Rare earths have gone from rare to popular. There is no geopolitical discussion that is not being discussed and the reason is simple: China controls the extraction and refining, as well as the production of rare earth magnets. The Asian country decided to control their use outside its borders through export licenses, given the increasing importance of rare earths for the supply chains of goods such as batteries, electric cars, turbines, aircraft or semiconductors, among many others.
As if this were not enough, rare earth elements are also of great importance for precision weapons, an issue of increasing importance in a world facing increasing militarization. It is also, without a doubt, a first-order factor for the United States in its strategic competition with China. So much so that its president, Donald Trump, had no choice but to accept China’s terms after his meeting with President Xi Jinping in Busan, South Korea, on October 30.
In exchange for a year of truce in which China agreed to continue providing rare earths, the Trump administration was forced to reduce tariffs on the Asian country and, most importantly, remove its own controls on the export of semiconductors key to developing the artificial intelligence that Chinese industry needs in its race to control this technology.
The risks to Europe from controls on rare earths are just as important, if not more so, than in the United States. First of all, the EU has no rare earth reserves or tools it can use to negotiate with Beijing. Moreover, their companies are as vulnerable as American companies, from Airbus to Volkswagen and other electric vehicle manufacturers, as well as the entire military industry that Europe desperately needs to develop in the face of the unstoppable Russian threat.
Despite the uneven conditions, which greatly alarmed Brussels ahead of the Trump-Xi summit, the EU has been able to adhere to the same truce as the United States. But that’s where the good news ends. Before China threatened export controls, the United States had already begun weaving webs of agreements to produce and refine these minerals, an effort that only accelerated when the threat became real. The Trump administration is working on agreements with Australia, Malaysia, Vietnam, Brazil, and Ukraine, and has even signed long-term contracts with the only plant in the world capable of refining 17 rare earth elements on an industrial scale: the Solvay plant in La Rochelle (France).
On the other hand, the European Union’s response does not appear to have been complete. If it is because they have already legislated on the matter – the Critical Raw Materials Act was approved in 2024 with ambitious targets to increase extraction (10%), processing (40%), and recycling (15%) within the EU by 2030 – we all know that these targets will not be achieved, because the plan lacks significant financing, fast-track mechanisms for licensing mining projects and, above all, binding alternative supply contracts that guarantee real quantities in the short term. Although the European Union has signed partnership frameworks with Canada, Namibia, Chile and others, progress is very slow and these countries have not yet been able to generate the relevant operational capacity. Our own projects (Sweden with Nora Car, Portugal with Mina do Barroso or Germany with Recycling) progress very slowly due to bureaucratic obstacles, but also due to strict European environmental regulation.
In this context, the one we should learn from most is Japan, which was the first to suffer from a decrease in the supply of rare earths by China in 2010. Despite the significant investments this country has made to reduce dependence on the Asian giant, it still buys 62% of its total imports of rare earths, compared to 100% in 2010. In the past 15 years, Tokyo has built alliances with Australia, Vietnam and Kazakhstan, and encouraged recycling domestically. It created strategic reserves. Despite all this, Japan is back at work – following China’s announcements of export controls this year – to accelerate public and private sector efforts to build an independent supply chain, including subsidies for domestic processing and exploration in the South Pacific.
Given the importance of rare earths to European industry – both civilian and military – we must not allow this year of truce to pass without moving quickly to search for alternatives to China. Japan offers a great opportunity there. Tokyo is looking for collaborators so that the initial production series that has been conceived for years can be profitable. To this end, it must meet a demand greater than its own, and the EU must offer its cooperation, even if at higher prices than China. By cooperating to create demand, Japan should be willing to share the technology it has accumulated in the field of rare earths. Finally, there is no doubt that Europe should use European companies already specialized in this field for its own plans, such as the French company Solvay and others. Mapping existing knowledge, using it, and sharing it with Japan in exchange for its knowledge is the way to advance the thorny and important challenge of securing vital supplies.