With fewer than 1,200 working days remaining to meet the goals outlined in the EU Critical Raw Materials Act, the clock is ticking. The recent EIT RawMaterials Summit 2025 was centered around this very challenge—the “race to 2030”. Peter Verbaken, Head of Commodities at APG and a panelist at the summit, shares his insights on the opportunities and obstacles Europe faces in mobilizing capital for its raw materials future.
Published on:
27 May 2025
In brief:
• Raw materials are essential for the energy transition and strategically vital sectors such as defense.
• Mining projects are high-risk by nature and often carry significant health, safety, environmental, and reputational concerns, which can deter potential investors.
• Governments have a key role to play in supporting initiatives in the raw materials sector through intense collaboration with private investors and the industry.
The Critical Raw Materials Act (CRM Act) aims to build strong, resilient, and sustainable value chains for critical raw materials within the EU, enabling Europe to meet its 2030 climate and digital goals. However, the region remains heavily reliant on imports. The CRM Act sets ambitious targets to reduce this dependency by increasing domestic production, refining, and recycling. In concrete terms, this means approximately 10 new mines, 15 new processing facilities, and 15 new recycling facilities. Achieving this requires substantial investment—particularly from Europe’s institutional investor base.
What’s driving the historic capital demand in metals and mining?
“On the demand side, there's a global push to secure supply chains for critical raw materials. Europe is far from the only player in this space. Even though metals demand has softened somewhat due to trade tensions, the world remains on a long-term growth path. These critical materials are indispensable for manufacturing wind turbines, solar panels, and batteries, which are essential to the energy transition.
“On the supply side, we’re seeing the effects of rising costs and CapEx inflation. The relatively straightforward mining projects in developed markets have already been executed. What remains are the more complex opportunities, often in emerging economies.”
What are the key challenges in financing European raw materials projects?
“To attract capital, projects need to offer a compelling risk-return profile. But mining projects—especially in the exploration phase—carry very high risks. Add to that the questionable reputation of the sector on ESG, and it becomes clear why institutional investors often steer clear. Mining is closely associated with elevated health, safety, environmental, and reputational risks. For asset owners like pension funds, the potential for reputational damage can be a dealbreaker.
“If an institution does choose to enter the sector, they typically need a diversified portfolio to mitigate risk—not just two or three isolated investments. But building such a portfolio increases the odds that at least one project might face ESG or reputational issues. This creates a dilemma: reducing financial risk, by building a diversified portfolio of investments, may actually increase reputational risk, and vice versa. Furthermore, many institutional investors currently lack the internal expertise needed to evaluate these complex projects. That expertise must be built to support informed, diversified investment in the sector.”
How do the prospects for these projects look?
“Exit strategies and timelines are highly uncertain and depend heavily on the project’s development stage, market sentiment, and pricing dynamics. Timelines can range from several years in bullish markets to over a decade in less favorable conditions. Historically, private investment in mining has produced disappointing returns, and reversing that trend will take time.”
In other developed markets like Australia and Canada, the mining sector is much more accepted as a necessity for a functioning society
Given the capital available in Europe, what can help mobilize it?
“EU governments have committed to reducing reliance on imported critical raw materials by diversifying and securing domestic and sustainable sources, as laid out in the CRM Act. They should actively support mining, processing and recycling projects—for instance, by offering cost-overrun protections and offtake guarantees, possibly through strategic stockpiling programs.
“Public-private partnerships are another route. In such setups, a government-linked entity can provide guarantees or backstops. In emerging markets, this role could be filled by robust multilateral institutions like the IMF. These mechanisms can help mitigate risk, increasing the likelihood that institutional capital will enter the space.”
How does public perception of mining influence capital mobilization?
“Yes, public sentiment around mining is often negative, especially when viewed through the ESG lens. This is by the way very much a European perspective. In for example Australia and Canada, which are developed markets like the EU, the mining sector is much more accepted as a necessity for a functioning society. We need to realize that we consume a lot of raw materials, for example in our push to expand renewable energy capacity, and that a truly sustainable approach should not ignore where these raw material come from and how they are produced. Europe needs to assess its concerns about the mining sector and compare them to continued reliance on sourcing our raw materials from regions where there is much less focus on ESG.
“There's also another side to the ESG perspective. Expanding mining, processing, and recycling capacity supports the energy transition and bolsters sectors critical to national security, such as defense. The industry—and governments—should better highlight these benefits. While smarter use of raw materials, improved recycling, and innovation will contribute, additional mining and processing will still be essential for the success of the energy transition. Given the geopolitical context and rising demand for responsible investing, we should focus on growing the raw materials sector within Europe and among allied nations.”
How do you view the near-term outlook for building sustainable EU raw materials value chains?
“There is genuine momentum. Take the European Commission’s 47 strategic projects, along with national critical raw materials funds launched in Germany, France, and Italy. The capital is available—but much of it lacks the expertise to assess and manage investments in the raw material sector. Governments need to provide ways to de-risk investments and European investors need to build greater risk tolerance for the sector and take a more comprehensive perspective on the ESG aspects. The journey ahead is long, but we’re moving in the right direction.”