The European Union (EU) currently relies on China for certain critical minerals but Brussels seeks to diversify its sources. Africa, which holds about 30% of the world's reserves of these essential minerals, could become a key partner of the Union. 

Several companies from China, Japan, South Korea, and the United States have been competing to secure access to Africa's minerals, which are crucial for the energy transition. However, a report from the European Council highlights that European firms are largely absent from this competitive landscape, even as demand grows in Europe. 

Currently, the EU depends on a handful of nations for critical mineral supplies, such as heavy rare earths which it solely gets from China. Leveraging the Critical Raw Materials Act passed in 2024, Brussels aims to limit dependence on any single country to no more than 65%. To meet this goal, Europe must sign supply agreements with mineral-rich countries that currently contribute little to its resources.

Africa holds about 30% of the world's strategic mineral reserves, and the EU is looking to countries like the Democratic Republic of Congo and Namibia to lessen its reliance on China. Alongside the U.S., the EU is committed to funding initiatives like the Lobito Corridor in this region. 

Despite these efforts, the EU has been struggling to make significant progress in a sector where China remains dominant. Meanwhile, new players such as South Korea, Japan, the UAE, and Saudi Arabia are expanding their presence in Africa.

Why Europe Struggles to Establish a Strong Presence in Africa

The report titled “Material World: How Europe Can Compete with China in the Race for Africa's Critical Minerals" outlines several challenges faced by European companies in establishing a foothold in Africa. The need to comply with social and environmental standards (ESG) raises costs, making them less competitive against international rivals who can offer better deals to African governments. 

Moreover, the European Union has not provided adequate support to motivate its private sector to invest in Africa. Without sufficient financial incentives and guarantees, European firms find it hard to secure the funding needed for access to critical minerals. 

European initiatives aimed at improving the business climate, including projects like the Lobito Corridor, may end up benefiting non-European companies more. This is particularly true in Namibia, where the EU's partnership has not attracted much European investment despite local mineral processing opportunities.

Developing a Partnership That Benefits Everyone

While European companies lag behind their Asian counterparts, other key players are emerging in Africa. This year, Belgium's Umicore reached an agreement with Gécamines to process germanium from the DRC, a critical metal that is mostly sourced from China. The DRC seeks to detain 30% of the global market, which could serve as a viable alternative to China. 

Furthermore, the UK's Pensana and Australia's Ionic Rare Earths are developing rare earth projects in Angola and Uganda to supply plants in the UK. These projects could allow the EU to secure some of its supply directly on European soil. To involve more European firms or firms connected to European interests, the document recommends that Brussels and European financial institutions offer incentives to these companies.

Offering price guarantees, including both floor and ceiling prices, could help companies that invest in local mineral extraction and processing by shielding them from market volatility and ensuring steady revenues for European producers. This approach could benefit Africa, which is eager to play a larger role in the value chain for critical minerals. 

From 2019 to 2023, Africa received only 2.8% of the world's foreign direct investment (FDI) in critical mineral processing, despite housing 30% of the world’s reserves. If Africa remains a raw material exporter, it is expected to earn just $55 billion out of the projected $8,800 billion global market for batteries and electric vehicles by 2025.

Emiliano Tossou