EU president Ursula von der Leyen revealed the plans in a State of the Union speech.
"We need to avoid being stuck in the kind of dependence we now see with oil and gas [and Russia]," she said.
In her speech, Von der Leyen warned that almost 90% of global rare earths and 60% of lithium are processed in China.
She insisted action needs to be taken to ensure diversification, noting that the European Critical Raw Materials Act will identify potential strategic projects and build up reserves where supply was at risk.
EU politicians have welcomed the announcement, saying the act will play an important role in securing the bloc's supply chain.
"Our twin green and the digital transition will live or die through the functioning of our supply chains," said Commissioner Thierry Breton.
"The Critical Raw Materials Act should provide a shared understanding of which critical raw materials can be considered as particularly strategic. This requires setting criteria for identifying raw materials which are of particular strategic relevance for our twin transition and defence needs, including economic importance, supply concentration, strategic applications and forecasted supply gaps," he said.
"Without European level action, we will miss out on synergies while some Member States will continue to develop stronger capacities than others. We need to build on those to create a true European network of raw materials agencies and anticipate risks.
"This network would develop monitoring and stress testing abilities to allow industry to anticipate risks of disruptions, price hikes or shortages and take appropriate diversification, stockpiling and investment decisions."
Breton said the act could have a target that at least 30% of the EU's demand for refined lithium should originate from the EU by 2030, or to recover at least 20% of the rare earth elements present in relevant waste streams by 2030.
In June, the European Raw Materials Fund announced that it was seeking 100 billion euros in investment to invest in the critical minerals needed for a transition to zero carbon emissions.
The European Raw Materials Fund is due to start with around 2 billion euros ($2.1 billion), but eventually, the region will need more than 100 billion euros in investment to produce enough critical minerals, Bernd Schaefer, chief executive of EU-funded EIT Raw Materials, told Reuters.
That call followed comments by Schaefer a month earlier stating that phasing out Russian fossil fuels requires more domestic EU production and a different mentality to mining on EU soil.
"We need a different mentality in Europe because I think we are missing something here. We are missing a euro-element, and we are missing a consumer element," he said.
The sheer quantities of raw materials needed for renewable energy technologies, like wind turbines and solar panels, could pose problems due to concerns over availability and the stability of the supply chain.
EIT Raw Materials estimates that only three possible projects could start production in the next couple of years, two in Romania and one in Bosnia and Herzegovina.
