Can Europe establish sovereignty in critical raw materials?

They are the backbone of clean energy technologies, from batteries and wind turbines to electric vehicles. Yet, Europe remains acutely vulnerable: China commands around 60% of global production and an overwhelming 90% of refining and processing capacity for these materials, leaving the continent exposed to supply shocks, price volatility, and geopolitical leverage.

This concentration is not just a statistical quirk; it is a structural risk:

"Even if you find lithium in Spain or Italy, you then need to ship it to China to process it - and hope it comes back again," observes Lénaïg Trenaux, Global Co-Head Energy, Battery, Mining, and Industries – Sustainable and Impact Advisory at Societe Generale. 

"From an impact standpoint, it makes no sense. We really need to rethink the value chain, and we should be more strategic about it."

This dependency, then, goes beyond the economic costs; it is a sovereignty issue, with ramifications for Europe’s ability to meet its climate goals and defend its industrial base.

Building capacity along the value chain

To address this vulnerability, Europe must develop robust capacity and supply chains in extraction, processing, and recycling – and do so in parallel. The European Union’s recently adopted Critical Raw Materials Act (CRMA) sets ambitious targets to strengthen domestic extraction and processing, accelerate recycling, and diversify supply sources through international partnerships. But ambition alone is not enough.

The challenge begins with geology: “Access to raw material is driven by their location. You can’t just decide to develop a mine where you want,” Ms. Trenaux points out. The continent does have some promising deposits, including copper in southern Europe and significant lithium resources, but unlocking these requires streamlined permitting, public acceptance, and a social license to operate. “There’s also an education process to explain and demonstrate that a mine can be developed in a sustainable manner, with all the appropriate mitigation processes in place,” she adds.

Processing is an even greater bottleneck. While Europe may extract some minerals, the lack of refining and processing capacity means most materials still flow to China. This is where most of the value is added – raw lithium, after all, is not that useful. Closing this gap will demand both time, investment and strategic policy support.

Recycling, meanwhile, offers a unique opportunity for Europe to leapfrog ahead. "Recycling is an obvious way to capture and mitigate adaptation risk. As far as metals are concerned, you can secure supplies through recycling," notes Ms. Trenaux. With the first generation of European wind farms and batteries soon reaching end-of-life, the continent could pioneer advanced recycling networks and keep valuable materials in the regional loop -- if it acts with urgency and determination.

Financing the critical minerals revolution

Developing mines, building refineries, and establishing recycling plants are all capital-intensive undertakings. Here, Europe has a wide range of financial levers at its disposal, from direct subsidies and loans by multilateral institutions like the European Investment Bank to public-private partnerships and a well-developed commercial banking network. Private market infrastructure funds are increasingly interested in investing into mining and minerals. Meanwhile, volume guarantees, and price stabilization mechanisms can all help de-risk projects and crowd in such private capital.

Societe Generale, one of the few European commercial banks still deeply engaged in mining finance, plays a pivotal role.

"A bank like ours, which finances mining projects always applying high sustainability standards, makes a positive difference," says Ms. Trenaux.

Beyond providing capital, banks advise clients on navigating complex regulations, taxonomies, and value chain dynamics. "A lot is spent on helping the client understand all their options for financing, be it equity, offtake funding, debt. We spend a lot of time looking at where a project sits in the ecosystem, in the value chain, and who can have an interest in it."

Societe Generale’s expertise is not limited to financing. The bank is deeply involved in structuring deals, guiding clients through regulatory complexity, and ensuring a project meets international ESG standards. The bank also advocates for regulatory simplification at a time when the EU’s focus on compliance threatens to undermine its industrial competitiveness compared to more laissez-faire attitudes in China and, increasingly, the US. 

The CRMA, while a step in the right direction, is not a panacea. “It has put the topic of self-sufficiency on the table, but we need to go much further to unlock access to funding, subsidies, support for exploration, for development. Only with a concrete and measurable action plan, especially on the financing side, will we be able to achieve our sovereignty objectives.” Ms. Trenaux cautions.

A realistic but challenging road ahead

Can Europe realistically build a resilient and autonomous supply chain for critical raw materials? The answer, according to Ms. Trenaux, is a qualified yes, but it will take effort and time – years not months to build the needed volumes and production levels. The key is to act on all fronts simultaneously: encourage mining where it makes sense, invest in processing and recycling, and forge international partnerships for secure supply.

Europe’s high environmental standards, often seen as a cost, could ultimately become a competitive advantage, as long as the regulatory burden is kept manageable.

"Maybe an extra cost today will have a massive benefit tomorrow," Ms. Trenaux suggests.

In sum, Europe’s path to critical minerals security will not be easy. It will require political will, regulatory pragmatism, strategic investment, and close cooperation between the public and private sectors. But with the right mix of ambition and agility, the continent can future-proof itself and ensure its place in the energy transition.