EU and US Near Critical Minerals Pact as Washington Pours $69 Million Into Domestic Extraction
The EU and US are finalizing a non-binding agreement to coordinate critical minerals supply chains and challenge China's processing dominance, while the DOE launches a $69 million funding program for domestic extraction and refining.
Overview
The European Union and the United States are close to finalizing a non-binding memorandum of understanding that would coordinate their efforts to produce, process, and secure critical minerals across the entire supply chain, according to Bloomberg. The agreement, which is currently under review by EU member states, comes as the US Department of Energy simultaneously announced a $69 million funding opportunity to accelerate domestic extraction and refining of minerals essential to defense, energy, and semiconductor manufacturing.
The twin moves mark the most concrete steps yet by Western governments to confront a structural vulnerability: China’s dominance over the processing of minerals that underpin nearly every advanced technology, from electric vehicle batteries to fighter jet guidance systems.
What We Know
The proposed EU-US pact would cover critical minerals “along the entire value chain and life-cycle management, including exploration, extraction, processing, refining, recycling and recovery,” according to Bloomberg. Draft documents describe mechanisms including minimum pricing guarantees designed to advantage non-Chinese suppliers, cooperation on investment standards and joint projects, and coordinated responses to supply disruptions.
EU Trade Commissioner Maros Sefcovic characterized his discussions with US Trade Representative Jamieson Greer as “very positive” during World Trade Organization meetings in Cameroon in March, as reported by The Japan Times. Both sides are also seeking “like-minded partners” to join a broader multicountry accord. Similar bilateral pacts already exist with Mexico, and joint statements were issued with Japan in February 2026, according to The Northern Miner.
Separately, the DOE’s Office of Critical Minerals and Energy Innovation and Hydrocarbons and Geothermal Energy Office on April 7 opened applications for up to $69 million through the Critical Minerals and Materials Accelerator program, as detailed on the DOE website. The funding targets three areas: production efficiency for rare earth elements, including recovery from manufacturing scrap and mine tailings; refining processes for gallium, gallium nitride, germanium, and silicon carbide; and cost-competitive direct lithium extraction from geothermal and brine sources.
“This funding will help establish a more secure and affordable supply of the critical minerals” foundational to energy dominance, said Audrey Robertson, assistant secretary of energy, in a DOE statement. Letters of intent are due April 21, with full application deadlines staggered from May through July 2026. The initiative is part of a broader $1 billion critical materials investment announced in August 2025.
Why It Matters
The urgency behind both initiatives traces directly to China’s grip on mineral processing. According to the International Energy Agency, China is the dominant refiner for 19 of the 20 critical minerals the agency tracks, holding an average market share of roughly 70 percent. For many high-demand minerals such as lithium, nickel, and cobalt, China’s share of raw extraction is only 10 to 30 percent, yet its share of refining reaches 60 to 70 percent. The IEA also found that around 90 percent of supply growth in recent years came from a single top supplier, with China leading in cobalt, graphite, and rare earths.
Beijing demonstrated the strategic leverage this concentration provides when it imposed export controls on seven heavy rare earth elements in April 2025 in response to US tariffs, followed by a second wave targeting five additional rare earths in October 2025, according to the European Parliament. The restrictions caused export volumes to drop sharply, forcing some automakers in the US and Europe to cut utilization rates or temporarily shut down factories. European rare earth prices reached up to six times domestic Chinese levels even after trade volumes partially recovered, the European Parliament assessment found.
What We Don’t Know
Key details of the EU-US framework remain unresolved, according to The Northern Miner. These include the specific structure of price floors, the scope of subsidies and purchase guarantees, and how enforcement or dispute resolution would work within a non-binding memorandum. Neither the European Commission nor the Office of the US Trade Representative has confirmed the final terms, and the drafts under review by EU member states could still change significantly.
It is also unclear how quickly any new supply chains can meaningfully reduce dependence on Chinese processing. Building mining and refining capacity typically requires years of permitting, construction, and scaling. The DOE’s accelerator program targets a performance period running from December 2026 through December 2029, suggesting that even funded projects will take years to reach commercial viability.
The broader geopolitical question is whether minimum pricing guarantees and coordinated investment can overcome China’s cost advantages, which stem from decades of state-backed capacity building and vertically integrated supply chains. The IEA has warned that supply concentration has been worsening, not improving, with the average market share of the top three refining nations rising from 82 percent in 2020 to 86 percent in 2024, according to IEA analysis.