The United States and the European Union are both working to reduce their dependence on China for critical minerals, but they’re taking markedly different approaches. As both powers pursue critical-mineral independence through different means, the EU may struggle to keep up with the US’s more assertive policy. This matters to Australia as a trading partner of both those economies.
Critical-mineral reserves are geographically concentrated, as is the capacity to refine and process them. China controls more than 90 percent of global processed supply of key energy minerals. More worryingly, the EU still sources all of its heavy rare-earth elements from China. These elements are the building blocks of advanced manufacturing, including fifth generation weapons systems and advanced industrial componentry.
Intense supply-side market concentration leaves buyers of critical minerals vulnerable to disruptions and market manipulation. China’s punitive use of export controls has demonstrated the validity of global concerns about these vulnerabilities, and Europe has suffered collateral damage during US–China trade spats.
To reduce dependence on China, the US and the EU have been developing new supply strategies. Significant differences exist between these approaches.
The EU’s approach, centred around its 2024 Critical Raw Materials Act (CRMA) has three goals: to attract, streamline and facilitate investment in strategic projects within and outside the EU; to strengthen economic security domestic measures, such as mechanisms for screening foreign direct investment and rules on foreign subsidies; and to introduce sustainability standards for traceability along EU supply chains, including through the Corporate Sustainability Due Diligence Directive, the EU Battery Regulation, the Digital Product Passport system. It also explicitly enshrines the CRMA’s sustainability objectives.
The EU approach seeks to balance security with sustainability while serving the higher goal of strategic autonomy.
In contrast, the almost entirely security-driven US strategy is focused on public–private partnerships, price controls, long-term offtake agreements and direct government investment in commercial projects, particularly targeting the defence sector.
Such intervention, at odds with the market-driven US economy, is justified on national security grounds. Critical minerals, alongside tariffs, form part of a broader strategy to reinforce supply-chain security and balance China’s historical market dominance.
A 2024 memorandum of understanding between Australia and the EU seeks to enable Australian companies to apply for EU strategic projects under the CRMA, which facilitates improved access to existing funding mechanisms and beneficial co-financing arrangements. This memorandum was reinforced by Australia’s 2025 declaration of intent with the European Investment Bank.
While EU strategic projects have not yet been approved in Australia, several Australia-linked companies are involved in such projects inside and outside the EU. During her visit to Canberra this week, the President of the European Commission Ursula von der Leyen endorsed four ‘major projects’ covering production of rare earths, lithium and tungsten.
A new Australia–EU Free Trade Agreement should provide a further boost to this partnership by facilitating EU investments and eliminating existing EU tariffs on critical minerals. The agreement will also provide a legal framework to support the building of secure and sustainable supply chains and the promotion high economic, social and governance standards.
In contrast, the Australia–US critical-minerals framework, agreed upon in October 2025, committed both sides to ‘take measures to provide’ at least US$1 billion (A$1.4 billion) in funding for projects based in both countries within six months. This spending will be in addition to already committed equity stakes in Alcoa’s gallium refinery in Western Australia and Arafura’s rare-earths project in the Northern Territory.
Critical minerals sit within a broader US–Australia alliance, centred around developing and deepening defence capabilities and cooperation. They’re therefore more directly tied to Australia’s national security interests.
The EU has signed 15 strategic partnerships and designated 67 mining projects as strategic, but its efforts have been too slow in diversifying supply chains. While EU funding is available, it’s scattered across different programs, and onerous project approvals remain a significant bottleneck.
This is unsurprising given the EU’s institutional structures and complex division of competences. It also has a historical focus on longer-term regulatory frameworks and diversifying supply chains to avoid reliance on single non-EU actors (the target is no more than 65 percent supply from a single source for each of its strategic minerals).
In contrast, the US comes with money, speed and a decidedly anti-China approach, with which the EU can hardly compete.
The most recent EU initiative, RESourceEU Action Plan, seeks to accelerate EU efforts by mobilising additional resources (3 billion euros) over the next 12 months, imposing tighter regulatory approval deadlines and more coordinated action. But the funding gap with the US remains significant.
In departure from its unilateral policies, the US has taken the initiative to create a critical-minerals club as a standards-based trading system with a floor price mechanism, seeking to unite nations against China’s dominance. As a critical-minerals supplier, Australia could benefit from this by providing an alternative to the purported unfair trade practices and low governance standards characteristic of the Chinese market, should such demand and willingness to pay higher prices materialise.
For Europe, the balance is more critical. While China seems to be a common ground, there are other issues – for example, Greenland and Ukraine – where US and EU interests diverge and conflict. The US will always put its interests first, but partnering with the US should not come at the cost of marginalising EU supply chains, strategic-autonomy objectives and values.
This research is part of the EU Centre of Excellence in Critical Minerals at the University of Canberra, EUOzCRM – 101176236 – ERASMUS-JMO-2024-COE, co-funded by the EU Erasmus+ Programme. The views expressed are solely those of the author and are independent of sources providing support.
