Revamping Regulation: Boosting Investment in Europe's Critical Raw Materials

As Europe moves toward decarbonizing its economy and transitioning key industries, such as the automotive sector to electric technologies, it has launched several initiatives to bolster its production capacities in the critical raw materials value chain. This includes lithium, nickel, cobalt, graphite, and rare earth minerals essential for manufacturing electric vehicles and other clean technologies. It aims simultaneously to address concerns about sovereignty, which have intensified due to the continent's significant reliance on China and the associated risks of export restrictions.

Key initiatives include the Critical Raw Material Act (CRMA) and the Net-Zero Industry Act, both introduced in 2024, as well as the ReSource EU Plan, unveiled in 2025. Under this plan, the European Commission will establish a Critical Raw Materials Centre in early 2026 to provide market intelligence, steer and finance strategic projects using tailored instruments with private and public partners, and act as portfolio manager for diversified and resilient supply chains, including through joint purchasing and stockpiling.

In this context, the EU Raw Material Week conference, organized by the European Commission from November 18th to 20th, brought together over 1,000 stakeholders from governments, industry, civil society, and research. It served as an opportunity to review the progress made and reflect on what is still needed to establish an integrated value chain.

Natixis CIB, represented by Simon Marielle, Executive Director in the Infrastructure & Energy Finance division, participated in a panel chaired by the European Commission alongside representatives from the EIB, ING, and Finnish Minerals Group, to address financing challenges and opportunities.

The European Commission has implemented various measures to establish capacity for the mining, refining, and recycling of critical raw materials within Europe. Initiatives include capital expenditure grants, pilot funding, increased public financing through the European Investment Bank (EIB) and export credit agencies (ECA), as well as various State-supported funds, such as InfraVia's Critical Metals Fund, investing in equity. Additionally, the European Union has compiled a list of 47 strategic critical raw material projects that are essential for achieving its production targets.

Further significant regulatory development involves stimulating demand from original equipment manufacturers (OEMs), who are required to adhere to declining CO2 intensity in annual fleet sales and to adapt to the ban on internal combustion engine (ICE) sales by 2035.

Project developers and banks currently face similar headwinds when deciding on investments or approving financing packages: slower-than-expected adoption of electric vehicles (EVs) in Europe, subdued commodity prices, and the Northvolt bankruptcy, which has undermined confidence in the sector.

Despite these factors, we remain optimistic. Following a slower growth period in 2024, EV adoption is continuing to surge in Europe, with sales showing a 32% increase year-to-date in the first ten months of 2025, according to BMI, compared to 23% globally. Moreover, unlike in the United States, there is a consensus in Europe supporting transport electrification, bolstered by stable regulations and a political commitment to enhance existing frameworks.

Low commodity prices continue to pose challenges for both equity and debt investors, leading to deferred investments that will likely heighten future price volatility, perpetuating the traditional ups and downs of metal cycles.

The Northvolt case has shifted momentum to established corporations, enabling them to invest more readily and secure straightforward corporate financing. However, this creates uncertainty for industrial startups, unless they can demonstrate strong partnerships with reputable industrial and financial players, alongside proven technologies and solid construction strategies.

Another emerging challenge is the disconnect between the urgency expressed by political representatives to establish a critical raw material value chain and the pace of investment. At Natixis CIB, with decades of experience in mining, we understand that mining investments require significant time, as projects must mature to gain social acceptance, navigate demanding permitting processes, and establish robust economic confidence in new investment theses.

Various tools are being discussed to accelerate capital deployment in the critical raw material sectors.

The first set of measures addresses the insufficient support from European OEMs for critical raw material projects, which require price support mechanisms in the offtake agreements with OEMs or gigafactory operators. This support is necessary to counteract Chinese oversupply and to promote responsible production.

Currently, European OEMs prioritize securing the cheapest raw material prices to manufacture competitive electric vehicles, which are still pricier than their internal combustion engine counterparts in Europe, unlike in China, where price parity has been achieved. Additionally, there is no significant green premium for lithium, nickel, or graphite produced with a lower CO2 footprint.

Several measures could alter OEM engagement in offtake discussions:

• imposing minimum European local content requirements to prioritize European projects. It could be facilitated for example through the battery regulation, which incorporates requirements for social and environmental risk due diligence, as well as the declaration of carbon footprints and performance classification.
• extending the Carbon Border Adjustment Mechanism (CBAM) to critical minerals like lithium, nickel, and graphite

The first measure is easier to implement but may have an impact on free trade agreements, while the second is more complex.

A second set of measures involves increasing public equity support for key projects to provide a longer-term investment horizon and act as a catalyst for private equity investors. This trend is already emerging through various Member States' critical metal funds, alongside the U.S. government's direct public equity investment in projects to achieve a more substantial impact.

We recently played a pivotal role in four significant transactions that bolster the European critical raw material and electric vehicle value chain in Europe: the Keliber lithium mine in Finland, the AESC and Verkor gigafactory projects in France, and, most recently, Vulcan Energy's Lionheart lithium and renewable energy project in Germany.  

Actually, Natixis CIB is one of the few banks with a strong global presence in mining finance, capable of funding projects across various jurisdictions due to its internal technical expertise and structuring capabilities.

Metals and mining is a strategic sector for the bank, which adopts a holistic approach by supporting projects and corporations while offering a wide range of services. These services include equity and debt advisory, sustainability strategic advisory, metal hedging, and capital market solutions.

Finally, Natixis CIB's expertise in the responsible development of mining projects is well-recognized in the market, particularly through our participation in leading initiatives such as the Finance and Investment Advisory Group of IRMA’s standard, which is acknowledged as the most stringent industry standard for responsible mining. Additionally, we are a member of the Technical Expert Group's Minerals, Mining, and Metals Committee for the Australian taxonomy.