Europe races to break free from China's grip on rare earth supplies
Europe is pushing to reduce its reliance on China for critical raw materials, especially rare earth elements (REEs). The European Union has finalised a major trade deal with Australia to secure supplies, while also investing heavily in defense and domestic production. These moves come as concerns grow over China's dominance in the sector.
By 2026, France will open Europe's first large-scale REE recycling and refining plant, built in partnership with Japan. The facility aims to cut dependence on Chinese imports, which currently supply nearly all of Europe's REE needs. The EU's dependence on China for rare earths has become a pressing issue. Germany, for example, imports 95% of its REEs from China, despite plans to build Europe's strongest conventional army. These materials are vital for modern weapons, including the Meteor long-range air-to-air missile, which relies on neodymium, praseodymium, and dysprosium.
To address this, the EU has taken several steps. In May 2024, the Critical Raw Materials Act (CRMA) came into force, targeting secure supplies of 34 essential materials. The bloc has also agreed to 14 partnerships and launched 13 strategic projects to diversify imports. A new free trade deal with Australia, finalised after years of talks, will grant the EU access to two-thirds of its strategically important raw materials. However, progress may be slow, as Australia still depends on Chinese refining.
Defence spending is rising sharply across Europe. The EU's ReArm Europe Plan, part of its Readiness 2030 initiative, will inject β¬800 billion into military capabilities. Germany alone plans an extra β¬500 billion over the next decade. By 2025, total defence spending among EU members is expected to hit β¬381 billionβa 37% increase since 2021.
France's upcoming recycling and refining facility marks another key development. Set to open in 2026, the plant will process REEs domestically, reducing reliance on Chinese imports. Currently, the EU sources 98% of its REE magnets from China, making this project a critical step toward self-sufficiency. The EU's trade deal with Australia and France's new recycling plant signal a shift toward greater independence in raw materials. Defence investments are also climbing, with Germany and the wider EU committing hundreds of billions to military expansion. These measures aim to strengthen Europe's strategic position while reducing vulnerability to supply chain disruptions.
