opposition and permitting challenges. While copper is the only CRM where the EU is on track to meet its targets based on current and upcoming projects, the situation for lithium and other critical materials remains uncertain.
Technological solutions and innovation support
To address these challenges, the report suggests that new technologies, such as primary sulfide leaching, geothermal direct lithium extraction and novel synthetic graphite production, could significantly boost CRM supply by 2035.
The report also recommends several tools to stimulate supply-side innovation in the EU, including innovation support programs like Horizon Europe, the ERA-MIN network, the European Technology Platform on Sustainable Mineral Resources (ETP SMR), and EIT Raw Materials. In addition, the report calls for increased investment in commercializing new technologies, including production-based support through tax credits and expanding loan guarantees via the InvestEU program.
Furthermore, the report suggests offering financial incentives and offtake agreements to stabilize prices for domestically produced materials, which could encourage investment in CRM extraction and processing within the EU.
Enabling environment and international competitiveness
The report stresses the importance of creating an enabling environment for CRM projects, recommending streamlined administrative processes and coordinated efforts to fast-track high-impact projects. It also calls for enforcing CRMA provisions to limit permitting timelines, fostering integrated downstream value chains, and including responsible mining practices within the EU’s sustainable activities framework.
To ensure international competitiveness, the report advocates for targeted trade measures to promote EU CRM production and support innovation in partner countries. It highlights the need for technology and skills transfer from foreign investors to EU partners and for scaling innovations that reduce environmental impacts in strategic partner countries through initiatives like the Strategic Partnerships and Minerals Security Partnership.
The report concludes that the EU must act swiftly to address these challenges in order to secure the critical raw materials necessary to achieve its clean energy goals and enhance its strategic autonomy.
