EU Unveils €3 Billion ReSourceEU Strategy to Diversify Critical Raw Materials Supply Chains
The European Union has introduced a comprehensive plan named ReSourceEU, allocating €3 billion to de-risk and diversify its critical raw-material supply chains. This strategy aims to reduce dependency on China, which currently dominates the supply of essential materials such as permanent magnets and lithium.
Under the initiative, the EU Commission will fund 25 to 30 strategic projects, including immediate investments in molybdenum extraction in Greenland and a lithium mine in Germany. The plan also involves implementing new regulations to prohibit scrap aluminium exports outside the EU and enhance recycling efforts for magnets used in car batteries.
To further support diversification, a €2 billion-per-year fund, backed by the European Investment Bank, will finance these efforts. The EU will establish a raw materials platform to consolidate orders, build joint stockpiles, and provide financial aid for sourcing materials that may be more costly than Chinese supplies.
If companies fail to diversify supply chains voluntarily, the Commission has reserved the right to enforce diversification through legislation, signaling a strong wake-up call to procurement leaders. This move comes amid growing concerns about China's ability to weaponize supply chains, particularly given the EU's reliance on approximately 17,000 to 18,000 tonnes of permanent magnets imported annually from China and the forecasted 60-fold increase in lithium demand by 2050, with Chile being a major supplier.
