While Europe was slow to recognise the potential security risks of dependency, years of quiet investment established China as the undisputed king of rare earth elements (REEs).

Now, Europe is scrambling to do damage control, but with long lead times, resistance to mine development and a lack of processing infrastructure, the region has likely shackled itself to decades of REE dependency.

REEs are a group of 17 chemically similar metals possessing magnetic, luminescent and electrochemical properties. They are inextricable from the energy transition and essential across verticals.

Whoever holds the bulk of global rare earth supplies holds the ace and the winner appears obvious, as Europe depends on China for all its heavy REEs and 85% of its light.

According to the Oxford Institute for Energy Studies’ senior research fellow Dr Philip Andrews-Speed, this will remain the case for a while.

He tells Mining Technology: “Not one country will reach the scale of China’s output of REE ores and refined REE metals.

“However, through cooperation and state support, advanced economies should be able to substantially reduce their dependence on China by 2035.”

China: the strategic positioning of the world’s rare earths leader

China dominates the REE picture at every stage from extraction to magnet manufacturing. It is estimated to account for 70% of REE extraction globally, 90% of separation and processing and 93% of magnet manufacturing.

This unassailable dominance is the result of decades of investment by the Chinese Government, which is estimated to have provided between $9bn and $10bn to rare earth companies between 2010 and 2019. It has placed particular emphasis on downstream operations and, by 2019, China had already captured between  85%-90% of global rare earth refining capacity. 

Gayathri Siripurapu, senior mining analyst at Mining Technology‘s parent company GlobalData, explains: “China invested heavily in processing, refining and manufacturing of rare earth-based products, particularly permanent magnets, which are critical for EVs, wind turbines and military applications. This downstream control has given China significant pricing power and supply-chain influence.”

It’s a point echoed by Caremag, a subsidiary of French company Carester, which is building a €216m ($258.2m) REE recycling and refining plant in France, set to open this year.

Carester president Frederic Carencotte tells Mining Technology: “Today, refining and separation capacities are highly concentrated globally, which can create exposure for downstream manufacturers in terms of lead times, logistics and supply continuity.”

Downstream investment and infrastructure strategies have often been directed at the local level in China, with Southern provinces (home to a wealth of ion-absorption clays) receiving particular processing focus. Only last month, China launched the Shenzhen-Ganzhou Industrial Collaborative Development Base, linking Shenzhen’s commercialisation capabilities with Ganzhou’s rare earth production infrastructure to provide financing and permitting services, alongside improved market access.

The Chinese Government also launched a rare earths exchange in Ganzhou in 2020 and another in Inner Mongolia, home to the Bayan Obo deposit – the biggest REE deposit globally, estimated to have more than 40 million tonnes of REE reserves.

Looking more broadly, in 2021, the government consolidated several key REE regional players (including Ganzhou Rare Earth Group) into a significant state-owned enterprise (SOE): China Rare Earth Group.

It helps, of course, that China has the deposits to deliver on its strategies. There are significant carbonatite-associated deposits in Wajiertage, Miaoya, Maoniuping / Dalucao and Bayan Obo, as well as an alkaline igneous rock-associated deposit in Weishan and an ion-absorption clay deposit in Xunwu / Longnan.

Outside of government support and geological advantages, China’s REE sector has also benefited from lower capital expenditure, particularly regarding labour costs and environmental standards.

“China achieved cost advantages by operating with less stringent environmental regulations, allowing it to scale production while undercutting global competitors,” Siripurapu explains.

Add these considerations to China’s quota system and export controls, and the extent of China’s dominance – and the risks for its dependents – becomes clear.

In April 2025, China retaliated against tariffs on Chinese goods introduced by US President Donald Trump by introducing export controls on seven heavy REEs, as well as related compounds, metals and magnets. The move was followed by further export controls on REEs in October, requiring foreign companies to obtain a licence to export parts containing Chinese-sourced REEs or produced using Chinese rare earth technologies.

Trump aside, these are far from the first export controls. It was China’s slashing of rare earth export quotas from 50,145t to 30,258t in 2010 that first woke Europe up to the repercussions of treating REEs as a commodity problem, rather than a strategic one. 

“Europe’s concern about REE supply risks began to crystallise in 2010, particularly with China’s temporary suspension of rare earth exports to Japan,” says Siripurapu.

“This event highlighted the geopolitical vulnerability of rare earth supply chains. However, the issue gained renewed urgency in 2020s, driven by Europe’s energy transition, the rapid growth in EVs, wind power and defence technologies, and increasing US-China trade tensions.”

Europe: the laggard’s game of catch-up

Against the backdrop of China’s massive REE investment, Europe has no competitive market to speak of, depending on China for 98% of its total rare earth magnet demand.

According to Andrews-Speed, the game of catch-up is already unwinnable: “Although investments in new processing capacity are being made in the US, Canada, Australia and Estonia, these will only make a small dent in China’s dominance by 2030.”

Unwinnable does not mean futile, however, and the EU is taking steps to close the dependency gap. The European Commission introduced the Raw Materials Initiative in 2008, noting that “the EU is highly dependent on imports of ‘high-tech’ metals such as cobalt, platinum, rare earths and titanium”.

A spokesperson for the European Commission tells Mining Technology: “The initiative established the foundations for securing sustainable and reliable access to non-energy raw materials essential for Europe’s industrial base. Its relevance has only increased as Europe’s green, digital and defence transitions have significantly intensified demand for critical raw materials, while global supply chains remain highly concentrated and exposed to disruption.”

Following the introduction of the initiative, several EU members developed national mineral strategies. Germany, for example, established a raw materials agreement with Mongolia in 2011 and a partnership with Kazakhstan in 2012, allowing German firms to explore and mine REEs.

The initiative is also responsible for implementing the 2024 European Critical Raw Materials Act (CRMA), which states that 40% of processing across the strategic raw material supply chain should be domestic by 2030. It further details that no more than 65% of the EU’s annual needs of each strategic raw material should come from a single third country, which the spokesperson says is “to address excessive concentration risks”.

“The CRMA responds to the EU’s growing strategic dependencies by strengthening the security, resilience and sustainability of raw material supply chains. The Act sets clear benchmarks to increase domestic capacities for extraction, processing, refining and recycling, while also reinforcing diversified international partnerships with trusted countries to ensure open, resilient and mutually beneficial supply chains,” the spokesperson explains.

The EC has also launched the European Raw Materials Alliance (ERMA) in 2020 to build resilience and autonomy for Europe’s rare earth and magnet value chains.

The spokesperson says that the ERMA has identified around €1.7bn in potential investment needs, “notably in rare earth extraction, refining and permanent magnet production”. This is expected to cover 20% of EU demand by 2030.  

The EU’s most recent step towards independence was the introduction of the RESourceEU Action Plan, adopted in December 2025, which the spokesperson says “shows that we want to go one step further and accelerate and amplify our efforts”. 

The spokesperson commented: “The Action Plan will support strategic projects and other relevant projects ready to reduce dependency by up to 50% by 2029 for the battery, rare earths and defence raw materials value chains, given their strategic importance for the energy and digital transitions and defence security.” 

Can Europe’s REE dependency gap ever be closed?

Collaboration, investment and regional strategies are undoubtedly important pieces of the puzzle, but ultimately, geology and infrastructure determine the picture.

According to analysis by GlobalData, there are currently ten REE mines in the exploration stage in Europe: four in Turkey, three in Finland, two in Norway and one in Sweden.

Siripurapu expands: “Projects such as the Cobanisa, Kurucaova, Kuzca, and Kuyubasi in Turkey and Olserum in Sweden are still undergoing geological assessments and early exploration work. These projects lack defined resources and are several years away from any potential development decision, assuming exploration success and permitting approvals.”

There are two further projects in the feasibility stage, both of which are surface, open-pit projects. One of these is AMR Mineral Metal’s Aksu Diâmas Project in Turkey, but the project is currently on hold, delayed by regulatory approvals and permitting challenges.

The other is Leading Edge Materials’ Norra Kärr Project in Sweden. One of Europe’s most significant rare earth prospects, it has faced delays due to environmental scrutiny, and regulatory approvals and permitting are ongoing.

“With only two feasibility-stage projects and a large share of exploration assets either stalled or relinquished, Europe’s upstream REE development capacity is unlikely to expand meaningfully in the near term,” comments Siripurapu.

Europe is also slowly dipping its toes into downstream infrastructure, although Andrews-Speed points out that progress is slow: “The West needs to invest more in processing capacity for both light and heavy rare earths.

“This is a complex process that poses technical challenges, as well as health and safety risks.”

There are currently two operational REE processing facilities in the region: Neo Performance’s REE magnet factory and Solvay’s La Rochelle processing facility.

Situated in southwestern France, La Rochelle is the only facility outside of China that can process all 17 rare earths. The facility dominated REE production in the 1980s and 1990s, but its current annual output of 4,000 metric tonnes of separated rare earth oxides is now around 1.48% of what is produced by China.

However, La Rochelle has received significant investment, and in April it opened its rare earths production line for permanent magnets, expected to produce “a few hundred tonnes”. Operations will scale, but initial focus will be on neodymium and praseodymium, used in magnets for EVs and wind turbines. Solvay aims to supply 30% of Europe’s processed rare earths demand for magnets by 2030. 

The company also signed a memorandum of understanding with Caremag in 2024, which Carencotte explains “reflected a shared ambition to strengthen Europe’s rare earth industrial ecosystem by combining complementary expertise”.

In Estonia, Neo Performance’s REE magnet facility opened in September 2025, having received a grant of up to €18.7m ($21.9m) from the EU’s Just Transition Fund. It has an initial capacity of 2,000 metric tonnes per year, although Neo Performance intends the facility to eventually produce over 5,000 metric tonnes. 

However, continued investment is the cornerstone of development, and Andrews-Speed questions “whether these plants can compete with China’s on costs without state support”.

Magnet recycling has also been touted to help to plug the supply gap and reduce European dependency on China. The practice is relatively new in Europe: the largest facility, in Germany, started production in May 2024, while Caremag’s recycling and refining plant will open this year to process industrial swarf from magnet manufacturing, production scraps and end-of-life permanent magnets, collected from equipment such as motors, electronics or industrial systems.  

The process takes several weeks, but Caremag is confident.

“Combining recycling and refining on the same site is a key strength of the project,” explains Carencotte.

“Recycling secures circular supply and reduces carbon footprint, while refining ensures Europe regains critical know-how in separation technologies that are currently highly concentrated outside the continent.”

However, recovery rates for rare earths currently remain below 1% globally, due in part to the unpredictable availability of end-of-life magnets.  

Siripurapu reflects: “It is not too late for Europe to improve its position, but China is likely to retain a central role in the global rare earth supply chain for the foreseeable future, particularly in processing and magnet manufacturing.

“China’s advantage is rooted not only in resource access, but in decades of accumulated technical know-how, scale and integrated downstream industries that are extremely difficult to replicate quickly.”