Breaking China’s Rare Earths Monopoly: The EU’s Critical Mineral Strategy

Beijing’s Dominance Across the Rare Earth Supply Chain

China retains about 44 million tons of rare earth oxide equivalent, dwarfing reserves in Brazil (21 million tons), India (6.9 million tons), and Australia (5.7 million tons). While 17 key minerals are not inherently scarce in the earth’s crust, they rarely appear in pure veins and require complex separation processes. China extracted about 270,000 tons of rare earth oxide equivalent in 2024, compared to just 45,000 tons produced by the United States.

This market advantage stems from a decades-long strategy. Beijing began investing heavily in mining, chemical separation, magnet manufacturing, recycling, and alloy technology back in the 1980s. That vertical integration lowered costs and left global competitors far behind. Furthermore, China’s new curbs require foreign companies to obtain special approval to export items containing even small traces of rare earth elements sourced from China, impacting global manufacturers of electric vehicles, wind turbines, semiconductors, and high-tech military systems.

High-Stakes Diplomatic Talks and Market Nervousness

As Donald Trump and China’s president, Xi Jinping, prepare to meet for their second summit of the year, Rafael Moreno stated that it is imperative for the two leaders to secure a deal easing Beijing’s threat to ban rare earth exports. “The market is nervous,” Moreno said. China first introduced export controls in April 2025, which hit automotive industries in the EU, UK, US, and Japan hard.

During a summit last October in South Korea, Xi agreed to suspend the introduction of stricter global restrictions for 12 months. Although industry leaders hoped Trump would secure an extension during their May meeting, the question remains open for their upcoming encounter. “It cannot not be extended if they are to continue to have these presidents’ meetings regularly,” said Kurt Tong, managing partner of the Asia Group. Tong noted that a suspension deal could potentially be delayed until November, when Trump is expected to travel to China for the Asia-Pacific Economic Cooperation (APEC) forum.

Europe’s Push for Supply Chain Diversification

In Brussels, diversifying supply chains away from China is a top priority for European Commission President Ursula von der Leyen. The EU trade commissioner, Maroš Šefčovič, scheduled a summit with China’s commerce minister, Wang Wentao, to avert a trade war amid deep concern over an “unsustainable” trade deficit running at €1bn a day. Heavy exports of electric vehicles, cars, and renewable energy machinery from China have intensified these alarms.

To counter this reliance, senior EU politicians are scouting alternative critical raw materials. Viridis Mining and Minerals is drawing attention in Brussels with its assets in Brazil, Australia, and Canada. The company opened a demonstration plant in Minas Gerais, Brazil, to process surface earth into a crumbly powder that could be further separated in France. The EU’s international partnership commissioner, Jozef Síkela, visited the Colossus plant in Brazil to review plans to capture 5% of the global rare earths market by the end of 2028.

Moreno emphasized the economic hurdles facing domestic producers. “It is natural for a company or OEM to want to buy the cheapest product, but then, you know, the impact of them not supporting a domestic supply chain means that the domestic supply chain just never gets off the ground.” Viridis is currently working with French chemical company Solvay to process the rare earths for original equipment manufacturers and car and wind turbine makers like Siemens Gamesa.

However, industrial buyers face immediate cost pressures. According to Eurometal, a trade group representing steel product buyers, component purchasers and original equipment manufacturers face daily pressure to opt for Chinese goods that can sometimes run 30% cheaper than domestic alternatives.

Frequently Asked Questions

Why are rare earth elements important?

Rare earth elements possess unique magnetic, optical, and electronic properties essential for producing high-powered magnets, batteries, wind turbines, semiconductors, lasers, and sensitive military systems.

How much of the rare earth market does China control?

China controls between 80% and 90% of the world’s raw materials and processed end products, alongside a dominant share of global processing and refining capacity.

What are international leaders doing to bypass Chinese supply chains?

Governments like the US and the EU are promoting local extraction and processing initiatives—such as Europe’s Critical Raw Materials Act and new mining projects in Brazil, Australia, and Canada—to build independent supply chains.