European critical raw material supply chain risks

Europe faces significant industrial and geopolitical vulnerabilities due to its high dependency on critical raw materials (CRMs) required for the energy transition and the digital economy. A study by Eurispes indicates that import dependency for materials such as lithium, magnesium, and rare earths is approaching 100%, with demand for lithium projected to increase by as much as 794% by 2050. The primary challenge identified is the capacity to develop refining and production infrastructure rapidly enough to meet this demand.

Further analysis commissioned by the European Automobile Manufacturers' Association (ACEA) specifies that supply chain concentration is a primary risk to the EU automotive industry. While raw material extraction is a factor, the study finds that for most critical inputs—including semiconductors, silicon, tungsten, and neodymium-iron-boron magnets—the greatest risk lies in the refining and processing stages. Currently, China dominates the processing of rare earths and the refining of gallium and germanium, while Taiwan and South Korea remain central to semiconductor manufacturing. Experts suggest Europe must overcome shortages in processing capacity, specialized technical expertise, and qualified suppliers, noting these capabilities cannot be established quickly.