EU lawmakers vote to create raw materials agency to cut reliance on China

The European Parliament has voted to bolster the bloc's Critical Raw Materials Act (CRMA), establishing a dedicated EU agency and a €2 billion fund to lessen Europe's reliance on foreign suppliers of essential minerals for clean energy, defense, and digital transitions. The amendments, approved by a wide margin of 470 to 83 votes with 108 abstentions, aim to speed up extraction, processing, recycling, and substitution across the entire critical raw materials value chain.

This move will have significant implications for commodity trade flows as the EU seeks to diversify away from dominant suppliers, particularly China, for inputs such as rare earth elements, lithium, and cobalt. Mohammed Chahim, a leading figure from the Socialists and Democrats group representing the Netherlands, emphasized the geopolitical significance of critical raw materials, stating that those who control them have the power to shape industrial, energy, and security landscapes.

A central element of the proposed changes is the creation of a critical raw materials center as an independent EU agency, funded with €2 billion through the newly proposed Critical Raw Materials Fund. This fund will ensure financial stability for developers working on extraction, processing, and recycling projects through mechanisms like price stabilization contracts.

MEPs also advocate for a conditional export-control clause aimed at keeping recyclable materials within the EU and boosting domestic processing capacity. This move is particularly important for components like permanent-magnet scrap and waste, which are crucial for electric vehicle motors and wind turbines, key sectors of the EU's energy transition strategy.

The Commission will be tasked with identifying large companies within strategic sectors like batteries, hydrogen equipment, aircraft, drones, satellites, and advanced chips that may require resilience obligations. These obligations will include comprehensive supply chain mapping and measures to reduce vulnerability to disruptions.

The EU Parliament further emphasizes the link between critical raw materials security and European defense capability, integrating this aspect into the forthcoming European Defence Industry Program. This shift reflects the growing concern among policymakers that supply concentration risks extend beyond economic implications to national security vulnerabilities.

The proposed amendments also seek to expand the joint purchasing mechanism to enable coordinated strategic stockpiling of critical raw materials by both member states and private-sector participants.

The Critical Raw Materials Act was initially adopted by Parliament in December 2023, laying the groundwork for an EU-wide framework to guarantee industry access to essential raw material inputs for the clean energy, digital, defense, and aerospace transitions. The Commission's amendments, proposed in December 2025, were prompted by the RESourceEU Action Plan, which highlighted the need to accelerate implementation and enhance the EU's strategic autonomy amidst increasing global competition for mineral resources. The Parliament is now poised to commence negotiations with member states on the final text.