Critical Minerals Pact Nearing
The United States and European Union are reportedly close to an agreement to coordinate production and secure supply chains for critical minerals, including incentives that could favor non‑Chinese suppliers. That industrial-policy push aims to reduce reliance on China and may create opportunities in procurement, traceability and industrial finance tied to mineral supply chains. (bloomberg.com) (northernminer.com)
Washington and Brussels are close to a minerals deal because the metal inside an electric car battery can decide whether a factory runs, a subsidy applies, or a supply chain stalls. A draft action plan seen by Bloomberg says the United States and the European Union would coordinate production, standards, investment, and responses to disruptions in supplies from countries such as China. (bloomberg.com) The proposed pact is not about oil or gas. It is about lithium, nickel, cobalt, graphite, and rare earths, which are the ingredients used in electric vehicle batteries, wind turbines, power electronics, and defense hardware. (congress.gov) China sits at the center of this market because mining is only one step and processing is the choke point. The International Energy Agency said in 2024 that China handled about 90% of rare earth processing, about 60% of refined lithium, about 70% of refined cobalt, and about 90% of battery-grade graphite processing. (iea.org) That concentration has already turned into policy pressure. In December 2023, China banned the export of rare earth extraction and separation technology, tightening control over know-how as well as material. (reuters.com) The United States has been trying to build a legal shortcut around that bottleneck since 2023. A Congressional Research Service brief says the original United States-European Union talks were designed in part so minerals extracted or processed in Europe could count toward electric vehicle tax credit rules under the Inflation Reduction Act of 2022. (congress.gov) That tax credit matters because it changes who gets picked in procurement contracts and battery supply deals. Under the law, a vehicle can qualify only if a required share of its battery minerals comes from the United States, a free-trade-agreement partner, or a country covered by a critical minerals agreement. (irs.gov) The new twist is price support. Bloomberg reported that the draft plan includes incentives such as minimum price guarantees, which would protect non-Chinese projects when prices fall low enough to crush higher-cost mines and refineries. (bloomberg.com) Europe has been building its side of the system in parallel. The European Union’s Critical Raw Materials Act sets 2030 benchmarks for extracting 10% of annual consumption inside Europe, processing 40%, and recycling 25%, while also limiting dependence on any one third country to 65% at any strategic stage. (eur-lex.europa.eu) Those targets are now attached to real projects. The European Commission said in March 2025 that it selected 47 Strategic Projects across 13 member states to speed up mining, processing, and recycling for materials including lithium, nickel, cobalt, manganese, and graphite. (ec.europa.eu) If the pact is signed, the winners will not just be miners. Companies that can prove where ore came from, lenders that can finance processing plants, and manufacturers that can lock in compliant supply outside China will all have a clearer lane than they did a year ago. (northernminer.com)
