The European Union has activated its Critical Raw Materials Act, the most significant industrial policy initiative since the 2021 chips legislation, allocating 35 billion euros to develop European and allied-country sources for materials including lithium, cobalt, rare earth elements, and processed semiconductors where Chinese suppliers currently hold dominant market positions. The act creates mandatory strategic reserve requirements for member states and facilitates long-term offtake agreements with mining operations in Africa, South America, and Australia.
Industry response has been cautiously supportive. European manufacturers welcome supply security initiatives but note that building alternative supply chains takes five to ten years at minimum and will result in higher input costs during the transition period. Several Chinese suppliers have signaled they may accelerate export restrictions in response to European diversification efforts, potentially creating supply gaps before alternatives are operational.
