Quick Read
- Europe relies on China for 70% of its rare earth supplies and nearly all rare earth magnets.
- Chinese export controls on rare earths highlight Europe’s vulnerability to supply disruptions.
- The EU is investing in recycling, domestic production, and partnerships to reduce dependence.
- Europe has its own rare earth reserves but lacks mining and refining capacity.
- Estonia opened the first EU-backed rare earth magnet plant in 2025, sourcing materials from outside Europe.
Europe’s Reliance on China for Rare Earths: A Strategic Vulnerability
In 2025, Europe finds itself at a pivotal moment, wrestling with the reality that it is almost entirely reliant on China for rare earth elements—materials essential for electric vehicles, wind turbines, defense systems, and digital infrastructure. The uncomfortable truth is that, despite having rare earth deposits in countries like Turkey, Sweden, and Norway, the European Union (EU) currently lacks the capacity to mine, refine, and process these resources at scale. This leaves the region exposed to supply chain disruptions that could ripple across its strategic industries.
Officials from Germany and the Netherlands recently traveled to Beijing for high-stakes talks about Chinese controls on rare earth exports and semiconductor chips. Their goal: to mitigate the risks posed by China’s dominance and to secure the continued flow of materials that underpin Europe’s technological and green transition. According to the International Energy Agency (IEA), China was responsible for 59% of global rare earth mining, 91% of refining, and a staggering 94% of permanent magnet manufacturing in 2024. These magnets are the unsung heroes behind modern innovations—from electric cars to wind turbines and data centers.
The Geopolitical Chessboard: Europe’s Vulnerability to Supply Disruptions
The precariousness of Europe’s position came into sharp focus in 2024, when Beijing imposed licensing requirements and later export controls on rare earth supplies. Although these restrictions were suspended for a year following a trade truce between China and the U.S., the episode underscored how quickly geopolitical tensions can threaten the EU’s supply chains. The European Union imports around 70% of its rare earth supplies—and nearly all of its rare earth magnets—from China.
Valdis Dombrovskis, European Commissioner for Economy and Productivity, told CNBC that while the suspension of Chinese export controls offers a temporary reprieve, it also highlights the urgent need for diversification. “For many of those rare earths, we are depending more than 90% on China’s supplies,” Dombrovskis noted. The lesson is clear: Europe cannot afford to repeat the mistakes of its previous dependence on Russian energy. As European Commission President Ursula von der Leyen put it, “The world we face today rewards speed, not hesitation. Europe cannot do things the same way anymore.”
Barriers to Building an Independent Supply Chain
Europe’s own rare earth reserves could, in theory, help break this cycle of dependency. Yet, a tangle of obstacles stands in the way. Unlike China, the EU is bound by lengthy approval processes, strict environmental standards, and robust public opposition to mining. These factors make rapid development of domestic rare earth production challenging.
However, necessity is pushing innovation. In September, Estonia saw the opening of Europe’s first rare earth magnet production plant, a project funded by both Canada and the EU. The plant sources raw materials from Australia and Malaysia, signaling the start of a slow but meaningful shift toward supply chain resilience. Willis Thomas, principal consultant at CRU Group, told CNBC, “There are barriers to bringing more deposits online, but if trade risks are realized, everyone will be pushed to build out the supply chain and resilience. It does take time, and there’s limited expertise.”
Strategic Implications: Climate, Technology, and Economic Resilience
The stakes for Europe go beyond mere economics. According to analysts Hamed Ghiaie and Filippo Gorelli, writing for the World Economic Forum, Europe’s ambitions for net zero carbon emissions and digital leadership depend on materials it does not control. “For decades, Europe treated raw materials as a commodity issue, rather than a strategic one. That complacency is becoming costly,” they argue. Shortages of rare earths—and related materials like gallium or germanium—could slow semiconductor manufacturing, AI development, and wind power installation.
This is not just about supply chains; it’s about the EU’s ability to meet climate targets and maintain economic resilience in an increasingly volatile world. The challenge is clear: Europe cannot build a green or digital future on supply chains it does not control. The drive to diversify sources, recycle existing materials, and invest in strategic partnerships—from Ukraine to Australia and Canada—is underway, but progress will be measured in years, not months.
Looking Ahead: Can Europe Catch Up?
Europe’s journey toward rare earth independence is just beginning. The “RESourceEU” initiative, announced by von der Leyen, aims to reduce reliance on Chinese raw materials by boosting recycling, joint purchasing, and investment in domestic production. Meanwhile, partnerships with countries like Kazakhstan, Uzbekistan, Chile, and Greenland are being pursued to secure alternative supplies.
But there is no quick fix. The EU’s efforts are complicated by a lack of expertise, infrastructure, and public support for mining. Even as new projects come online, Europe remains vulnerable to the whims of global trade tensions and the strategic decisions of Beijing. The next few years will test the bloc’s ability to adapt, innovate, and build the foundations for a more resilient future.
Europe’s rare earth dilemma is a lesson in the importance of strategic foresight. The facts are stark: despite its own reserves, the EU is not yet equipped to break free from China’s grip. Without substantial investment, regulatory reform, and public buy-in, Europe’s green and digital ambitions remain at risk. The challenge is not just to diversify supply, but to transform raw materials from a commodity into a cornerstone of sovereignty and resilience.