EU Launches $3.5 Billion Plan to Secure Raw-Material Supply as China Tensions Mount — Update

By Edith Hancock

The European Union presented a $3.5 billion plan to secure critical raw materials as tensions over China's control over rare earths leave industry in the bloc vulnerable to supply shortages.

The package, part of the European Commission's economic security and ReSourceEU strategies outlined on Wednesday, includes setting up a center--inspired in part by Japan's Organization for Metals and Energy Security -- to help monitor the EU's mineral supplies and facilitate joint investments by member states.

The 3 billion-euro ($3.49 billion) program, to be implemented over the next year, also proposes finding ways to keep more minerals in the bloc through recycling or export restrictions on products such as aluminum and magnet waste.

Tensions with China over trade are running high, forcing governments to reckon with their dependence on the country. China accounts for roughly 60% of rare-earths mining and 94% of magnet production globally, according to a report from the OECD on Tuesday.

The Chinese government moved to impose new restrictions on its own mineral exports by obliging companies to gain licenses in October and has clashed with the Netherlands regarding its control over semiconductor manufacturer Nexperia. While the restrictions on mineral exports have since been paused until November 2026, the move has spooked industry and policymakers. "The breadth and complexity of China's proposed controls could materially affect many supply chains in the short to medium term if restrictions are reimposed and licences are delayed or denied," the OECD said.

Stephane Sejourne, the EU's top industrial policy official, told reporters Wednesday that the bloc is focused on diversifying from China, and that the commission wants to significantly cut back its dependence on foreign lithium, cobalt and graphite by 2030.

"Today, Europe acts on its independence in critical raw materials," Sejourne said. "We are equipping ourselves with the tools we need to accelerate our own production, and diversify our supply of critical raw materials."

Under the European Commission's proposal, it will seek to fast-track projects it considers important to the EU's raw materials goals. The 3 billion euros to be deployed on projects for immediate relief will come from a combination of institutions and EU financing tools. Some 2 billion euros will be provided by the European Investment Bank, Sejourne said. Officials will prioritize investments for permanent magnets, batteries and defense. Sejourne also wrote to ministers in each of the EU's 27 countries to request that they mobilize funds, he said.

The minerals plan forms part of a broader economic security package that will also see the EU executive work on sharpening existing policy tools such as new guidelines for screening foreign direct investment, enhancing risk assessments and improving information sharing with member states.

"We must strengthen our capacity to gather and share economic intelligence, because true security is only possible when Europe acts as one--with member states and industry moving in sync," trade commissioner Maros Sefcovic said.

Write to Edith Hancock at edith.hancock@wsj.com

(END) Dow Jones Newswires

December 03, 2025 11:39 ET (16:39 GMT)