Adopted on 3 December, the EU’s new critical minerals action plan outlines its first sign of tangible commitment with €3 billion to fund minerals projects and ultimately protect European industries from potential geopolitical stresses related to Chinese resource dominance. At first, this may seem like a step in the right direction for minerals security, but closer inspection brings to light doubts on whether prioritised projects are actually aligned with this objective.
In early December 2025, the European Commission adopted a new initiative to further ensure security of minerals supply in Europe, in support of its Critical Raw Materials Act (CRMA). The RESourceEU Action Plan is set to commit €3 billion to build non-China critical minerals supply chains by supporting relevant projects elsewhere in the world. Under this initiative, the European Investment Bank has already promised funding to Vulcan’s lithium extraction project in Germany and Greenland Resources’ Malmbjerg molybdenum project in Greenland.
Funding for a molybdenum project came as a surprise to some, and for good reason – molybdenum does not come across as critical and is not included on the EU’s current list of critical minerals. If these are the projects being given priority, the question is – what exactly makes a mineral critical enough for substantial funding to be immediately allocated?
CRU believes that it comes down to three key aspects that should be included in a more targeted definition of criticality. A critical mineral is one that has:
- Significant technological or environmental barriers to production;
- Fast-growing demand within a strategic sector such as energy or defence; and
- Constrained supply or supply that is concentrated to a single dominant source that opens consumers up to supply risk.
Minerals which fulfil these criteria, in CRU’s opinion, should be at the front of the queue for government attention and financial support. This is not an unpopular approach, but many countries have muddied the definition such that any mineral or project may be considered “critical” if it ticks enough boxes. The danger of this is that projects producing truly critical minerals may be passed over for investment funding in favour of projects that are perhaps easier, cheaper or less risky but do not align with the core motive. Overall funding is spread too thinly, diminishing the impact in genuinely critical sectors.
The fast-tracked molybdenum project is an example of this. Demand for molybdenum is driven by the steadily growing stainless and alloy steel sector, but it is not materially impacted by the energy transition or used in high concentrations in other strategic sectors like defence. While molybdenum may be defined as critical owing to the nature of its extraction as a by-product of copper, its supply is certainly not under any significant geopolitical risk – it has a diverse supply base at mining and refining stage. Furthermore, it is not technically sophisticated to extract, typically using mature flotation and roasting processes that have been widely used in the mining industry for decades.
So why did Greenland’s molybdenum project receive funding under the EU’s latest directive? This can only be attributed to the EU’s loose definition of criticality, which has rewarded a project potentially further along the development pipeline. Along the same pattern, the first batch of fast-tracked projects recognised under the CRMA’s “Strategic Projects” list are all in late stages of development, making them low-hanging fruit for demonstrating progress regardless of their criticality.
In contrast, there are some minerals that clearly face the high level of geopolitical risk the RESourceEU Action Plan aims to protect Europe from. According to market analytics produced by CRU’s various analysis teams, rare earth elements (REEs) are a well-documented mineral group that sits firmly in the “critical” end of the spectrum, with technological barriers, fast-growing demand and bottlenecked supply in China.
Rare earths: The exemplar definition of criticality
The REE market is famously rife with geopolitical tension. It has already been hit several times with export restrictions from China in 2025 – first, the regulated export of several REEs in April, followed by the restricted export of most products manufactured using China’s REE technology and a barring of Chinese citizens from supporting overseas REE activities later in October (note that the latter of these restrictions has been suspended until November 2026).
These supply-tightening measures were partly retaliatory against US tariffs on Chinese imports, part of the trade war that had been brewing for years but came to a head when Trump’s second administration started in January. China’s control over 90% of global REE magnet production (and unrivalled technical know-how in processing) has sealed its influence through these export restrictions.
Given the currently difficult-to-substitute role of REE magnets in the clean technology and defence sectors, and the challenge of the REE separation process, government action outside China to ensure supply is crucial in addressing these challenges. In July, the US Department of Defense signed a lucrative guaranteed-pricing offtake deal with aspiring mine-to-magnet REE producer MP Materials to support its magnet production trials. The US has since also signed deals with Australia, Ukraine and Saudi Arabia in a bid to secure non-Chinese sources of REEs.
However, at the same time, governments have chosen to dilute their resources across other minerals that, in CRU’s opinion, need not be prioritised. For example, project investment under the EU’s CRMA is unfocussed. In addition to the recently announced molybdenum project, projects across aluminium, magnesium, manganese and graphite all have received “Strategic Project” status, which aims to guarantee fast-tracked permitting and financing application priority.
The EU is not alone in this, either. In November 2025, the US Geological Survey (USGS) included potash on its latest list of critical minerals – a curious choice since potash (potassium chloride) is widely available globally and experiences comparatively little supply risk. The US also enjoys proximity and, until very recently, a secure trade relationship with Canada – the world’s largest producer – which has developed extensive distribution networks specifically to serve US customers.
Governments need to narrow their critical minerals investment focus now
The longer governments wait to support meaningful investments in minerals that fulfil the three main criteria listed above, the further they fall behind in the race to secure supply. Besides limited financial power, there are further reasons why a targeted approach is crucial and time sensitive.
Firstly, bottlenecks and supply dominance is often a result of a monopoly on expertise. For some critical minerals, technological know-how simply does not yet exist outside of China. Both time and money will need to be invested in the research and development behind manufacturing technologies – for example, rare earth magnet-making and lithium-ion battery cell production, both of which have already been perfected at scale in China and not yet anywhere else. This has enabled China to optimise, automate and deploy capacity at scale.
A second reason is the difficulty in getting new critical minerals projects off the ground. An example here is the first attempt at commercial REE separation outside of China – Lynas’ new REE separation facility in Malaysia. This facility was commissioned in early-2025 and is owned by Lynas Malaysia, a subsidiary of the premier REE producer outside China, Australia’s Lynas Corporation. It receives feedstock from Mt Weld in Australia, a mature, high-grade deposit that has been mining REEs since 2011.
With secured high-grade feedstock and rising demand for REEs, Lynas Malaysia’s facility should have breezed through development, but this was not the case. A hallmark of REE processing, the project faced an onslaught of public protests over the toxic waste produced in REE separation, despite reportedly having proven compliance with radiation safety standards. It took nearly 20 years to develop the project from feasibility study to commissioning. The lesson is clear – any new project development needs to start now.
Pinpoint genuine criticality with CRU
Constantly evolving policy on critical minerals, while necessary to support needy projects, can become a hindrance to its own core objective if implemented in an unfocussed manner, particularly when it comes to allocating funding and managing risk. Governments need to ensure that attention is fed to the truly critical projects to truly protect their own strategic industries.
CRU can help you identify what is genuinely critical for your business, and guide you towards opportunities to de-risk, fill gaps or, in some cases, trust that the industry will solve its issues and stay put. We provide both ready-made intelligence and tailored research to help organisations stay ahead of shifts – from risk exposure to opportunity identification, enabling more informed, forward-leaning decisions.
Knowing what we track and how we track it can help you prepare for your next move, whether it is today, in the next 12 months or in the next decade. To learn more, please contact us.
