Europe’s struggle to secure materials for its energy transition, electric mobility rollout and industrial renewal is often framed as an external problem, usually reduced to dependence on China or global commodity markets. In reality, the decisive fault line now runs inside Europe itself. Control over the transformation of raw materials into electricity systems, vehicle platforms and industrial output is increasingly split between Western Europe and South-East Europe, with sharply different economic roles, risk exposures and ownership structures.
This internal divide is not ideological. It is structural, measurable and already shaping capital flows, industrial geography and long-term competitiveness. When viewed through quantified indicators such as CAPEX concentration, energy intensity, ownership profiles and value capture, the picture becomes clearer: Western Europe dominates demand and system design, while South-East Europe is becoming the execution layer where materials are physically transformed, often under external control.
The transformation chain and why it matters
The strategic bottleneck in modern industry is not extraction but transformation. Lithium carbonate becomes lithium hydroxide. Nickel concentrate becomes battery-grade sulphate. Aluminium scrap becomes extrusion billet. Rare earth oxides become permanent magnets. These steps require large, immobile assets with operating lives of 20–40 years, electricity consumption measured in hundreds of gigawatt-hours per year, and CAPEX per facility ranging from €300 million to over €2 billion.
Control over these assets determines pricing power, supply reliability and industrial resilience. Once built, they lock in supply chains, energy contracts and technology standards. The question is no longer where Europe buys materials, but where and under whose control those materials are transformed.
Western Europe: Demand power without physical dominance
Western Europe remains Europe’s largest consumer of processed materials. Germany, France, Italy and the Benelux together account for roughly 60–65 % of EU industrial demand for battery cells, advanced steels, aluminium products and industrial chemicals. Automotive production alone consumes battery materials equivalent to 700–800 GWh per year by 2030, while grid expansion and renewable deployment require millions of tonnes of steel, copper and aluminium annually.
Financially, Western Europe controls the bulk of capital allocation. Over 70 % of EU institutional investment capacity sits in Western European financial centres. Export credit agencies, development banks and structured finance vehicles are predominantly headquartered there. Even projects physically built elsewhere are often financed, insured and hedged in Western Europe.
Western Europe also dominates system integration. Grid codes, automotive platforms, industrial automation standards and certification regimes are defined in Western European markets. This gives the region control over specifications and compliance thresholds.
However, this dominance stops short of physical transformation. Since 2020, Western Europe has closed or mothballed more than 25 % of its primary metals and chemical processing capacity, driven by electricity prices that in some markets exceeded €150–200 per MWh during peak periods, combined with carbon costs of €80–100 per tonne of CO₂. New refining and smelting projects struggle to reach financial close under these conditions.
As a result, Western Europe increasingly controls what is needed, but not how it is produced.
South-East Europe: Where transformation actually happens
South-East Europe occupies the opposite position. The region represents less than 20 % of EU end-market demand, but it is capturing a disproportionate share of new materials processing investment. Since 2021, over €40–45 billion of announced or committed CAPEX in battery cells, chemical intermediates, recycling and metal processing has been directed toward Hungary, Romania, Bulgaria and neighbouring markets.
Energy is the first differentiator. While volatile, power systems in South-East Europe allow long-term bilateral contracts, state-backed pricing mechanisms and capacity guarantees that are no longer feasible in Western Europe. Industrial users can still secure electricity in the €60–90 per MWh range under negotiated frameworks, which is decisive for energy-intensive processing.
Permitting and political economy form the second advantage. Large industrial plants can reach permitting decisions in 3–5 years, compared with 7–12 years in Western Europe. Governments in South-East Europe are more willing to classify processing plants as strategic assets and absorb political risk in exchange for employment and export revenues.
Labour and industrial legacy provide the third pillar. Metallurgical, chemical and mechanical engineering skill bases remain intact, allowing rapid scale-up. While wages are lower, the critical advantage lies in operational flexibility rather than cost alone.
These conditions explain why battery cell plants with capacities of 50–100 GWh per site, chemical complexes producing hundreds of thousands of tonnes per year, and recycling facilities processing 50,000–100,000 tonnes of material annually are increasingly located in South-East Europe.
Ownership versus control: The decisive imbalance
The key distinction is that hosting transformation assets does not automatically imply controlling them. In Western Europe, ownership, financing and system integration often align. In South-East Europe, ownership is frequently external.
Across battery materials, chemicals and advanced processing, an estimated 55–65 % of new large-scale processing assets in South-East Europe are majority-owned by non-EU or non-local capital, primarily Chinese industrial groups, global commodity traders or multinational consortia. Local states provide land, incentives and grid access, but strategic decisions on sourcing, technology and offtake are made elsewhere.
Western Europe, meanwhile, increasingly relies on outputs from these assets without owning them. The result is a bifurcated system in which neither side fully controls the transformation chain.
Power systems: Materials into electricity
In the power sector, transformation control determines deployment speed. Wind turbines, transformers and grid equipment require electrical steel, copper, aluminium and rare earth magnets. Grid expansion targets imply annual investment of €80–100 billion across Europe through 2030, but material availability is a binding constraint.
Western Europe defines grid standards and expansion plans, yet relies on processed inputs increasingly sourced from South-East European plants or global supply chains controlled externally. When transformation capacity is disrupted or repriced, grid projects slow regardless of political urgency.
This dependence means that power system resilience is now as much a materials processing issue as an energy policy issue.
Mobility: Batteries as the strategic fulcrum
Electric mobility concentrates transformation risk more than any other sector. A single 100 GWh battery plant represents roughly €7–8 billion in CAPEX and consumes lithium, nickel, cobalt and graphite worth €2–3 billion per year at current prices.
Western Europe controls vehicle platforms, branding and consumer markets. South-East Europe increasingly hosts battery cell production. Yet upstream refining of battery-grade materials remains globally concentrated, with Chinese processors controlling a majority share of lithium hydroxide, graphite and cathode precursor supply.
Even when battery plants are located in Europe, over 70 % of critical battery intermediates are sourced through Chinese-controlled processing chains. This means that Europe’s electrification trajectory remains exposed to external decisions on pricing and allocation.
Industrial growth and value capture
Over a 20–30 year asset life, processing plants generate stable, infrastructure-like cash flows. They anchor supply chains and attract downstream investment. If ownership remains external, value capture also flows outward.
South-East Europe risks becoming a transformation subcontractor, capturing employment and some tax revenue but limited strategic leverage. Western Europe risks becoming a high-margin system designer dependent on externally controlled inputs.
Neither outcome is optimal. Strategic autonomy requires alignment between demand, processing and ownership.
The European choice ahead
The decisive question is no longer whether Europe should expand mining or recycling. It is who controls the transformation points where materials become power, mobility and industrial growth.
If current trends persist, Western Europe will retain demand and design authority, South-East Europe will host execution, and external actors will control inputs and pricing. Europe’s green transition will proceed, but under conditions it does not fully control.
Reversing this trajectory requires coordinated capital deployment, shared ownership models and political acceptance that processing capacity is strategic infrastructure. Without that alignment, Europe’s internal divide will deepen, and control over its industrial future will continue to drift away from the continent itself.
Elevated by clarion.engineer