EL7.AI
CommoditiesMedium•27 October 2026•
3 min read

European Parliament backs €2 billion critical raw materials fund

Key Facts

1Parliament proposed an initial fund contribution of €2 billion in the 2028–2034 budget.
2Parliament’s position was adopted by 470 votes to 83, with 108 abstentions.
3The convertible preferred shares and related warrant represent 15% of outstanding common stock under the company’s measurement on 9 July 2025.

The European Parliament voted on 20 October in favour of establishing a European Centre for Critical Raw Materials and an investment fund with a proposed initial contribution of €2 billion from the EU budget for 2028–2034. Parliament’s position was adopted by 470 votes to 83, with 108 members abstaining, according to a statement cited by 2EU Brussels. The proposal calls for the fund to be included in the future European Competitiveness Fund. This places the financing within the next budget, rather than making funds available to companies immediately after the vote. It also links the initiative to a centre combining supply-risk monitoring with project support and joint purchasing and storage tools.

The proposed centre would combine market and supply-risk analysis, joint purchasing, strategic stockpiles and investment support, according to the statement. This design means its role would extend to coordinating responses to supply disruptions, alongside supporting critical raw materials projects. The fund could deploy equity investments, loans, guarantees and other forms of risk-sharing. Target projects span multiple stages of the value chain, from exploration and extraction to processing and refining. The plan also covers recycling and the substitution of alternative materials, extending its scope beyond mining alone.

The plan includes a conditional provision that could allow restrictions on exports of scrap and waste from permanent magnets, with the aim of keeping recoverable and recyclable materials in Europe. Parliament also supports contracts for difference to make revenues from extraction, processing and recycling projects more predictable. These tools are intended to share risks that projects may face across the raw materials chain. The vote, however, did not establish an operational compensation scheme available to companies. These mechanisms therefore remain part of the position put forward by Parliament, rather than support that has taken effect.

The U.S. deal with MP Materials offers a different example of direct government intervention in the sector. The company announced in July 2025 preferred shares convertible into common stock and a related warrant, together representing 15% of its then-outstanding common stock under the measurement basis it specified on 9 July 2025. That percentage highlights the size of the stake that could result from converting the shares and exercising the warrant, according to the company’s disclosure. The European proposal sets out a broader framework for financing tools across the value chain and does not announce the adoption of a version of the U.S. deal. The practical difference is that the European plan remains a parliamentary position awaiting completion of the institutional process.

The measures must be negotiated with the Council of the European Union, while the fund’s contribution depends on future EU budget decisions. 2EU Brussels said the measures “must be negotiated with the Council and do not open up funding to companies now”. Parliament’s vote therefore does not mean companies can apply to the fund or obtain direct financing at this time. The proposed contribution remains tied to approval of the budget for 2028–2034. The next step is negotiations with the Council on the proposed measures.