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Europe's Critical Minerals Defence and Rearmament on Fragile Supply Chains

  • Writer: Alvaro Antoni
    Alvaro Antoni
  • 2 days ago

Guns without foundations


As European leaders commit to historic levels of defence spending, a structural problem is being systematically underweighted in public debate: the basic materials from which modern weapons are made are, to a remarkable degree, sourced from the very states that European rearmament is designed to deter or hedge against.


The immediate catalyst for renewed focus is the conflict environment. Russia’s ongoing war in Ukraine has driven sustained demand for artillery shells, armoured vehicles and air defence systems. More recently, the widening of the conflict in the Middle East, including developments involving Iran, has concentrated minds further on the pace of depletion and the limits of European defence industrial capacity. According to SIPRI, global defence spending rose by 9.4% between 2023 and 2024, with Germany, Poland and other NATO members driving a significant share of that increase. Orders for military equipment have risen commensurately across the Alliance, pointing to an accelerated build-out trajectory over the coming decade.


What receives considerably less attention is the material precondition for that build-out. Fighter aircraft, main battle tanks, submarines, missiles, drones, radar systems and communications infrastructure all incorporate an array of critical raw materials whose supply chains are heavily concentrated in China and, to a lesser extent, Russia. NATO itself recognised this in December 2024, releasing a list of twelve raw materials it determined were integral to the manufacture of advanced defence systems and equipment, and stating that their secure supply was vital to maintaining the Alliance’s technological edge and operational readiness. The European Commission had reached broadly similar conclusions through successive iterations of its critical raw materials list, and the EU’s own demand for rare earth metals is projected to increase six-fold by 2030 relative to 2022 baseline consumption.


Europe’s rearmament is proceeding on the assumption that the material inputs for that rearmament are accessible. That assumption is increasingly contestable.

The analytical task, then, is not to assess whether European defence spending is rising (it clearly is), but to ask whether that spending is being designed with a realistic model of the supply chain risks it will encounter. The evidence suggests it is not.


What the hardware actually requires


Modern defence platforms are materially complex in ways that are easy to underestimate. A single F-35 Lightning II combat aircraft requires more than 400 kilograms of rare earth elements in its construction, according to the US Department of War. These materials are incorporated across the aircraft’s guidance systems, communications equipment, and crucially, its permanent magnets, which are used in components exposed to extreme temperatures and pressure differentials. The relevant magnets (neodymium-iron-boron and samarium-cobalt) depend on heavy rare earths, including dysprosium, terbium, samarium and yttrium, four elements for which China accounted for the majority of global processing capacity in 2024.


Rare earths are not the only area of concern. Tungsten, of which China controls approximately 83% of global production, is used in engine components, warheads and armour-piercing munitions. Its properties, including exceptional hardness, strength and heat resistance, make substitution technically difficult in high-performance defence applications. Gallium, of which the US government noted in 2023 that its aerospace industry maintained a 100% net reliance on China as the primary source, is used in the radars, sensors and semiconductors embedded throughout modern military electronics. Antimony, heavily concentrated in Chinese processing, is a component of armour-piercing ammunition. Cobalt, though primarily extracted in the Democratic Republic of Congo, flows through a processing chain in which Chinese-owned operations play a dominant role; it is used as a superalloy base in combat aircraft propulsion systems.


Titanium presents a distinct but related vulnerability: while China is a significant producer, Russia has historically been a primary source of aerospace-grade titanium for European supply chains. In late 2024, President Putin explicitly threatened to limit Russia’s export of strategic materials, referencing uranium, nickel and titanium. The prospect of simultaneous pressure from both Eastern suppliers is not a theoretical risk scenario; it is a live one.


When translated into demand terms, the scale of the supply challenge becomes clearer. An analysis by the Payne Institute at Colorado School of Mines projected that the military equipment build-out anticipated through 2035, based on NATO procurement trajectories, would require annualised demand increases of approximately 250% for vanadium and manganese, around 200% for titanium and copper, and 80-100% for rare earths, gallium and several other materials, relative to the annualised demand implied by the existing fleet. The absolute volumes involved remain relatively modest in the context of total global consumption for most of these materials (with the notable exception of hafnium, where projected military deliveries could represent nearly 30% of current US annual consumption), but the directional signal is unambiguous.


China’s export controls: from instrument to doctrine


China has long held a structurally dominant position in critical mineral supply chains, but 2025 marked a qualitative escalation in its willingness to deploy that position as a coercive tool. The pattern that emerged was not improvised. It was incremental, escalating, and increasingly targeted at Western defence industrial capacity.


The sequence began in July 2023 with export controls on gallium and germanium, introduced in direct response to US semiconductor export restrictions. Graphite controls followed in December 2023. In December 2024, Beijing tightened its posture further, announcing a complete ban on exports of gallium, germanium and antimony to the United States and imposing heightened scrutiny on graphite exports based on end-use assessment. February 2025 brought controls on tungsten, tellurium, bismuth, indium and molybdenum, a grouping characterised by the IEA as materials primarily used in defence and high-tech applications.


The most significant escalation came in two waves during 2025. In April, China announced with immediate effect export controls on seven medium and heavy rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. Exporters became required to obtain individual licences from China’s Ministry of Commerce. Then, in October 2025, a second package extended controls to five additional rare earths, as well as to refining and magnet-manufacturing equipment, including, crucially, foreign-made products that had used Chinese materials or processing technology at any stage of their production. This extraterritorial dimension, extending Chinese law to products manufactured outside China, is unprecedented in scope.


Most significantly of all, the October package introduced categorical denials for defence-related end use. For the first time, China codified in regulatory form that materials subject to its export controls would not be licensed for applications in defence manufacturing. The practical effect, i.e. that European and NATO defence programmes could be formally excluded from supply, is not a theoretical risk but a stated policy position. Implementation was suspended for one year, until November 2026, following diplomatic signals from Beijing. But the suspension is not a retraction. The architecture of exclusion has been constructed; only its activation has been deferred.


The October 2025 package introduced categorical denials for defence-related end use. Europe has until November 2026 before that architecture becomes operational.

The European Central Bank assessed in this period that over 80% of large European firms were no more than three intermediaries away from a Chinese rare earth producer. European manufacturers of defence systems, electronics and automotive components were identified as particularly exposed. The IEA separately reported that rare earth prices had risen to up to six times their pre-restriction levels in some cases, with downstream effects on input costs across the broader manufacturing sector.


Selected Defence-Critical Minerals: Chinese Dominance, Export Controls, and EU Supply Risk
Selected Defence-Critical Minerals: Chinese Dominance, Export Controls, and EU Supply Risk. Sources: IEA Global Critical Minerals Outlook 2025; IISS Critical Raw Materials and European Defence (March 2025); DIIS Policy Brief (February 2026). China processing shares are approximate and reflect 2024 data. EU supply risk assessments reflect our own analytical judgement based on concentration, export control activity, and availability of substitutes or alternative sources.

The policy architecture and its gaps


European policymakers have not been inattentive to these risks. The EU’s Critical Raw Materials Act, which came into force in May 2024, represents the most comprehensive legislative attempt to date to address the underlying exposure. It establishes binding benchmarks for 2030: 10% of annual EU consumption to be met by domestic extraction, 40% by domestic processing, and 25% by recycling, alongside a cap preventing any single third country from supplying more than 65% of a given strategic raw material. In March 2025, the European Commission designated 47 projects across 13 member states as strategic, granting them streamlined permitting and improved access to institutional support.


At the member state level, there has been some convergence. France’s 2024-2030 military programming law enabled the defence ministry to request the creation of industrial stockpiles of defence-relevant materials and components. Germany’s December 2024 National Security and Defence Industry Strategy committed to using the national raw materials fund to strengthen supply security for the defence sector. Spain, Italy, Poland and the UK have published strategies that variously address raw materials security, though none yet incorporates defence-specific binding targets.


The difficulty is that the gap between these frameworks and operational resilience is wide, and in several critical respects, it is widening rather than closing. The CRMA provided no new financing mechanism; it relies on directing existing instruments and on member state coordination, both of which have proven slow in practice. As of late 2025, France’s €500 million critical minerals fund had not announced a single investment. Italy’s €1 billion vehicle remained inactive. Germany’s €1 billion fund took over a year to make its first investment in December 2025. The national funds have divergent eligibility criteria, limiting cross-border collaboration and directing capital towards nationally favoured materials rather than EU-wide strategic priorities.


On permitting, the picture is similarly sobering. The CRMA introduced streamlined procedures and binding timelines for strategic projects. But designation as a strategic project does not override national environmental law or resolve local political contestation. Europe’s most significant rare earth deposit, at Kiruna in Sweden, has priority status under the CRMA; permitting is nonetheless expected to take ten to fifteen years, in part because the mine cuts across indigenous Sami reindeer migration corridors. The contrast with the urgency implied by the November 2026 suspension deadline for Chinese export controls is acute.


The most important gap, however, may be in procurement policy. The forthcoming revision of defence-related procurement rules, scheduled for the third quarter of 2026, would be the logical instrument for introducing sourcing conditionality. It should require that procurement contracts favour bidders sourcing refined or processed materials from European or diversified non-Chinese supply chains. Whether that revision will include binding conditionality of this kind remains unclear. As of now, European defence procurement proceeds largely without reference to the origin of the raw material inputs involved.


The risk of American displacement


A further complication deserves explicit attention: the risk that the United States, in pursuing its own critical minerals strategy, inadvertently displaces European access to the limited pool of non-Chinese supply. More on that here.


The US response to China’s weaponisation of mineral dependencies has been substantial and accelerating. It combines Inflation Reduction Act tax credits, Defense Production Act guarantees, equity stakes in mining and processing companies, and long-term offtake agreements that commit buyers in advance to fixed volumes of future output. The overall package has been reinforced by up to $100 billion in lending authority across key agencies, plus the February 2026 launch of Project Vault, a $12 billion public-private strategic stockpile initiative to buffer manufacturers from supply shocks.


The mechanism of displacement is not hostile; it is commercial. US offtake agreements, backed by government guarantees, offer project developers a degree of revenue certainty that European buyers cannot currently match. The consequence is that scarce non-Chinese processing capacity, which remains the binding constraint, since mining is more geographically distributed than refining, is being contracted out of European reach before Europe has built the instruments necessary to compete for it. Belgium’s Solvay, having opened a rare earth processing facility in France in April 2025, earmarked large volumes of output to US magnet manufacturers rather than European ones, citing stronger commercial commitment from US counterparts. US Rare Earth simultaneously acquired the UK-based processor Less Common Metals. These are not isolated cases; they reflect the structural logic of a US industrial policy designed to absorb available non-Chinese capacity as rapidly as possible.


Replacing dependency on Beijing with exclusive dependency on Washington is not a strategic upgrade for Europe’s critical mineral defence. The US government’s programmes are designed, first and foremost, to serve US industrial and defence priorities. If those programmes absorb the limited available pool of diversified supply through long-term commitments, Europe may find itself materially excluded from the diversification it is ostensibly pursuing.


Implications for strategy and policy: addressing Europe’s critical minerals defence gaps


The picture that emerges is of a rearmament proceeding on an unstable material foundation. European defence budgets are rising. Procurement orders are being placed. New production facilities are being announced. But the raw material supply chains on which all of this depends are subject to escalating geopolitical pressure, concentrated in adversarial or ambiguous hands, and subject to a Chinese regulatory framework that has already codified the possibility of their denial for defence end-use.


Several implications follow. The first is that defence planning timelines and supply chain risk assessments need to be integrated more rigorously. The November 2026 reactivation date for China’s October 2025 export control package should be treated as a planning constraint, not a background development. That is a matter of months, not years. The industrial response to a formal denial of Chinese rare earth supply for European defence manufacturing would require years of lead time that have not been invested.


The second is that procurement conditionality is the most immediately actionable lever. The upcoming revision of defence procurement rules offers a concrete opportunity to introduce binding sourcing requirements that direct contracts towards certified-origin materials. This would also serve as a demand anchor for European and diversified supply chains, creating the offtake certainty that project developers currently receive from US counterparties and that European buyers do not yet offer. The political will to move in this direction has been signalled but not yet operationalised.


The third concerns coordination with Washington. The risk of US offtake crowding out European access is real but not inevitable. A coordinated allied approach to critical mineral security, one that allocates non-Chinese processing capacity between transatlantic partners rather than competing for it, would serve both parties’ interests more effectively than the current dynamic of competitive absorption. The Forum on Resource Geostrategic Engagement (FORGE), successor to the Minerals Security Partnership, offers a forum; its effectiveness depends on whether its members are willing to treat allied supply allocation as a joint problem.


The fourth is that the investment gap at the EU level needs to be acknowledged for what it is. The €3 billion RESourceEU initiative represents real but insufficient progress. The transformational opportunity lies with the next Multiannual Financial Framework, where the Commission’s proposal allocates €115.7 billion to resilience, security, defence and space from 2028 to 2034, compared with €25.3 billion in the current framework. The share earmarked specifically for critical raw materials remains to be determined through political negotiation. Given the stakes, that determination should be treated as a security decision, not merely a budgetary one. More on that here.


Europe has a narrow window (measured in months, not years) to close the gap between its defence ambitions and the material supply chains those ambitions require.

The wars on Europe’s doorstep and beyond its near neighbourhood are making clear that the physical capacity to produce and sustain military capability is not a contingency, but a first-order strategic requirement. Rare earths, tungsten, gallium and their counterparts are not exotic footnotes to that requirement. They are its precondition. A rearmament programme that does not address its own material foundations is not a security strategy; it is an aspiration.


Organisations seeking to translate these dynamics into an actionable strategy, whether to advance specific projects, to inform policy design, to structure investments, or to navigate regulatory and financing pathways across jurisdictions, are invited to contact AAP Consulting for further discussion.


References


The Refining Gap: Why the Transatlantic Critical Minerals Agenda Must Move Beyond the Mine

  • Writer: Alvaro Antoni
    Alvaro Antoni
  • Feb 11

When representatives of 54 countries gathered in Washington on 4 February 2026 for the inaugural Critical Minerals Ministerial, the scale of ambition was unmistakable. In the space of a single week, the Trump administration launched Project Vault, a public-private strategic minerals stockpile backed by approximately $12 billion in seed funding; unveiled the Forum on Resource Geostrategic Engagement (FORGE) as successor to the Biden-era Minerals Security Partnership; and announced joint Action Plans with the European Commission, Japan, and Mexico, including the prospect of coordinated price floors and a binding plurilateral trade framework for critical minerals. The European Union, for its part, signalled its readiness to sign a memorandum of understanding with the United States on critical mineral supply chain security.


These are significant developments. They reflect a shared recognition, at the highest political levels, that concentrated mineral supply chains are no longer merely an industrial concern but a first-order geopolitical vulnerability. Yet there is a risk that the current momentum, welcome as it is, continues to focus disproportionately on the most visible parts of the value chain, namely mining and raw material access, while underweighting the segment where Western vulnerability is most acute: refining and processing.


This article examines the state of play on both sides of the Atlantic and argues that the emerging transatlantic critical minerals agenda will be judged not by how many new mines it opens or how many memoranda of understanding it signs, but by whether it can credibly begin to rebuild the midstream processing capacity that China has spent decades consolidating.


The structural bottleneck: processing, not mining


The public and political discourse around critical minerals has, understandably, often centred on mining. Mining is tangible. It evokes questions of permitting, land use, environmental protection, and resource nationalism, all of which carry significant political weight. But as several recent assessments have made clear, the most consequential chokepoint in critical mineral supply chains is not extraction but what comes after it.


The Critical Minerals Value Chain: Where the Real Bottleneck Lies
The Critical Minerals Value Chain: Where the Real Bottleneck Lies

As the Payne Institute for Public Policy at Colorado School of Mines observed in its 2025 State of Critical Minerals Report, it is China’s dominant market share downstream of mining, specifically in refining and processing, that creates the most acute vulnerability for Western economies. China spent decades building not only mining capacities at home and abroad, but near-monopolies in the intermediate processing steps: the separation, refining, and conversion operations that transform raw ore into the materials that actually enter industrial supply chains. Policy analysts and industry observers have increasingly recognised that this dependency is, if anything, more pronounced for the EU than for the US, given Europe’s even thinner domestic processing base.


The European Court of Auditors’ Special Report 04/2026, published in February 2026 and examining the EU’s critical raw materials policy for the energy transition, reinforces this assessment in stark terms. Currently, 100% of rare earth processing takes place outside the EU, overwhelmingly in China. The EU’s Critical Raw Materials Act (CRMA) set an ambitious benchmark of processing 40% of strategic raw materials domestically by 2030. Yet the Court found that the EU appears to be a long way from reaching this level and that, in fact, domestic processing capacity is shrinking rather than growing. The EU-27 lost approximately half of its primary aluminium processing capacity between 2019 and 2023, a trajectory driven in part by high energy costs that render energy-intensive processing operations uncompetitive relative to other regions.


The US faces a structurally similar problem, though it manifests differently. Across the critical minerals spectrum, China’s pricing power is squeezing the profitability of private mining and processing operations, effectively deterring new Western investment. Lithium, cobalt, and nickel prices have all fallen below the thresholds required to support new capacity outside China. In rare earths, current pricing for NdPr oxide, a non-substitutable input for permanent magnets, stands at roughly half of what US mining companies say they need to be profitable, even at scale. In copper, refining margins have turned negative as a surge of Chinese-backed capacity has overwhelmed the global market. The Payne Institute’s 2025 report captured the dynamic plainly: China is exerting its influence across all critical minerals processing.


This is not simply a market failure; it is the product of deliberate strategic positioning by Beijing over several decades, combined with its willingness to deploy export restrictions as geopolitical leverage. In 2025, China imposed export licence requirements on several rare earths and permanent magnets, triggering price shocks and delivery delays. A second package expanded restrictions to include processing equipment and categorical denials for defence-related critical raw materials, with implementation suspended until November 2026. The message was clear: control over processing confers control over supply, regardless of where the ore is mined.


Two strategies, one problem


Both the EU and the US have recognised the challenge and mobilised policy responses. But the approaches differ substantially in ambition, instrument design, and risk profile, and neither is, on its own, sufficient to address the scale of the processing deficit.


The EU approach is anchored in the CRMA, which entered into force in 2024 and established non-binding 2030 benchmarks: 10% of annual consumption from domestic extraction, 40% from domestic processing, 25% from recycling, and a 65% cap on single-country import dependency for any strategic raw material. The CRMA introduced a Strategic Projects instrument to channel permitting and financing support, and by 2025, the Commission had selected 47 EU-based and 13 non-EU-based projects.


However, the European Court of Auditors’ assessment raised serious questions about whether these mechanisms can deliver at the required pace. The targets themselves lack clear justification: no public documentation explains how the specific benchmarks were derived or how they relate to the EU’s renewable energy or net-zero industry targets. Moreover, the targets are aggregated across all strategic raw materials, meaning they can technically be met without delivering improvements for individual materials where dependency is most severe.


On strategic projects, the Court found that most were at an early stage of development when selected, making it highly unlikely that they will meaningfully contribute to the 2030 targets. Financial viability is not a condition for project selection, and at least one project promoter filed for bankruptcy after designation. Critically, the CRMA provides no dedicated EU funding for strategic projects, a gap that the Commission’s proposed European Competitiveness Fund and the RESourceEU Action Plan have begun to address but have not yet closed.


RESourceEU, launched in late 2025, represents the EU’s most concrete attempt to accelerate the strategy. It mobilises approximately €3 billion over 12 months to push mature projects across the finish line in three priority areas: permanent magnets, batteries, and defence-critical inputs. The plan includes demand aggregation, joint purchasing, strategic stockpiling, an export ban on magnet and aluminium scrap, and recycled content requirements for magnets. Yet early assessments suggest that while RESourceEU addresses targeted bottlenecks, it does not constitute a structural breakthrough. Key levers remain voluntary (joint purchasing) or politically contingent (price stabilisation, equity stakes, diversification requirements). The overall funding volume remains relatively modest, with larger-scale EU financing potentially achievable only under the next Multiannual Financial Framework (2028 to 2034).


The US approach has moved faster and with a heavier hand, deploying instruments that are largely unprecedented in the American context. The Department of Defense’s partnership with MP Materials, announced in mid-2025, broke new ground by combining equity investment, offtake agreements, and a price floor for NdPr oxide. MP Materials’ targeted capacity of 10,000 metric tons per year of NdPr oxide and magnets would fulfil over 60% of recent US demand and represents the first serious domestic rare earth magnet production in decades. The deal appears to have had a crowding-in effect: MP subsequently secured $1 billion in commercial loans and an offtake agreement with Apple.


The Trump administration has expanded this toolkit further. Executive Order 14201 (March 2025) laid the groundwork for the Development Finance Corporation to support domestic mining and processing. The administration has taken equity stakes in critical mineral companies, including MP Materials, USA Rare Earth, and Canadian firms Lithium Americas and Trilogy Metals. Project Vault, announced on 2 February 2026, establishes a strategic minerals reserve backed by a $10 billion EXIM Bank loan and approximately $2 billion in private capital, with participation from equipment manufacturers including GE Vernova, Boeing, and Western Digital alongside commodity traders.


Most significantly, the administration has signalled an intent to reshape the global critical minerals trade itself. At the February Ministerial, Vice President Vance proposed a preferential trade zone for critical minerals, protected by enforceable price floors and adjustable tariffs. The newly established FORGE framework, chaired initially by South Korea, is intended to coordinate this effort among allied nations. Separately, the US Trade Representative announced that the US, the European Commission, and Japan will develop Action Plans for critical minerals supply chain resilience, with a memorandum of understanding expected within 30 days.


The risk of fragmentation


The scale of US government mobilisation, over $30 billion in financing support announced in the past six months alone, is striking and represents a qualitative shift in how Washington approaches industrial policy for critical minerals. But it also creates a gravitational pull that may not work to the broader Western interest.


The RESourceEU assessment documented early evidence of this dynamic. The US “mine-to-magnet” strategy, by tying up scarce non-Chinese supply through subsidies, equity stakes, and long-term offtake agreements, is already drawing processing capacity and investment toward the US. There are already early indications of European processing capacity shifting to the US, with firms such as Less Common Metals and Solvay among the reported cases. This is a rational response by firms to more favourable policy conditions, but the aggregate effect risks being counterproductive: if allied nations compete for the same limited non-Chinese processing capacity, the result is displacement rather than net expansion, and China’s structural advantage remains intact.


The International Energy Agency’s Global Critical Minerals Outlook 2025 projects that the average market share of the top three refining nations will decline only marginally by 2035, suggesting that diversification of processing supply chains will be slow even under favourable conditions. This timeframe underscores a central reality: the challenge is not merely to redirect existing capacity but to build genuinely new capacity at scale. Neither the EU nor the US can do this alone. The EU has regulatory frameworks and market size, but lacks the fiscal firepower and the tolerance for state-led industrial intervention that the US is now demonstrating. The US has financial muscle and political urgency, but cannot secure the full range of processing capabilities, supply relationships, and market depth it needs without allied participation.


The paused EU-US critical minerals agreement of 2023 to 2024 was an early casualty of this misalignment. The new Action Plan announced at the February Ministerial represents a chance to restart, but whether it advances beyond memoranda of understanding to operational coordination on the midstream will be the decisive test.


What midstream cooperation could look like


Several elements of a more substantive transatlantic approach to the processing gap are already visible in the respective policy frameworks, though they remain largely unconnected.


First, coordinated price support and demand anchoring. The Payne Institute report made a compelling case that for many critical minerals, particularly lower-volume defence-relevant materials, the barrier to Western processing investment is not technological but economic: market prices, often depressed by Chinese overproduction, do not support the business case for new capacity. The Trump administration’s embrace of price floors and the EU’s tentative steps toward price stabilisation under RESourceEU point in the same direction. Aligning these mechanisms across the Atlantic, ensuring that a price floor established by Washington does not simply redirect limited supply away from European buyers, would be a meaningful step.


Second, joint investment in processing infrastructure. The rare earths value chain illustrates the challenge most clearly. Separation and refining of rare earth elements is among the most complex operations in modern metallurgy, and China has built a decisive technology lead. Building competitive Western separation capacity requires not only capital but sustained demand commitments, technology transfer where possible, and coordinated permitting. The Department of Defense-MP Materials model offers one template; the EU’s Strategic Projects instrument offers another. Connecting these frameworks, for instance, through mutual recognition of strategic project status or co-financing of processing facilities in allied third countries, would be more impactful than parallel bilateral partnerships that compete for the same projects.


Third, recycling and secondary supply. Both the EU and the US recognise the importance of recycling, but progress has been limited. The European Court of Auditors found that out of 26 materials critical for the energy transition, seven have end-of-life recycling rates between 1% and 5%, and ten, including lithium, gallium, and silicon metal, are not recycled at all. The Payne Institute highlighted the US copper scrap opportunity: approximately 880,000 metric tons of copper scrap were exported in 2023, with around 40% going to China, even as the US imported refined copper. RESourceEU’s proposed export ban on magnet scrap and aluminium scrap signals a shift, but transatlantic coordination on recycling standards, waste trade rules, and joint investment in secondary processing capacity could multiply the impact on both sides.


Fourth, market infrastructure and transparency. The Payne Institute noted that price discovery for many critical minerals is opaque, with thin markets and reliance on Price Reporting Agencies. The EU’s Raw Materials Mechanism, launched in 2025 under the EU Energy and Raw Materials Platform to facilitate demand aggregation and coordinated procurement of strategic raw materials, and the US push for FORGE-based reference pricing are both attempts to improve market functioning. Interoperability between these platforms, or at a minimum shared data standards, would strengthen the collective bargaining position of allied buyers relative to dominant suppliers.


Conclusion: the future of the transatlantic critical minerals agenda


The events of February 2026 mark a genuine inflexion point. The political salience of critical minerals has never been higher on either side of the Atlantic, and the institutional machinery to act, from FORGE and Project Vault to RESourceEU and the CRMA Strategic Projects, is more developed than at any point in the past decade.


But political salience and institutional activity are not the same as strategic effectiveness. The core challenge, rebuilding Western refining and processing capacity in the face of entrenched Chinese dominance, pricing strategies designed to deter competitor investment, and a decade-long lead in metallurgical technology, remains largely ahead. The EU’s own auditors have concluded that the current policy framework is not on track to meet its 2030 targets. The US approach is bolder in scale and speed, but its domestically focused, transactional character risks fragmenting allied efforts at the precise moment when coordination matters most.


The test for the coming months is whether the Action Plans announced at the February Ministerial can move beyond diplomatic signalling toward concrete operational alignment on the midstream. This means joint processing investments, coordinated demand support, aligned trade instruments, and shared market infrastructure. The refining gap will not be closed by either Brussels or Washington acting alone. It will require a degree of transatlantic coordination that, to date, has proven difficult to sustain.



Organisations seeking to translate these dynamics into an actionable strategy, whether to advance specific projects, to inform policy design, to structure investments, or to navigate regulatory and financing pathways across jurisdictions, are invited to contact AAP Consulting for further discussion.

The EU’s next long-term budget (2028–2034): the big picture, and a deeper dive into Global Europe

  • Writer: AAP Consulting
    AAP Consulting
  • Sep 23, 2025

Updated: Feb 11

On 16 July, the European Commission tabled its plan for the next Multiannual Financial Framework (MFF), the EU’s seven-year budget for 2028–2034. As summer recedes and Brussels’ engine whirs back to life, it is a good moment to look under the bonnet.

Europe’s seven-year budget is never just an accounting exercise. It is a statement of priorities, and, this time, an admission that the world has changed faster than Brussels’ machinery was designed to move.

Why now? Because the mix of risks is sharper and more intertwined: a grinding war on the EU’s border; tougher geopolitics and weaponised interdependence; supply-chain fragility and an urgent race for competitiveness; migration pressure; inflationary aftershocks; climate and biodiversity imperatives; and the hard practicalities of preparing for EU enlargement. The budget, in short, has to do more and react faster than the one it replaces. This is the political and economic context in which the EU’s next long-term budget is being shaped.

In this context, the Commission proposes a €1.763 trillion framework (2025 prices). Compared with 2021–2027, this represents a notable increase in absolute terms of approximately 40%. Measured against the economy, the ceiling comes to 1.26% of the EU’s Gross National Income, up from 1.13%.

This translates roughly to €560 per person per year across a Union of about 450 million people. Whether that is “a lot” depends on what it will deliver in practice.

So how does the plan look on paper? The Commission’s answer is a streamlined architecture: four headings instead of seven, and roughly 16 programmes instead of today’s 50 plus. The idea is fewer silos, clearer objectives, and more room to manoeuvre when priorities shift.

The new architecture, in plain English

The Commission groups spending into four baskets:

  • Heading 1 corrals the big, familiar workhorses (cohesion funds and agricultural policy) into national and regional partnership plans, and it also carries the repayments for the pandemic-era NextGenerationEU borrowing. It is the largest pot, at roughly €946.4 bn, but grows only modestly versus today (an increase of 14%).

  • Heading 2 is where the political heat is: €522.2 bn (an increase of 132%) dedicated to competitiveness, prosperity, and security. Think research and innovation (via a European Competitiveness Fund, including Horizon Europe), skills and mobility (Erasmus+), critical infrastructure (the Connecting Europe Facility), single market programmes, civil protection and health response, and nuclear-related lines. The intention is to put serious money behind Europe’s economic resilience and strategic autonomy.

  • Heading 3—Global Europe covers the EU’s external action. With €190 bn inside the MFF (and a further €88.9 bn for Ukraine outside the ceilings), it is larger than before, but otherwise carries a similar mix of programmes to Heading 6 in the current MFF. It brings together the new Global Europe instrument, the Common Foreign and Security Policy (CFSP), Overseas Countries and Territories (OCTs), and international fisheries agreements.

  • Heading 4 covers administration (€104.4 bn). The cost of running the institutions that, in turn, run the budget.

The four headings add up to a broad statement of intent: how Europe invests in its regions, equips its economy, manages its institutions, and positions itself beyond its borders. It is this outward-facing dimension (Heading 3, Global Europe) that warrants a closer look, not least because it defines how the EU will engage with its neighbourhood and the wider world in the years ahead.

Heading 3—Global Europe

Heading 3 is the EU’s external action envelope. For 2028–2034, it totals €190 bn inside the MFF, plus a further €88.9 bn for Ukraine above the ceilings. It brings together the new Global Europe instrument, the CFSP, support to the OCTs, and international fisheries agreements—a similar mix as under Heading 6 in the current MFF, but with a bigger scale.

The Global Europe instrument

At the heart of Heading 3 lies the Global Europe instrument, which is set to become the financial backbone of Brussels’ external action. Building on its predecessor, NDICI–Global Europe, it centralises aid, development finance, and geopolitical tools into a single €176.8 bn package (2025 prices). Its ambition is wide: to fund everything from humanitarian relief to enlargement, from sub-Saharan infrastructure to Ukraine’s post-war reconstruction.

Policy-wise, the instrument backs a sharper mix: credible pre-accession support, sturdier neighbourhood partnerships, principled humanitarian aid, and a beefed-up Global Gateway to mobilise investment. All are underpinned by commitments to democracy and human rights, gender equality, climate and biodiversity, and migration management. When partners face balance-of-payments stress, macro-financial assistance can be deployed.

Architecture of the instrument

Global Europe is deliberately geographised: five regional pillars (Europe, MENA & Gulf, Sub-Saharan Africa, Asia-Pacific, Americas & Caribbean) plus one global pillar. Each pillar has a programmable core for multi-year country and regional strategies and a non-programmable component for targeted needs, so the EU can plan at scale but pivot when circumstances change. The global pillar backs cross-regional priorities such as health security, climate and biodiversity, digital connectivity, and rule-of-law initiatives. In short: geography first, with room for global initiatives where Brussels wants to project norms.

Funding allocations

The scale is striking. Sub-Saharan Africa takes the lion’s share (€53.4 bn), reflecting Europe’s strategic concerns over migration, energy, and security ties south of the Sahara. Europe itself follows closely (€38.1 bn), thanks to enlargement and pre-accession support. The Middle East and North Africa also looms large (€37.9 bn), underscoring the EU’s perennial Mediterranean preoccupations. Smaller but still significant are Asia-Pacific (€15.1 bn), the Americas & Caribbean (€8.1 bn), and global programmes (€11.2 bn).

An “emerging challenges and priorities” cushion of €13.1 bn provides Brussels with the agility to reallocate funds swiftly as crises or opportunities arise.

Ukraine is a special case: its reconstruction support (grants, loans and guarantees) is financed outside the MFF ceilings, but channelled and implemented through the Global Europe instrument.

EU Budget 2028–2034: Global Europe Instrument
EU Budget 2028–2034: Global Europe Instrument

Implications for business

For companies and implementing partners, Global Europe is not just about policy—it is also a market. Development contractors, consultancies, NGOs, and infrastructure firms will find the largest opportunities in Sub-Saharan Africa, where EU money will flow into energy, transport, and digital projects tied to migration management and climate transition. Ukraine is another focal point, with grants, concessional loans, and guarantees earmarked for reconstruction, opening the door to contracts in housing, energy grids, and critical infrastructure.

Oversight and control

Global Europe will sit inside the EU’s next €1.76 trillion MFF. Even before the ink is dry, frugal member states have signalled that this top-line figure is too rich. That pressure could bite both across the board and within Heading 3.

But size is only half the story. The other fault line is oversight. Under the current MFF, Members of the European Parliament (MEPs) have repeatedly complained that NDICI diluted their scrutiny: funds were complexly structured, and the Commission enjoyed too much leeway. The new proposal doubles down on flexibility. Within each of Global Europe’s six pillars, the Commission would be able to shift funds across categories—say, from humanitarian aid to competitiveness, or from macro-financial assistance to resilience—without going back to the budget authority for approval. Across pillars, the Commission would be allowed to reallocate up to 10% of a pillar’s funds autonomously.

To Brussels insiders, this flexibility is a feature, not a bug: it allows the EU to pivot swiftly when crises erupt. Yet for MEPs, it looks like a further erosion of parliamentary control over tens of billions of euros in external spending.

The combination of scale and discretion could make Global Europe more potent, but also more politically contentious than its predecessor. In any case, only time will tell. As the MFF proposal is still at an early stage, the final framework may well shrink in both scale and ambition…

What’s next for the EU’s next long-term budget?

Legally, the MFF follows Article 312 of the Treaty on the Functioning of the European Union: a Council regulation adopted unanimously, with the European Parliament’s consent. Alongside it comes a renewed Inter-Institutional Agreement to choreograph the annual budget dance. None of this is quick. Technical talks begin now; political horse-trading will intensify through 2026–2027. If precedent is any guide, the final compromise will land uncomfortably close to the end of 2027, just in time for the new framework to start on 1 January 2028.

That means the numbers, the balance between headings, and the fine print on oversight are all still up for negotiation. Global Europe may not emerge in its proposed shape: frugal governments will push to slim down the overall envelope, while MEPs are likely to demand stronger parliamentary control over the Commission’s newfound flexibility. What Brussels has on the table today is an opening bid rather than the final word.

Note: All figures in this article are expressed in 2025 constant prices. The European Commission usually presents headline figures in current prices. We use constant prices here to ensure better comparability across MFF periods.

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