EU to Enforce Diversification in Raw Materials Supply Chain with €3 Billion ReSourceEU Strategy
The European Union is considering legally requiring its industries to reduce their reliance on Chinese raw materials to protect against potential future hostile actions, according to industry commissioner Stéphane Séjourné.
In line with this approach, the European Commission has unveiled a €3 billion strategy called ReSourceEU aimed at de-risking and diversifying the bloc's supply chains for critical raw materials. This plan intends to support 25-30 strategic projects and includes regulatory measures such as banning scrap aluminium exports outside the EU and recycling magnets used in car batteries.
A new fund of €2 billion per year, supported by the European Investment Bank, will finance supply chain diversification away from China and back projects like a Finnish lithium mine. If voluntary diversification efforts by industry prove insufficient, the Commission reserves the right to introduce legislation mandating diversification, which has been described as a wake-up call.
Two projects have already received immediate funding: molybdenum extraction in Greenland and a lithium mine in Germany. The plan also introduces a raw materials platform to coordinate orders and establish joint stockpiles, along with financial support to help procure materials from more expensive non-Chinese suppliers.
Currently, the EU heavily depends on China for magnets, sourcing approximately 17,000-18,000 tonnes out of a total demand of about 20,000 tonnes. The EU itself produces only around 1,000 tonnes, with the remainder supplied by other countries. Lithium demand is projected to increase substantially, nearly sixtyfold by 2050, with over 78% of the EU's lithium supply in 2020 coming from Chile.
ReSourceEU represents a strategic move by the EU to strengthen its resource security and reduce dependency on Chinese supply chains in the raw materials sector.
