Critical Minerals: US-EU Alliances Reshape Supply Chains in 2026

The global competition for critical minerals has entered a new phase in 2026, as the United States and European Union launch ambitious alliances to counter China's stranglehold on rare earth and battery mineral supply chains. With China refining over 85% of the world's rare earths and controlling more than 60% of battery-grade lithium and cobalt processing, Western economies are racing to build alternative supply networks through bilateral partnerships, strategic stockpiles, and new financing mechanisms. The February 2026 Critical Minerals Ministerial in Washington and the EU's rollout of 60 Strategic Projects under the Critical Raw Materials Act signal a structural shift in how industrialized nations secure resources essential for AI, defense, and clean energy.

China's Grip Tightens Under the 15th Five-Year Plan

China's 15th Five-Year Plan (2026–2030) explicitly identifies rare earths and critical minerals as providing 'competitive advantages' for the nation. Beijing has pledged to strengthen its dominance in refining, processing, and advanced materials across semiconductors, aerospace, defense, and battery supply chains. In October 2025, China imposed sweeping export controls on seven heavy rare earths, including yttrium and scandium, and expanded restrictions in early 2026 to cover processing technology and technical know-how. Indium, critical for semiconductors and AI infrastructure, was added to the control list in February 2025. Unlike reversible tariffs, these controls are embedded in national security licensing frameworks, creating permanent regulatory barriers that outlast any diplomatic cycle. Licensing approval rates for European firms have fallen below 25%, and prices for rare earths outside China have spiked sixfold. The China rare earth export controls have transformed mineral access from a commercial question into a political one, with manufacturers now requiring foreign government approval subject to shifting geopolitical conditions.

The US-EU Response: FORGE, Project Vault, and Strategic Partnerships

The 2026 Critical Minerals Ministerial and FORGE

On February 4, 2026, the U.S. Department of State hosted the 2026 Critical Minerals Ministerial, led by Secretary of State Marco Rubio and Vice President JD Vance, with representatives from 54 countries and the European Commission. The centerpiece was the launch of FORGE (Forum on Resource Geostrategic Engagement), the successor to the Minerals Security Partnership (MSP), chaired by the Republic of Korea. FORGE aims to coordinate investment, technology transfer, and regulatory alignment among allied nations. The U.S. signed 11 new bilateral critical minerals frameworks or MOUs with countries including Argentina, Morocco, the Philippines, the UAE, and the UK. Vice President Vance also proposed a preferential trade zone for critical minerals with enforceable price floors to stabilize markets against manipulation by dominant actors. The US-EU critical minerals partnership was further solidified through a joint action plan published by the U.S. Trade Representative, focusing on mining, processing, recycling, and trade facilitation.

Project Vault: A $10 Billion Strategic Reserve

On February 2, 2026, the Export-Import Bank of the United States approved Project Vault, a $10 billion Direct Loan to establish the U.S. Strategic Critical Minerals Reserve. This public-private partnership will store essential raw materials—including lithium, rare earth elements, cobalt, and nickel—across American facilities. Major original equipment manufacturers including Clarios, GE Vernova, Western Digital, and Boeing have indicated participation, with suppliers like Hartree Partners, Mercuria Americas, and Traxys supporting the effort. The project is structured to deliver a net positive return for U.S. taxpayers while shielding domestic manufacturers from supply shocks and reducing reliance on foreign-controlled supply chains. The U.S. government has mobilized over $30 billion in total financing support for critical mineral projects over the past six months.

EU's Critical Raw Materials Act and 60 Strategic Projects

The European Union's Critical Raw Materials Act (CRMA), which entered into force in May 2024, is now operational with 60 Strategic Projects selected in the first call out of 170 applications. A second call launched in late 2025 attracted over 160 applications, with a cut-off date of January 15, 2026. Of these, 75 focus on the battery value chain, 21 on rare earths for permanent magnets, and several are linked to defense. Strategic Projects benefit from accelerated permitting and easier access to funding under the RESourceEU plan. The projects cover 14 critical raw materials including lithium, cobalt, rare earth elements, graphite, nickel, and copper. The EU aims to extract 10% of its annual consumption, process 40%, and recycle 25% of its critical raw materials by 2030. However, the EU Critical Raw Materials Act targets face significant challenges given that Europe currently depends on China for 98% of its rare earth needs and 97% of its lithium supply.

New Entrants: Saudi Arabia and the UAE Reshape the Landscape

While the US and EU focus on transatlantic cooperation, new players are emerging. Saudi Arabia's Vision 2030 has driven over $4 billion in mining investments through state-owned Ma'aden, including a commercial-scale rare earth refinery at Wa'ad Al Shammal in partnership with MP Materials and the U.S. Department of War. The kingdom claims $2.5 trillion in mineral reserves and has amended mining laws with tax incentives to attract foreign investment. The UAE is investing over $3 billion in downstream processing hubs at KIZAD and JAFZA, focusing on lithium-ion battery recycling and rare earth separation. Abu Dhabi's IRH acquired Mopani Copper Mines in Zambia, while Saudi Arabia's Manara Minerals took a 10% stake in Vale Base Metals. These Gulf nations are positioning themselves as neutral processing hubs, potentially offering an alternative to both Chinese and Western-dominated supply chains. The GCC critical minerals localization