China’s share in EU mineral imports
Eurostat data for 2025 show that China accounted for 92% of EU magnesium imports by value. It also supplied 77% of gallium imports and 68% of ferro-tungsten imports. For natural graphite, China provided 43% of EU imports by value, and it was also the EU’s leading supplier of rare-earth products.
The figures highlight a gap between the scale of EU reliance on Chinese supply in several mineral markets and the scope of the Carbon Border Adjustment Mechanism (CBAM). CBAM applies to selected industrial goods, while several critical materials remain outside its current product coverage.
CBAM scope covers some industrial inputs, not all critical materials
Chinese aluminium imports, covered steel products and certain ferroalloys face CBAM requirements when they enter the EU market. By contrast, magnesium, gallium, graphite supplies, rare-earth products and ferro-tungsten are among the critical materials outside the mechanism’s current scope.
These materials support multiple industries across the economy. Aerospace and defence manufacturers use specialised metals and rare earths, while graphite is important for battery production. Magnesium, ferro-tungsten and other processed materials also serve steelmaking, electronics and renewable energy technologies, so disruptions could affect several sectors at once.
Different carbon-border treatment for Chinese producers
The mechanism applies different requirements depending on which goods are exported to the EU. An aluminium smelter supplying the European market must account for emissions associated with its covered products under the current framework.
Producers of magnesium metal, rare-earth oxides or natural graphite generally do not face the same direct carbon-border mechanism. This difference can shape incentives for emissions reductions where reporting requirements apply to covered exports.
Europe’s dependence on China extends beyond extraction of raw minerals. Processing capacity, refining expertise and established industrial networks give Chinese suppliers a strong position in markets where alternative sources may be limited. CBAM can influence the carbon performance of covered imports but does not automatically drive equivalent changes throughout the critical-minerals supply chain.
Diversification measures extend beyond carbon pricing
Carbon pricing cannot replace raw-material diversification. Extending CBAM to more products could change trade incentives, but it would not immediately create new mines, processing plants or commercially viable substitute technologies.
Alternative supply chains require investment, infrastructure, skilled labour, access to energy and long-term demand commitments. These requirements are particularly demanding for specialised minerals and processing operations, where it can take considerable time to establish competitive capacity.
The Critical Raw Materials Act (CRMA) and related industrial policies therefore remain part of the EU’s strategy. International partnerships can help diversify sourcing, while recycling can reduce reliance on newly extracted materials.
Strategic stockpiles and procurement arrangements can also strengthen resilience against supply disruptions. These measures address a different issue from CBAM, which is designed to address emissions and carbon-leakage risks associated with covered imports. Raw-material policy must help European manufacturers obtain essential inputs from a broader range of suppliers.
Downstream expansion proposal from 2028
The EU’s evolving carbon-border framework is relevant to Chinese manufacturers beyond goods already covered. A proposed extension to certain downstream goods from 2028 could bring additional industrial equipment and fabricated products within CBAM’s scope.
If implemented, such an extension could make the carbon intensity of steel and aluminium used in goods manufactured for the EU more important. Suppliers with reliable emissions data and demonstrably lower-carbon inputs could be better positioned than competitors relying on default emissions values.
The proposed change would not by itself resolve Europe’s reliance on Chinese supplies of critical materials that remain outside CBAM. Even so, the direction of EU policy gives Chinese producers an incentive to strengthen emissions monitoring and documentation where their products or downstream customers are exposed to the mechanism.
Carbon policy alongside processing capacity and security
The broader strategic competition between China and Europe is increasingly shaped by carbon policy, processing capacity and supply-chain security. China’s position draws partly on depth in its processing industry and its role in supplying materials used in advanced manufacturing.
Europe is seeking to combine carbon pricing with efforts to develop alternative sources and reinforce its domestic industrial base. CBAM changes competitive conditions for selected imports, particularly covered steel and aluminium products, but its reach remains limited where European reliance on Chinese suppliers is especially pronounced.
Europe’s policy challenge extends beyond whether to expand the carbon border to how climate measures align with investment, recycling, strategic procurement and diversified sourcing. Reducing emissions associated with covered imports will not necessarily reduce vulnerability to concentrated supplies of critical minerals without that broader industrial framework.