Europe has rare earths but, for now, it’s at China’s mercy

Like the U.S., Europe is also feeling the pressure to keep China sweet in order to maintain supplies of rare earth elements, which are vital for its strategic industries in the region such as auto production, green energy and defense.

Europe is heavily dependent on China for supplies of the world’s 17 rare earth elements and has been looking to calm stormy waters with Beijing over supplies, while looking for alternative sources of critical minerals — including in its own back yard.

That’s a long process, however, and for now, Europe is as vulnerable as other major consumers of rare earths, and particularly the U.S., when it comes to Beijing’s ability to turn the tap off on supplies.

Officials from Germany and the Netherlands are in Beijing this week for talks with their Chinese counterparts on China’s controls on rare earths exports and semiconductor chips which have made European industries vulnerable to global supply chain disruptions.

China dominates the rare earths market from mining to refining, with data from the International Energy Agency showing that, in 2024, China was responsible for 59% of the world’s rare earths mining, 91% of its refining and 94% of the manufacuring of permanent magnets which are commonly used in electric vehicles, wind turbines, industrial motors, data centers and defense systems.

As the world’s single largest supplier of a component that’s critical to so much manufacturing, China’s dominance has made “global supply chains in strategic sectors – such as energy, automotive, defense and AI data centres – vulnerable to potential disruptions,” the IEA noted.

That potential for disruption came to the fore this year when, in April and October, Beijing announced licensing requirements, and later export controls, on its rare earth supplies and technologies.

Those controls were suspended for a year as a result of a trade truce reached in October between China and the U.S. reached but major rare earth importers such as the U.S. and EU, which imports around 70% of rare earth supplies — and almost all of its rare earth magnets — from China, are all too aware of its vulnerabilities to geopolitical disruptions.

Last month, European Commission President Ursula von der Leyen announced that the bloc was launching the “RESourceEU” plan aimed at reducing reliance on critical raw materials from China “in the short, medium and long term.” She said the bloc could do this by recycling existing raw materials, such as those in batteries, and by joint purchasing to stockpiling.

Von der Leyen also said the EU would boost investment in strategic projects “for the production and processing of critical raw materials here in Europe,” and would speed up work on critical raw materials partnerships with countries like Ukraine, Australia, Canada, Kazakhstan, Uzbekistan,…