The European Commission’s strategic-project pipeline has reached 106 projects across extraction, processing, recycling and integrated operations. This reflects Europe’s efforts to expand domestic supply, but strategic designation alone does not secure financing, offtake or protection from lower-priced imports.
The Critical Raw Materials Act (CRMA) is advancing faster than the Carbon Border Adjustment Mechanism (CBAM). The CRMA seeks to strengthen supply security, while CBAM addresses carbon leakage in selected carbon-intensive sectors, leaving many strategic minerals outside its direct scope.
Critical minerals face different border rules
The policy gap affects lithium, graphite, nickel, cobalt, copper and rare earths, materials essential to European industry, electrification and advanced technologies. The CRMA focuses on reducing dependence on external suppliers by expanding extraction, processing and recycling in Europe.
CBAM, by comparison, covers selected imports of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. As a result, European lithium hydroxide refineries, graphite purification facilities and rare-earth processing plants can be considered strategically important while competing with imports that face no equivalent CBAM charge.
Their commercial viability depends on competitive electricity prices, long-term offtake agreements, grants, state aid, financing and customer demand for traceable materials. Producers of covered aluminium and certain ferroalloys operate under a different regulatory framework, which can affect the relative cost of competing imports.
Project designation does not secure financing
The Commission’s 106-project pipeline supports efforts to mobilise investment, but a strategic designation does not guarantee financing, secured offtake or protection against lower-priced imports. Developers and lenders still need to assess capital expenditure, infrastructure, feedstock availability and operating costs, as well as expected revenues.
European refining projects therefore require more than recognition as strategic. Competitive energy, faster permitting, reliable financing, integration with recycling and long-term customer commitments are essential to building commercially sustainable supply chains.
Any CBAM expansion would need product-specific rules
Extending CBAM to additional critical minerals could narrow the policy gap, but would require product-specific customs classifications, emissions methodologies and verification procedures. It would also require defensible comparisons with EU industrial carbon costs.
Critical minerals have differing production methods and emissions profiles. Expanding CBAM coverage solely because a material is strategically important would go beyond the mechanism’s original carbon-leakage objective.
Refiners must balance supply security and costs
For copper, lithium, nickel, graphite and rare earths, the central challenge is combining supply security with competitive production costs and credible environmental performance. Europe’s success will depend on whether its policies can turn strategic priorities into financially viable refining projects capable of competing with imported materials.
