Europe’s Rare Earth Reckoning: Lagging Behind in the Race Against China’s Grip

In the high-stakes world of global supply chains, rare earth elements—those obscure metals powering everything from electric vehicles to fighter jets—have become the new battleground. As 2025 unfolds, Europe finds itself scrambling to catch up in a race dominated by China, with recent deals highlighting the continent’s vulnerabilities. Belgian chemical giant Solvay’s latest contracts with U.S. firms underscore a stark reality: while America forges ahead in diversifying supplies, Europe lags, risking its green energy ambitions and defense capabilities.

According to a report in The New York Times, Solvay has inked deals to supply rare earth materials to American companies, marking the latest sign of Europe’s sluggish progress in breaking China’s chokehold. The contracts involve processing and refining rare earths, but they also reveal how European firms are turning westward for partnerships amid tightening Chinese export controls.

China’s Export Squeeze Tightens

China’s dominance in rare earths is no secret—it controls about 70% of global production and nearly all of the refining capacity. In October 2025, Beijing expanded its export restrictions, adding five new elements and imposing extra scrutiny on semiconductor users, as reported by Reuters. This move, timed ahead of U.S.-China talks, has sent shockwaves through Western industries, with European prices for rare earths soaring up to six times higher than in China, per posts on X citing the International Energy Agency.

The impact is profound for Europe’s military buildup. A piece in The New York Times details how drones, missiles, and other defense components rely on these minerals, now jeopardized by unsteady supplies. “Drones, missiles and other crucial components of Europe’s rush to rearm itself rely on an increasingly unsteady supply of minerals from China,” the article notes, highlighting the geopolitical risks.

EU’s Push for Independence

Amid these pressures, the European Union is ramping up efforts to build its own rare earth ecosystem. The European Raw Materials Alliance (ERMA) has issued a call to action, emphasizing Europe’s leadership in the green transition. In a 2021 report updated for 2025 contexts, ERMA states, “Europe is the global leader of the Green Transition. The EU aims to become climate neutral by 2050,” but warns that success depends on securing rare earth magnets for efficient electric motors, as per their document available on EIT Raw Materials.

France is leading the charge with the continent’s first large-scale rare earth production facility, as announced in posts on X by users like NXT EU. “France has started building the first large-scale rare earth production facility in Europe! Reducing reliance on China and boosting European sovereignty,” the post enthuses. Meanwhile, Estonia’s Narva has opened Europe’s inaugural rare earth magnet production site, capable of supplying magnets for over a million electric vehicles annually, according to X user Eerik N Kross.

Market Forecasts and Growth Drivers

The global rare earth market is booming, projected to reach $11.3 billion by 2030 with a 10% CAGR, driven by demand in electric vehicles and renewable energy, as per a strategic business report on GlobeNewswire. Another analysis from OpenPR forecasts the market hitting $14.7 billion by 2032, fueled by permanent magnets and clean energy applications.

Recycling is emerging as a key strategy, with the recycled rare earth supply market expected to reach $10.5 billion by 2035 at a 10% CAGR, according to Industry Today. This shift addresses environmental concerns, as European mining faces strict regulations—deposits are small, extraction dirty and costly, as mapped out in X posts by Simon Kuestenmacher showing favorable geological sites across the continent.

Geopolitical Maneuvers and Diplomatic Channels

To mitigate risks, the EU and China have established a “special channel” for rare earth supplies, with EU Commissioner Maroš Šefčovič revealing that half of 2,000 applications from European firms have been approved, per Investing.com. Šefčovič discussed the issue with Chinese Commerce Minister Wang Wentao, stressing that poor export management could harm EU production.

Yet, analysts warn of ongoing dependencies. Sari Arho Havrén posted on X: “Europe likely to remain dependent on Chinese rare earths for at least the next 10 to 15 years,” citing South China Morning Post. This sentiment echoes a ScienceDirect study on geopolitical risks, noting the energy transition’s mineral intensity and dependencies on key producers.

Western Responses and Industry Shifts

The U.S. is pulling ahead, as evidenced by Solvay’s deals, but Europe is not idle. A BBC article reports the EU aiming to boost domestic production, led by France’s facility: “The EU is aiming to increase its own production of rare earth metals, led by a facility in France,” per BBC.

Posts on X highlight broader concerns, with Financelot listing critical minerals like rare earths in the context of Project 2025, encompassing AI, quantum tech, and advanced manufacturing. Meanwhile, Sander Tordoir critiques Europe’s industrial policy hesitance: “Europe’s lack of confidence in industrial policy remains striking,” noting the global market’s modest €3.5 billion annual value.

Challenges in Mining and Supply Chains

Developing European mines faces hurdles. X user LWS Financial Research notes export controls driving price divergences, while Piotr mentions China’s new licensing regime unlikely to fully rollback restrictions. David Burton on X spotlights Sweden’s Olserum project by European Green Transition, quoting CFO Jack on the need for secure supplies: “There is no active rare earth mine in Europe — it’s critical that Europe develops a secure supply.”

Naeem Aslam warns on X of the EU’s 98% reliance on Chinese magnets exposing EV and wind sectors, with a temporary export reprieve offering brief relief. An Economist piece forecasts intensified Western efforts in 2026 to reduce dependence, stating, “In 2026 Western efforts to reduce dependence on rare earths from China will intensify,” per The Economist.

Future Outlook and Strategic Imperatives

As Europe navigates this landscape, alliances like ERMA push for action in rare earth magnets and motors. The SFA Oxford analysis warns of China’s controls shifting global power, threatening defense and energy security, as detailed on SFA Oxford.

Pravda Hungary reports on Russia’s ambitions to increase production but facing obstacles, per Pravda Hungary. Ticker Wire on X notes the EU-China channel aiding approvals, while emphasizing Europe’s race to build capacity. With markets expanding and geopolitical tensions rising, Europe’s rare earth strategy will define its industrial future.