Defence funding in Europe risks squeezing battery materials investment at EU Raw Materials Week

EU Defence

Defence funding in Europe risks squeezing battery materials investment, participants warned in Brussels. The debate surfaced at EU Raw Materials Week during investor and industry discussions. Defence funding in Europe risks squeezing battery materials investment as capital shifts toward security priorities. Therefore, the energy transition may face a tighter financing environment.

The European Commission is pushing defence spending through the ReArm Europe Plan. The plan aims to mobilise up to €800bn for defence investment. Meanwhile, the United States is backing military metals through funding and policy tools. As a result, critical raw materials markets are linking defence and clean energy strategy.

Investors follow defence narratives while battery projects face funding gaps

Investors are showing stronger interest in defence-linked opportunities. Demeter partner Antoni Troeich said money is flowing into defence. However, he also framed batteries and the energy transition as sovereignty issues. Defence funding in Europe risks squeezing battery materials investment if capital ignores EV supply chain scale.

Some investors react when they hear materials overlap both sectors. Troeich said investors became more interested after learning raw materials matter for defence. Meanwhile, battery projects still need long-duration capital and stable offtake. Therefore, developers must sharpen investment cases around scale and resilience.

Lithium demand scale still depends on EVs, not defence volumes

Lithium producers see potential for cross-sector partnerships. However, they warn defence demand cannot justify new plants alone. One producer said the EV market drives demand at scale. As a result, defence funding in Europe risks squeezing battery materials investment without replacing EV-led volume growth.

Co-operation also faces structural limits. Defence procurement is often secretive and specification-driven. Meanwhile, defence may require high-purity lithium or lithium metal grades. These grades do not always match mainstream battery industry needs. Therefore, collaboration will likely focus on niche refining and qualification pathways.

The Metalnomist Commentary

Europe should avoid framing defence and batteries as competing priorities. Meanwhile, dual-use refining and secure sourcing can serve both markets. Therefore, policymakers should align finance tools to unlock EV-scale projects with defence-grade options.