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In today’s geopolitical contest for technological and climate leadership, critical minerals and rare earth elements (REEs) have become the 21st century’s strategic resource—indispensable, contested, and politically charged. For Europe, these materials underpin ambitions across the green transition, digital innovation, and defense modernization. Yet the continent remains deeply exposed: overwhelmingly dependent on China for both supply and processing, ill-equipped to pivot quickly, and increasingly entangled in a broader US–China rivalry where mineral access is becoming a tool of coercion.
Europe’s dependence on China
Europe’s reliance on China for critical minerals and rare earths is profound and multifaceted. According to Visual Capitalist, Europe is 100% dependent on China for heavy rare earths—vital for hybrid vehicles, fiber optics, and nuclear power—and 97% dependent for magnesium, essential for aerospace and automotive manufacturing. China controls over 90% of global rare earth processing, including refining and alloy production, making it the linchpin of supply chains for clean energy, defense, and digital technologies.
The International Energy Agency (IEA) projects that both mining and refining will remain heavily geographically concentrated over the next decade, with China continuing to dominate refined supply across most critical minerals. Global demand for minerals such as lithium, cobalt, and rare earths is expected to rise sharply, and demand for battery-related materials such as lithium could surge by 42x. This surge is driven by the explosive growth of electric vehicles (EVs), wind turbines, and solar panels—all sectors where Europe has ambitious targets and where Chinese supply chains are dominant.
Europe’s dependence is not just on raw materials but the entire value chain. As sa report from Investigate Europe notes, China has established a controlling position at each step—mining, refining, alloying, and magnet production—through a concerted, long-term industrial strategy, heavily subsidized by the state. This strategy prioritizes geopolitical leverage over profitability, making it difficult for market-driven economies to compete. Even advanced European manufacturers that once relied on domestic or intra-EU sourcing now find themselves at the mercy of Chinese export licensing.
The intractability of diversification
Europe’s ambition to diversify rare earth supply chains and achieve “strategic autonomy” confronts a complex set of structural, environmental, and geopolitical constraints. For one, Europe has limited domestic resources and capacity. There are currently no active rare earth mines in Europe, though some deposits are known. In January 2023, Sweden’s state-owned mining company LKAB announced the discovery of Europe’s largest deposit of rare earth metals in Kiruna, Lapland. While hailed as a potential game-changer, the project faces a decade-long timeline before production can begin, given the need for environmental assessments, permitting, infrastructure development, and supply chain integration.
Neo Performance Materials operates the only rare earth separation facility for magnets in Europe, located in Estonia. Having recently divested its majority stakes in Chinese facilities, Neo is now scaling up its European operations. Belgian chemicals group Solvay recently expanded production of rare earths at its processing plant in La Rochelle, France. But meeting continental demand is years away, and further investment will depend on customers being willing to pay a slight premium to diversify their sources of supply.
Developing a reliable EU supply of critical minerals and rare earths, including through projects like Sokli in Finland, also remains challenging due to environmental regulations extended permitting procedures, and protracted legal battles. These obstacles are compounded by lengthy court reviews, bureaucratic fragmentation, and widespread public distrust in mining firms.
Efforts to scale up recycling offer limited short- and medium-term relief. Currently, less than 1% of rare earth elements are recycled in Europe. Industry projections suggest that significant volumes of recyclable inputs—like end-of-life magnets and EV batteries—will not become widely available until after 2035. Europe also lacks a centralized rare earth recycling infrastructure. Fragmentation across borders, inconsistent waste classification standards, and insufficient R&D funding have all slowed progress. Without coordinated regulation and financial incentives, recycling is unlikely to substantially reduce import dependency in the near future.
Global competition further constrains access to alternative supply sources. Australia is ramping up production and pursuing an EU trade deal, but much of its output still feeds Chinese processors due to limited refining capacity. The US is developing its own rare earth supply chain through firms like MP Materials, though these efforts face significant risks and delays. Russia’s role has waned due to post-invasion isolation, while EU investment in African supply chains remains modest. Despite initiatives like the Lobito Corridor, progress is stalled by regulatory uncertainty, risk aversion, and China’s entrenched position through longstanding commercial and political networks. Finally, global competition limits the availability of alternative supply sources.
Policy responses and their limits
The European Commission has charted a bold course toward climate neutrality by 2050, focusing heavily on electrifying transportation. To secure the necessary supply of nickel, lithium, and other key minerals, the EU is strengthening trade partnerships with countries in the Global South. This effort is underpinned by major initiatives, including the Green Deal Industrial Plan, the Net-Zero Industry Act (NZIA) , and the Critical Raw Materials Act (CRMA).
The CRMA, enacted in May 2024, aims to bolster strategic autonomy by increasing and diversifying the supply of critical raw materials. It sets ambitious benchmarks for 2030: sourcing 10% of annual needs from domestic extraction, processing 40% within the EU, and obtaining 25% from recycling, while reducing dependency on any single third country to under 65% The act also provides for strategic stockpiling and encourages the use of the Global Gateway initiative to finance upstream projects in partner countries. Additionally, it proposes establishing a Critical Raw Materials Club to enhance supply chain security through collaboration with aligned international partners.
Since 2021, the EU’s “raw materials diplomacy” has yielded 13 agreements with countries including Canada and Kazakhstan. More recently, it unveiled a plan to broaden this approach by developing “clean trade and investment partnerships” — a new framework to diversify supply chains and deepen ties with like-minded resource providers.
The European Commission (EC) has identified 47 strategic projects across 13 EU countries, focusing on the extraction, processing, and recycling of critical materials such as lithium, tungsten, cobalt, and graphite. These projects are intended to reduce the EU's dependency on external sources, particularly China, which currently dominates rare earth production.
However, the CRMA suffers from a critical shortfall, namely the lack of dedicated EU funding. This is compounded by the difficulty of persuading member states to pool capital. The European Investment Bank has not committed significant resources, and private investment remains tepid due to uncertain demand, low prices, regulatory delays, and the risk of public opposition. Many industry stakeholders see the targets as aspirational rather than achievable.
The EC is assessing the feasibility of a collective procurement framework for critical raw materials. However, previous shortcomings in joint initiatives—most notably the limited success of the 2022 joint purchasing platform—highlight the persistent difficulties of coordinating energy policy among member states.
Complementing the CRMA, the NZIA aims to boost European manufacturing of clean technologies, including solar panels, batteries, and heat pumps. It sets a target for the EU to produce 40% of its clean tech needs domestically by 2030 and introduces measures to simplify permitting processes, facilitate market access, and enhance workforce skills . Despite these efforts, the NZIA has been criticized for lacking a solid EU-level funding instrument, relying instead on repackaged existing resources, which may not be sufficient to meet its ambitious goals.
The Global Gateway initiative, with a budget of €300 billion, aims to mobilize infrastructure investments in partner countries, particularly in Africa and Latin America, to develop diverse and sustainable supply chains. Strategic partnerships have been established with nations such as Namibia, the Democratic Republic of Congo (DRC), Zambia, and Rwanda, encompassing technical assistance, skills training, and investment guarantees. Despite these efforts, implementation has been uneven. European companies often exhibit hesitancy in investing in African supply chains, favoring the reliability and lower costs of Chinese imports. This reluctance is further compounded by bureaucratic challenges and infrastructural hurdles across the African continent.
Caught in the US-China trade war
Europe’s vulnerability has been thrown into stark relief by the intensifying US–China trade war. In April 2025, China imposed export restrictions on six rare earths and related products, ostensibly in response to US tariffs but affecting all overseas customers, including Europe.
The EU Chamber of Commerce in China reported that some European manufacturers have already faced production stoppages due to shortages, as China’s licensing process for rare earth exports became a bottleneck. Even as the US and China paused new tariffs in May 2025, rare earth export restrictions remained, with only piecemeal and slow relief for some European semiconductor and clean tech firms.
While Europe has sought to deepen cooperation with the United States to reduce its dependence on China—through platforms like the Minerals Security Partnership (MSP), Mineral Security Partnership Forum (MSPF), and coordinated supply chain diplomacy—such efforts offer only limited respite. The return of Donald Trump to the White House has further complicated transatlantic coordination. His administration has revived its disdain for multilateralism, pressured European allies on trade and defense spending, and pursued a more transactional foreign policy that prioritizes narrow US interests over shared strategic objectives. In this context, hopes for a unified transatlantic approach to critical mineral security appear increasingly dim, leaving Europe to navigate the China dilemma with few dependable partners.
China’s ability to weaponize its dominance in rare earths is not new. In 2010, it temporarily cut off exports to Japan during a diplomatic dispute, causing global prices to spike and exposing the fragility of supply chains. The current controls are more sophisticated and targeted, but the effect is the same: Europe is exposed to geopolitical shocks and trade disruptions beyond its control, with little leverage to shape outcomes in the US–China rivalry.
Strategic and economic implications
Europe’s green transition is at risk. Wind turbines, EVs, and solar panels—all cornerstones of EU climate goals—rely on Chinese-controlled supply chains for rare earths, lithium, and other critical minerals. The International Energy Agency (IEA) has warned that supply constraints could slow or derail the rollout of clean technologies, undermining the EU’s Fit for 55 initiative to reduce greenhouse gas emissions and the REPowerEU plan to phase out Russian fossil fuel imports. In sectors such as offshore wind, Chinese-produced rare earth magnets are irreplaceable in the short term.
Europe’s ambitions for “technology sovereignty”—the idea of achieving self-sufficiency in key digital, energy, and defense technologies—are fundamentally compromised. The semiconductor and defense industries cannot achieve autonomy while dependent on Chinese rare earths. Without secure access to inputs, downstream strategic industries remain hostage to upstream bottlenecks. This creates a strategic asymmetry that constrains Europe’s capacity to act independently in an increasingly fragmented global order.
China’s ability to weaponize supply chains forces Europe into reactive diplomacy, exemplified by its scramble for African partnerships and reliance on US–China détente. The competition for critical minerals is not just economic; it is a matter of national security and geopolitical influence. Europe’s lack of control over critical mineral supply chains weakens its negotiating power, limits its ability to respond to crises, and exposes its industries to the whims of foreign policy shifts.
Conclusion
Europe’s critical mineral conundrum reveals a deeper crisis of strategic vulnerability. As demand for rare earths and related materials accelerates, the continent finds itself structurally dependent on a single geopolitical rival, lacking the domestic capacity or political consensus to quickly diversify. Policy initiatives like the CRMA and global partnerships are necessary steps but fall short of reshaping Europe’s underlying exposure. Caught between China’s strategic leverage and the United States’ increasingly unreliable partnership under Trump, Europe must now reckon with the uncomfortable reality that neither diversification nor sovereignty will come easily—or soon.
To navigate this dilemma, Europe must embrace a more integrated strategy—combining bold public investment, regulatory streamlining, transatlantic coordination where possible, and industrial alliances beyond the West. Otherwise, it risks forfeiting its climate ambitions, technological autonomy, and geopolitical relevance in a world where critical minerals are the currency of power.
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