Germany’s Metals Crisis Deepens Concerns Over Europe’s Critical Raw Materials Strategy

Germany’s struggling metals and processing industry is increasingly emerging as one of the strongest warning signs for Europe’s industrial future. The continued deterioration of the country’s metallurgical sector is raising serious concerns about whether the European Union can realistically achieve the ambitious goals set under the [[PRRS_LINK_1]].

As Europe faces a combination of high energy prices, geopolitical instability, weakening industrial demand, and intensifying global competition, Germany’s decline is exposing structural weaknesses in the continent’s long-term industrial strategy. The issue extends far beyond Germany itself, threatening Europe’s ability to secure independent supply chains for strategically important raw materials.

Production Collapse and Job Losses Intensify Pressure

According to recent data from Germany’s Federal Statistical Office (Destatis), production in the country’s metal-processing sector in March 2026 remained 12.9% below the levels recorded before the Russia-Ukraine war and the subsequent energy crisis that reshaped Europe’s industrial economy.

The impact on employment has also been severe. Approximately 16,000 jobs have disappeared from Germany’s metals industry since early 2022, underlining the scale of the industrial downturn affecting one of Europe’s most important manufacturing sectors. This decline is particularly alarming because Germany has traditionally served as the industrial backbone of Europe, with its economy heavily dependent on large-scale manufacturing, exports, and energy-intensive production.

CRMA Goals Face Growing Industrial Reality Check

The European Union’s Critical Raw Materials Act was introduced to reduce dependence on foreign suppliers and strengthen Europe’s strategic autonomy in key industrial resources.

Under CRMA targets, the EU aims by 2030 to:

• Process at least 40% of its annual strategic raw material consumption within Europe
• Source at least 25% of strategic materials through recycling
• Reduce excessive dependence on single external suppliers, particularly China

Europe’s industrial reality is increasingly colliding with those ambitions. While political discussions often focus on mining permits and access to mineral deposits, the real challenge lies deeper within the supply chain — in refining, metallurgy, chemical processing, recycling, and advanced [[PRRS_LINK_2]]. These sectors require massive energy consumption, stable long-term investment conditions, and globally competitive production costs.

Energy Prices Remain Europe’s Biggest Competitive Weakness

Since 2022, Europe’s energy-intensive industries — including metals, chemicals, ceramics, and glass — have struggled under the weight of exceptionally high electricity and natural gas prices.

Germany has been among the hardest hit because its industrial competitiveness was historically built on:

• Stable and affordable energy
• Integrated industrial supply chains
• High-volume manufacturing output
• Strong export-oriented production

The energy crisis fundamentally disrupted that model.

For industries involved in processing strategic materials such as [[PRRS_LINK_3]], [[PRRS_LINK_4]], [[PRRS_LINK_5]], cobalt, graphite, and rare earth elements, energy costs are often one of the most decisive economic factors. Without competitive electricity pricing, Europe risks losing not only industrial production but also future investment in strategic mineral processing facilities.

China Continues to Dominate Critical Mineral Processing

Europe’s challenge becomes even more difficult when compared to the global competitive landscape. China continues to dominate large portions of the global critical minerals value chain, including:

• Rare earth refining
• Graphite processing
• Battery precursor manufacturing
• Permanent magnet production
• Industrial mineral separation technologies

Chinese producers benefit from lower energy costs, extensive state support, integrated industrial ecosystems, and enormous economies of scale.

At the same time, countries such as the [[PRRS_LINK_6]], [[PRRS_LINK_7]], and [[PRRS_LINK_8]]are rapidly expanding investment into integrated supply chains through aggressive industrial subsidies and long-term strategic financing. Europe, meanwhile, is attempting to rebuild industrial capacity that has gradually weakened over decades.

Temporary Subsidies Cannot Solve Structural Problems

In response to mounting industrial pressure, the German government introduced temporary industrial electricity support measures for energy-intensive sectors between 2026 and 2028. The subsidies are designed to reduce short-term cost burdens for manufacturers. Many industry experts warn that temporary state support cannot fully resolve Europe’s deeper structural competitiveness problems.

Investors evaluating multi-billion-euro projects — including lithium hydroxide refineries, battery material plants, graphite processing hubs, and recycling infrastructure — require long-term stability and predictable industrial economics. Short-term political support measures are rarely sufficient for investment decisions that span decades.

Serbia and the Western Balkans Gain Strategic Importance

The situation is becoming increasingly important for [[PRRS_LINK_9]]and the wider Western Balkans, regions that European policymakers now view as strategically important for future raw materials development.

Serbia possesses several advantages that place it directly within Europe’s evolving critical minerals strategy:

• Significant lithium potential
• Strong copper production capacity
• Existing industrial infrastructure
• Expanding renewable energy development
• Strategic geographic position near EU markets

Germany’s industrial difficulties demonstrate that mining alone will not guarantee Europe’s strategic autonomy.

The true economic value comes from transforming raw materials into:

• Battery chemicals
• Permanent magnets
• Industrial alloys
• Semiconductor inputs
• Advanced manufacturing components

Without strong domestic processing industries, Europe risks remaining dependent on foreign manufacturing even if mining activity increases within the continent.

Europe Faces a Broader Industrial Survival Challenge

The debate surrounding critical raw materials is no longer focused solely on resource security. It is increasingly becoming a broader discussion about Europe’s industrial survival.

Although the EU can accelerate mining permits, expand strategic partnerships, and support domestic extraction projects, these efforts may fail without globally competitive industrial conditions.

Key challenges remain:

• High electricity costs
• Complex environmental permitting procedures
• Financing bottlenecks
• Slower industrial project execution
• Weak downstream manufacturing competitiveness

The pressure is especially severe in metallurgy because industrial ecosystems are extremely difficult to rebuild once they begin to disappear. Skills, engineering expertise, supplier networks, logistics systems, and industrial clusters often deteriorate slowly — but restoring them later requires enormous financial resources and time.

Germany’s Metals Sector Becomes a Stress Test for Europe

Germany’s weakening metals industry is no longer viewed as a temporary cyclical slowdown. Increasingly, it is becoming a major stress test for Europe’s entire industrial strategy.

The continent now faces a difficult balancing act between:

• Decarbonization goals
• Strategic autonomy
• Industrial competitiveness
• Energy transition policies
• Economic resilience

Whether Europe can successfully maintain all of these objectives simultaneously remains one of the defining economic questions of the coming decade.