In this week’s edition, we look into the implications of the UK’s deal with Greenland on critical materials, and what this means for the European industrial future. Enjoy!
UK-Greenland Deal: Securing Critical Minerals
On Wednesday, 1 October, the UK and Greenland finalised a deal on critical minerals that will allow UK companies to extract minerals from Greenland. Since the end of the pandemic, the main goal of the European Union and the Western world has been to transition to clear energy, making critical minerals and rare earth elements a central pillar of industrial and geopolitical strategy. Lithium, cobalt, nickel, copper, graphite and rare earths are indispensable for batteries, wind turbines, solar panels, and the broader electrification of economies. According to the International Energy Agency, the demand for critical minerals is forecast to triple by 2030 and quadruple by 2040 if net-zero ambitions are to be met. These minerals are not rare in geological terms, but they are highly concentrated geographically, difficult to extract, and even harder to refine into the forms that can be used by modern manufactures.
The European structural deficit in the critical minerals race
What matters is not who owns the deposits, but who controls the refining and processing that makes them usable for industry.
On that front, Europe is facing a structural deficit. Over the past two decades, China has built a dominant position across the value chain. It accounts for nearly half of global copper refining, three-quarters of cobalt processing and more than two-thirds of rare earth production. Its industrial policy has been deliberate and sustained, turning raw materials into the basis of its competitive edge in clean technologies. Europe, by contrast, has focused primarily on signing strategic partnerships and producing policy papers, with little to show in terms of actual refining capacity. The consequence is that Europe finds itself at least a decade behind the US and two decades behind China in securing the materials and industrial base for the energy transition.
Recognising the risks of dependency on foreign supply chains, the United States has moved decisively to secure both raw materials and domestic industrial capacity. In the past 6 months alone, the Trump administration has fast-tracked ten mining projects to expand domestic critical mineral production, eased permitting requirements and launched major funding programmes to incentivise refining and processing within US borders. The administration is also investing in the research and development of recycling technologies to reduce long-term reliance on imported materials. Beyond domestic policy, the US is forging strategic global partnerships to diversify access to lithium, cobalt, nickel and rare earth elements, while coordinating industrial efforts to ensure that these minerals are transformed into batteries, magnets and other critical components within allied territories rather than being exported for processing in China. The Department of War and the State Department are promoting different NGOs, such as the Critical Minerals Forum, with the aim of helping to develop international agreement that will aid the United States to catch up with China’s leadership.
This combination of domestic industrial policy, financial incentives and international partnerships underscores a comprehensive approach that Europe has yet to match.
The European Commission has not been with its hands crossed these past few years. Since 2021, Brussels has signed fourteen strategic partnerships with countries such as Canada, Ukraine and Nigeria, among others, to secure access to minerals. The UK, operating outside the EU framework, is now finalising a deal with Greenland, whose reserves include many of the minerals critical to the energy transition. Both moves reflect a growing awareness that access to resources is not guaranteed, particularly given that China and Russia are pursuing the same supplies. Yet these agreements suffer from a fundamental limitation: they focus on extraction, not refining. Mining contracts and memoranda of understanding may diversify sources of raw minerals, but they do not solve the real bottleneck, which is the processing of minerals into high-purity forms usable by European manufacturers. This is because, once materials are extracted, the next step is refining, and almost all of that still happens in China today. Without domestic refining capabilities, Europe is locked into dependence, even if the minerals originate elsewhere.
Another “gas” crisis?
A parallel can be drawn with Europe’s experience of relying on Russian gas. For years, policymakers dismissed warnings about overreliance, assuming that supply diversification and market mechanisms would be sufficient. When Russia invaded Ukraine, the result was a crisis, and even now, after more than three years into the war, some countries still depend on Russian gas and oil. The dependency on Chinese refining is deeper and more structural because it involves not just a single commodity, but the full range of inputs for the technologies used to create the key technologies of tomorrow. The risk is not just higher prices or disrupted shipments, but the erosion of Europe’s industrial base. Factories of the future will be located near refining hubs where materials can be transformed efficiently and on a large scale. This is why China today leads not only in mineral processing, but also in battery production, solar manufacturing and electric vehicle deployment. Europe’s ambitions for a green industry are undermined at their root by the absence of domestic refining capacity.
Meanwhile, China has executed a comprehensive strategy over the past twenty years, securing overseas mines, investing in refining and integrating downstream industries. Its footprint extends from cobalt mines in the Democratic Republic of Congo to nickel mines in Indonesia and lithium mines in the Andes. At each stage, it has coupled resource access with domestic processing capacity, ensuring that value creation and industrial leadership will go to Chinese firms. The US has belatedly recognised the danger and is beginning to close the gap, starting from a lower starting point. According to the 2022 State Department data, it will take the US up to 5 years to become a leading player in the critical mineral race. Meanwhile, the European Union risks being left behind altogether, operating in a space of extraction diplomacy without the industrial follow-through.
Recycling and the development of alternative technologies offer a partial, though not complete, solution for Europe. Recovering critical minerals from batteries, wind turbine components and electronic waste can reduce the pressure on primary mining and partially offset the lack of domestic refining capacity. Emerging battery chemistries, such as lithium-iron-phosphate and sodium-ion technologies, also promise to decrease dependence on cobalt and nickel. However, these measures are insufficient on their own: current recycling infrastructure is limited, and alternative technologies have not yet been deployed on a large scale. Without parallel investment in refining and processing, recycling and substitutes can, at best, mitigate risk and not eliminate Europe’s fundamental strategic deficit.
Securing Europe’s energy future
The policy implications are clear. Europe cannot meet its energy transition goals, nor secure its industrial base, without urgent investment in refining. That means not only striking agreements to import minerals, but also building the infrastructure to process them on European soil. It requires faster permitting, financial incentives for smelting and refining projects, and coordinated investment in recycling to reduce long-term dependence. It also demands difficult political choices, because refining brings environmental challenges that European governments have so far been unwilling to confront. However, the alternative is to outsource the entire foundation of the energy transition to China and the US The experience with Russian gas shows that dependency is not just an economic vulnerability, but also a strategic liability. Catching up with China and the US will not be easy, but not trying would mean accepting permanent subordination in the industries that will define the future.
