The European Union is unlikely to diversify its supply of critical raw materials in time to meet its climate and industrial targets, leaving the bloc heavily dependent on China well into the next decade, according to a new report by the European Court of Auditors (ECA).
Despite the signing of 14 major trade agreements and sustained diversification efforts led by the European Commission, EU auditors concluded that the EU27 is “unlikely to succeed in time” in securing alternative sources of minerals essential for clean technologies such as electric vehicle batteries, wind turbines and solar panels.
China remains the dominant supplier. The ECA report shows that the EU sources 97% of its magnesium imports from China, alongside large shares of gallium (71%), germanium (45%), baryte (44%), arsenic (39%), graphite (40%) and tungsten (31%). Magnesium is a key input for hydrogen electrolysers, while gallium and germanium are vital for semiconductors and renewable technologies.
“Without critical raw materials, there will be no energy transition, no competitiveness, and no strategic autonomy,” said Keit Pentus-Rosimannus, warning that the EU is “dangerously dependent” on a small group of external suppliers.
While countries such as Chile (lithium) and Turkey (boron) are also important partners, China remains unrivalled in both mining output and refining capacity. According to EU data, China controls around 60% of global production of critical raw materials and about 90% of global refining capacity. The European Parliament estimates that the EU depends on China for roughly 90% of its raw materials and 98% of rare-earth magnets.
The pending Mercosur trade agreement, covering Argentina, Brazil, Paraguay and Uruguay, could help diversify supply once approved by the European Parliament. EU lawmakers are also debating whether to revive a stalled trade and minerals agreement with the United States.
Speaking in December, EU Executive Vice President Stéphane Séjourné acknowledged the bloc’s raw material dependence and said dialogue with China “remains essential,” even as Brussels rolls out new monitoring measures and prepares to launch a European raw materials centre to coordinate supply, stockpiling and market oversight.
Auditors noted that Beijing has increasingly used its dominance as geopolitical leverage. Export restrictions on rare earths in recent years, including in 2025, disrupted EU industries. Data from the European Chamber of Commerce in China shows that Chinese authorities approved only 19 out of 141 licence applications submitted by European companies in mid-2025.
The report also questions whether the EU’s Critical Raw Materials Act (CRMA), adopted in 2024, can realistically meet its targets. The law sets non-binding goals for 2030, including 10% domestic extraction, 40% local processing and 25% recycling, while limiting reliance on any single non-EU supplier to 65%. Auditors say these targets are difficult to achieve given China’s grip on processing for materials such as magnesium, gallium and all rare earth elements.
The ECA highlights recycling as an underused lever. Ten critical materials needed for the energy transition are not recycled at all in the EU, and existing targets do little to incentivise recycling of specific materials. The auditors recommend binding recycling targets, improved waste collection rules and easier movement of critical-material waste within the bloc to improve the commercial viability of recycling.
“China’s vertical integration, scale and low costs give it a structural advantage,” Pentus-Rosimannus said, adding that without stronger action on recycling, partnerships and strategic projects, the EU risks falling short of its green and industrial ambitions.
