Members of the European Parliament want Brussels to borrow a page from Donald Trump's playbook by taking equity stakes in critical raw material projects, following the lead of the United States and Japan to safeguard mineral supplies essential for defense and clean technology.
Last week the European Parliament voted to create a dedicated agency that could take stakes in raw material companies, build EU strategic reserves, and monitor supplies across the bloc when it is deemed necessary to "guarantee the EU's supply security."
Mohammed Chahim, the Dutch Social Democrat lawmaker leading the proposal, said the move would help Europe reduce its dependence on Chinese minerals in key sectors such as batteries and green technology, and soften the blow from falling prices of critical metals. "European local projects are highly vulnerable to market and international price volatility, while global prices can be manipulated by large market players," he said. The US and Japan have already committed resources to securing mineral supply, making them "far more resilient to risk."
The Trump administration poured money into building supply chains, including by taking equity stakes in rare earth producers. Last summer, the US Department of Defense made a $400 million equity investment for a 15% stake in American rare earth company MP Materials, alongside a $150 million loan. The two sides also signed a ten-year agreement setting a floor price of $110 per kilogram for neodymium-praseodymium alloy, a rare earth material used to make permanent magnets for electric vehicles and robots, which is stored or sold by MP Materials.
The US's aggressive critical minerals strategy has prompted warnings that Europe risks falling behind. Bernd Schäfer, head of industry body EIT RawMaterials, cautioned that in the rare earth sector the US could in the future leave Europe in a position of supply dependence.
The EU's planned critical raw materials center will receive 2 billion euros in the bloc's next long-term budget, modeled on Japan's Metals and Energy Security Organization, a Japanese government body whose goal is to maintain stable, price-controlled energy and mineral supplies for the country. "We are learning from the Japanese model; there is no need to reinvent the wheel from scratch — referring directly to it is more efficient," Chahim said.
The EU's previous approach to supply security focused mainly on designating strategic projects in mining, processing and recycling, which benefit from faster approval processes but are not guaranteed public funding. Earlier this month, the EU added 46 new strategic projects on top of the original 60 already enjoying such treatment.
Chahim acknowledged that catching up with the US and Japan will require additional funding from private capital, member state governments and the European Investment Bank. "If there is only 2 billion euros, I am not optimistic about the project's chances of success," he said.
The European Commission had originally planned to launch the center through a legislative proposal this autumn, but has now abandoned that plan. Instead, Chahim took a rather unusual route: joining forces with officials and other lawmakers to propose large-scale amendments to a revised version of the existing Critical Raw Materials Act. That law sets minimum capacity targets for mineral extraction, refining and processing within the EU.
However, the plan to create the agency and allow equity stakes in companies under "exceptional circumstances" still requires approval from EU member states to take effect. "Germany, Spain and some countries were initially skeptical, but I know that now they are at least willing to engage in negotiations," Chahim said.
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