Europe is overly dependent on China for the minerals needed for its green transition, according to credit ratings agency Moody’s. In a new report, the data and research provider said a lack of domestic resources means the bloc risks lagging behind other jurisdictions. Critical and strategic raw materials like lithium, nickel, copper, cobalt and rare earths are essential for low-carbon technologies, and their use will quadruple between now and 2040. However, Europe imports the vast majority from other jurisdictions, leaving its companies exposed to supply chain risks and price volatility – and threatening its long-term competitiveness. Some of the most-exposed sectors include defence and aerospace, mobility, electronics and renewable energy, the report noted. “As the pace of the green transition and digital transformation accelerates, Europe risks being left behind because it lacks sources of key raw materials,” Moody’s said. “It is highly reliant on China and emerging and frontier markets, which exposes it to supply-chain and price volatility.” Regulations like the EU’s Critical Raw Materials Act – which attempts to bring processing of certain key materials onshore, limit reliance on supply to single countries, and boost recycling – will help, but need time to take effect. The report also noted that EU plans to invest in clean technology were much weaker than the US Inflation Reduction Act, as they do not “provide mechanisms like tariffs or subsidies that could further incentivise domestic production and reduce dependency on foreign sources”.
