Missing in action? Europe’s mineral finance approach

As Europe accelerates its efforts to secure the supply of critical raw materials vital for clean energy technologies, including batteries, ensuring diverse supply chains will be key. Several initiatives such as Strategic Partnerships, Clean Trade & Investment Partnerships, Global Gateway and ReSource EU are looking to build resilient supply chains, but concrete outcomes are lacking. 

Looking at current progress, the EU is failing to catch up with overseas investments. Since 2020, China has invested over USD15 billion in key battery metals projects globally. In contrast, EU companies have invested only USD1.7 billion, all of it in Argentina.

Despite all these mineral initiatives, questions remain: how will the EU bring sufficient funding to these projects efficiently, and how can it ensure that supported mineral projects meet the highest environmental and social standards?

To find out, T&E commissioned a study examining the role of European Export Credit Agencies (ECAs); an important player in de-risking. The study explores EU ECAs’ involvement in the extractive sector and dives into existing standards and gaps.

T&E finds that while ECAs are mentioned in the EU’s vision to secure minerals strategically, a coherent approach to bring needed mineral projects on the ground is missing. Further, current standards governing ECAs may fall short of ensuring responsible mineral projects.

We find:

• ECAs have so far played only a limited role in the extractive sector, especially for critical raw materials. Even with new raw-material funds in Germany, Sweden and Finland, EU-level coordination remains weak. Under the Global Gateway, EU’s answer to Chinese belt and road, ECA participation may still represent only a very small share of their overall activity, around 5% at most according to our study.

• The overall issue is not EU ECA capacity but fragmentation. EU ECAs collectively manage over EUR 100bn in official financing support. Yet there is no EU mechanism to deploy this capital , or from other institutions, strategically. Unlike China, the US or Canada – who have adopted ‘whole-of-government approaches’ – Europe is not mobilising ECAs together with Development Finance Institutions, private investors and industry to form competitive finance packages for domestic or oversea mineral projects. Looking at planned oversea battery metal mines, the majority of equity owners are based in Canada, Australia, the UK and US.

• Current standards governing ECAs may fall short of ensuring responsible mineral projects. Frameworks such as the OECD Common Approaches leave gaps in due diligence, monitoring, disclosure and grievance handling. These weaknesses translate into inconsistent practices across EU ECAs. Some ECAs disclose only minimal information on supported projects, making it difficult to track impacts or identify their involvement at all. While a few ECAs apply stronger voluntary standards, this is uneven and below what best practices for mining contexts.

T&E recommends:

The EU should establish a coordinated EU-level approach:

The EU should ensure responsible oversight and robust standards for ECAs: