With China remaining dominant in the field of critical raw materials, Poorva Karkare and Karim Karaki argue that the EU can draw lessons from it and carve out a complementary and indispensable role to advance its economic and geopolitical objectives and refine its resource offer to partner countries – particularly in Africa.
Securing access to critical raw materials (CRMs) has become a strategic imperative for the EU. These resources are crucial for the EU’s competitiveness, green and digital transition, and strategic autonomy. Consequently, the EU has developed an ambitious policy framework, including the Critical Raw Materials Act alongside strategic CRM projects both within and outside the EU, Global Gateway initiatives, CRM partnerships and Clean Trade and Investment Partnerships (CTIPs). While it is early days to comment on the implementation or even effectiveness of these measures, there are questions about the EU’s capacity to realise its CRM ambitions.
One of the biggest challenges is China’s prominent position across the entire CRM value chain, as our recent analysis on the Lobito corridor shows. Drawing lessons from Beijing’s approach, the EU must refine both the substance and strategic positioning of its CRM offer – particularly in Africa – to advance its economic and geopolitical objectives.
Learning from China
Firstly, China’s strength lies in its dominance over the entire CRM supply chain, from mining (in third countries) to (domestic) refining and manufacturing. Its approach involves robust industrial policies that link CRM access to domestic industries such as electric vehicles and required batteries, rather than just subsidies, which are only a part of the overall strategy.
For the EU, the takeaway is that a successful CRM strategy requires developing the entire value chain, including downstream industries. Processing and refining activities are vital, both domestically in the EU and in partner countries. A European industrial policy, as advocated by the Draghi report, should therefore include major investments within Europe, coordinated with external investments like off-take agreements, drawing on policy tools such as the European Competitiveness Fund.
An off-take agreement is a contract where a buyer (the “offtaker”) agrees to purchase a significant portion of a seller’s future output, often before it’s even produced. Secondly, China’s dominant position is reinforced by competitive financing for CRM access in third countries, for example, in Africa. Its financial package includes policy banks, state-owned commercial banks, as well as non-Chinese lenders, including Western commercial banks that support activities of mining businesses. Moreover, China provides a fully integrated package, including infrastructure accompanying the mining projects.
The lesson for the EU is the central role of affordable and innovative financing that caters to the needs of firms and responds to the priorities of partner countries’ governments with flexibility, speed and scale. The EU’s next Multiannual Financial Framework provides an opportunity to rethink its financial package, coordinating development and export/investment-related financing, and strengthening the European Financial Architecture for Development, though this remains a work in progress.
Securing CRMs in a pragmatic yet distinctive European manner
“America first does not mean America alone”, said Scott Bessent, US Secretary of the Treasury. This logic applies to Europe as well. In the CRM landscape, a zero-sum framing should not cloud the possibility of diversifying supply chains through cooperation.
In other words, the EU should pursue its competitiveness and strategic autonomy objectives by being proactive and working strategically with partners, including China, when that is in line with its geostrategic and developmental objectives. Rather than focusing exclusively on those measures which will only benefit the EU and not China, the EU should leverage the latter’s strengths to its own advantage. Below are three areas to consider when repositioning the EU’s CRM offer to its African partners.
Firstly, enhance the role of European firms across the CRM value chain. While their presence in actual mining activities is limited, European firms excel in other operations required in the CRM value chain, including specialised equipment and machinery, geological surveying, exploration planning and environmental and social impact assessments. European engineering firms, environmental consultancies, legal experts and academic institutions are globally recognised. These are strategic assets that meet the needs of partner countries. In fact, Chinese firms increasingly partner with European firms for environmental, social and governance (ESG) compliance. This expertise must be mobilised more strategically, supporting mining projects throughout their lifecycle.
While this doesn’t directly contribute to the EU’s objectives of ensuring CRM access, these firms arguably could facilitate European mining firms to engage in Africa by contributing to a more conducive business environment by lowering risk perceptions. In this regard, the EU should facilitate these businesses’ market entry by de-risking investments and facilitating European firms’ collaboration. Export credit agencies, development finance institutions and technical assistance instruments should be mobilised more strategically to provide targeted backing to these actors. This support should be embedded in a broader industrial policy that links internal capabilities with external engagements, ensuring coherence between Europe’s domestic industrial resilience and its international CRM partnerships.
Secondly, bridge EU private sector engagement with African private sector development to respond to partner countries’ industrialisation while meeting European economic interests. The EU’s current approach is fragmented, with its private sector engagement tools (largely focused on the EU Single Market) and private sector development in Africa (mostly addressed through development cooperation efforts). A more integrated model would better coordinate the two.
This could be through joint ventures or co-investment platforms between European and African firms, including through collaboration with Chinese firms (where relevant), enhanced local workforce development and vocational training – including for women and youth – linked to EU-supported mining projects, support for local suppliers through targeted technical assistance and access to EU procurement pipelines. An example of such EU-Africa collaboration is the technical partnership between Belgian materials technology firm UMICORE and the DRC’s state-owned enterprise Gecamines’ subsidiary to produce germanium concentrates following China’s export restrictions.
In addition, the EU can leverage its own trade derisking strategies (for example restrictions on CRMs coming from China) to incentivise Chinese firms to delocalise their supply chains and develop CRM processing activities in African countries to retain access to the EU market (attracting investments for CRM processing in the EU can be part of this strategy though there are structural concerns related to energy prices and NIMBYism).
Thirdly, provide an integrated package of indirect support to mining operations to enhance the EU’s economic and (geo)political capital. A common challenge to greater processing activity in African countries is energy and logistics. This is where the EU can add considerable value, especially in light of declining Chinese loans. Through the Global Gateway strategy, the EU can improve the attractiveness for European mining investments in African countries. When seen as part of a comprehensive package involving the above points, the EU’s interest in the Lobito corridor could become strategic (though until recently, this did not seem to be the case, as our analysis shows).
Combining the above elements, a recent analysis outlines a scenario where a trilateral approach between the EU, China, and DRC could boost local cobalt processing in the DRC. The EU could fund infrastructure, training and ESG support, while China invests in refining via a joint venture with Gécamines, and the refined cobalt could be supplied to a Sino-European venture based in Europe to produce downstream products, including electric vehicle (EV) batteries. Such a collaboration responds to:
- The EU’s geostrategic goals of securing direct access to CRMs from diversified sources and developing European green industrial capacity
- Africa’s priorities of greater value addition domestically and regionally, and
- China’s objective of retaining market access.
Strategic complementarities
While China remains dominant in the field of CRMs, the EU should strive for strategic complementarity. By strategically working with China and reinforcing its strengths in sustainable mining and related services, the EU can enhance its value proposition to African partners. This is particularly relevant in light of growing frustrations among partner countries over the EU’s compliance-driven approach – with unilateral trade, climate or ESG regulations – which appears less development-oriented or commercially engaged.
Beyond the EU’s technical and regulatory expertise, its commercial engagements in specialised activities around the CRM value chain can make the European offer more distinct and relevant. Thus, the objective should not be to displace China – an unrealistic goal given Europe’s relatively limited financial and project execution capacity – but rather to carve out a complementary and indispensable role that creates incentives to combine these strengths in a way that truly reflects ‘win-win’ partnerships.
About the Authors
Poorva Karkare is a senior policy analyst at ECDPM working on issues of industrialisation and regional integration in Africa with a political economy lens.
Karim Karaki is the head of ECDPM’s economic recovery and transformation team.