EU Proposes "Critical Minerals Alliance" to the US — Will the Next Move to Reduce Dependence on China Succeed?

EU Proposes "Critical Minerals Alliance" to the US — Will the Next Move to Reduce Dependence on China Succeed?

The "resource geopolitics" surrounding critical minerals has shifted into a higher gear. The European Union is proposing to the United States a cooperative framework for the procurement, refining, and stockpiling of critical minerals like rare earths and lithium, which are indispensable to modern industries. The aim is clear: to reduce dependence on China's supply dominance and to mitigate vulnerabilities in the supply chain.


Why the EU is aligning with the US "now"

The core of the proposal reported is for the EU and the US to sign a Memorandum of Understanding (MoU) and to create a "strategic partnership roadmap" within about three months. The plan is to establish a mechanism for jointly securing critical minerals, aiming for procurement that does not rely on specific countries.

Two factors are evident in the timing.


One factor is that China's tightening of export restrictions on rare earths and other minerals has rapidly heightened the sense of crisis in the West. Reports mention the background of China imposing export restrictions last year, which were later "postponed." When the supply-controlling side plays its cards, downstream industries (such as electric vehicles, wind power, defense, and semiconductors) can be immediately shaken.


Another factor is that the US is accelerating the creation of a "framework" for securing critical minerals by involving its allies. The article indicates that the US is gathering foreign ministers and high-ranking officials from allied countries to form agreements, and the EU appears to have the intention of "influential participation" in this trend.


Contents of the proposal: Not just joint procurement, but a "market defense" concept

The proposal goes beyond merely saying, "Let's find mines together." According to reports, the roadmap draft includes the following elements.


  • Supply chain security: Reduce dependency and withstand supply disruptions. Cultivate an international "premium market" to jointly counter fragmentation and disruptions.

  • Deepening industrial and economic integration: Strengthen ties from mining to processing, components, and final products through joint projects.

  • Mutual exemption from export restrictions: A direction where export restrictions are not imposed between the EU and the US on raw materials for critical minerals.

  • Research and development, innovation: Technical cooperation across the entire value chain.

  • Information sharing and transparency: Identify risks in the supply chain and improve market transparency. As a means to prevent disruptions, consider the possibility of establishing stockpiles and a EU–US response group.

  • Coordination on export restrictions to third countries: Include cooperation on addressing export restrictions implemented by third countries.


Particularly noteworthy is the idea of "price support" and "protecting the market from oversupply and market manipulation." Reports discuss a proposal to protect Western refining and mining companies through price mechanisms to prevent them from being undercut by China's cheap supply. This indicates a discussion that goes beyond a mere free market to include "market design" for strategic materials.


Twisted factors: Greenland and "territorial integrity"

It is also noteworthy that this proposal is not just about resources. Reports suggest that the EU proposal calls for "respecting each other's territorial integrity." This is against the backdrop of tensions with the EU when the Donald Trump administration mentioned purchasing Greenland (a Danish territory). This move seems to embed language as a "safety valve" to address political friction within the alliance while advancing resource cooperation.


The reality barrier: "Refining" and "time" are harder than mining

However, even if a framework is established, breaking the supply dominance is not easy. A repeatedly pointed-out challenge for Europe is the slow progress in mining, refining, and recycling. Recent audits and reports have given harsh evaluations that the EU's diversification efforts have not "led to visible results." Reports conveying the findings of the European Court of Auditors mention that while production, processing, and recycling targets for 2030 are set, in reality, recycling is not progressing, and processing capacity is struggling due to high energy costs.


Moreover, mine development tends to be prolonged due to permits and environmental impact assessments. Other reports point out that it takes "a very long time" for mines to become operational, potentially overshadowing Europe's energy transition goals.


In short, the desire to "reduce dependence on China" alone is not enough; without a combination of midstream processes like refining and separation and system design that ensures investment recovery, the supply chain will not move.


US moves: The idea of using stockpiles as "insurance"

The EU's mention of stockpiling aligns with US moves. According to reports, the US is advancing a large-scale stockpiling plan to prepare for supply shocks of critical minerals. The aim is to involve the private sector and make it function as "insurance" covering supply for a certain period.


For the EU as well, stockpiling and joint response frameworks are realistic means to fill the gap period until diversification of procurement sources progresses.


SNS reactions: "Criticism" precedes expectations

As this news spread, in investor communities and news forums, rather than being met with unanimous praise, there was a noticeable presence of "calm criticism."


For example, in Reddit's mineral investment community, there were reactions about the EU's position, such as "There are some refiners, but the EU doesn't mine much rare earths. It's interesting to see what they can bring to the table."


In response, another participant emphasized the value of industrial collaboration, stating, "Stabilizing downstream magnet production is equally important for an independent supply chain," highlighting the importance of including processing and components, not just mining.


Additionally, there were voices noting the "chain reaction" of resource diplomacy, such as "The EU is also pursuing raw material projects with Brazil. The next few months should be interesting."


On the other hand, in more general economic communities, there is a strong skeptical view on whether the West can shift dominance in the short term. Comments included sentiments like "The issue is less about resource reserves and more about the accumulation of separation and refining technology and human resource investment, which are not easy to catch up with," and voices pointing out the "structure that doesn't want to do it domestically" due to the large environmental burden.


Summarizing the sentiment on social media, there are roughly three types.

  1. Realists: Refining is more of a bottleneck than mining. What can the EU offer? The system is key.

  2. Industrial collaboration advocates: There is value in an allied supply chain that includes magnets, components, and final products.

  3. Skeptics: Without long-term investment, China's advantage won't be overturned. It may end as a political slogan.

Implications for the market and companies

If this framework progresses, the impact will not be limited to resource companies. Critical minerals are the "heart of raw materials" for a wide range of industries, including EVs, batteries, renewable energy, defense, semiconductors, and AI infrastructure. If the supply chain stabilizes, downstream investment plans will also become easier to establish.


On the other hand, if the emphasis on price support and market protection strengthens, there could be short-term pressure on costs. China's cheap supply has, if ethics and security discussions are set aside, contributed to lowering industrial costs. If the focus shifts from "cheapness" to "certainty," companies will be forced to redesign their procurement strategies.


What to watch to gauge "seriousness"

The future focus is whether the roadmap will end as "beautiful goals" or be accompanied by investment and systems. Specifically,

  • How far the design of price support (offtake, minimum price, insurance, subsidies, etc.) will go

  • The target minerals, scale, and release rules of stockpiles

  • Whether joint projects will extend beyond mining to refining, separation, magnets, and recycling

  • How much the EU and the US will align in response to third-country export restrictions

  • How to overcome interest adjustments within the alliance (between EU member states, between the EU and the US)


Critical minerals are an area where national security and corporate competitiveness directly clash. That's why, even on social media, alongside expectations, the question "Can it be implemented?" arises. The EU's proposal indicates that it has entered the next stage by not just "chasing" the US's moves but also considering system design to protect the allied market. The remaining issue is how much political and industrial strength Europe and the US have to translate that blueprint into real mines, refineries, and supply chains—that's the crux of the matter.


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