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Speed read Explore Europe’s reliance on China for rare earths and critical materials. Learn how hydrogen, recycling, and innovation can reduce dependency and secure industrial sovereignty. |
Introduction
Lithium, cobalt, neodymium, and other critical elements play a central role in modern life. They power electric vehicle batteries, wind turbines, solar panels, and electronic components. However, behind this green technology lies a lesser-known reality: the European Union (EU) is heavily dependent on China for the refining and supply of these critical raw materials. This dependence represents a strategic risk for industry, the energy transition, and technological sovereignty in Europe.
As China tightens export controls on certain materials, Brussels has decided to act to secure its supply chains and reduce vulnerability. In this article, we analyze the current state of this dependence, its economic, geopolitical, and environmental stakes, and possible alternatives for Europe, including hydrogen development, recycling, and industrial alliances. We will also examine the potential consequences for China if it pushes export restrictions too far.
1. Current Situation: Strategic Dependence
1.1 Key Figures on European Dependence
The EU imports a significant share of critical raw materials from concentrated sources, notably China. For magnesium, China accounted for 96% of European imports in 2024. For heavy rare earths, dependence reaches 100%. Even when extraction occurs in Australia, Africa, or elsewhere, refining and processing are mainly concentrated in China, giving Beijing considerable strategic leverage.
1.2 Why This Is Problematic
Centralized refining makes Europe vulnerable to Chinese restrictions. European companies rely on these materials to produce batteries, electric motors, and electronic components. Any restriction or price fluctuation can slow production and raise costs.
1.3 Recent Alerts
In 2025, Beijing limited exports of certain rare earths and derivative products. This caused price increases and concern among European industrialists. Europe’s energy transition, electric vehicles, renewable energy, digitization, relies on these strategic resources, heightening the risk.
1.4 Link to the Green Transition
These materials are indispensable for lithium-ion batteries, electric motors, wind turbines, and solar panels. Without a secure supply, Europe’s energy transition could slow, compromising its goal of carbon neutrality by 2050.
2. Why Europe Is So Dependent on China
2.1 China’s Well-Planned Strategy
For the past two decades, China has invested heavily in the extraction, refining, and storage of critical raw materials, controlling the entire value chain and using this position as a geopolitical lever.
2.2 European Shortcomings
Europe has abandoned local extraction due to high costs and environmental constraints. The lack of a coordinated industrial strategy has exacerbated dependence.
2.3 Industrial Network Effect
Even if raw materials are extracted elsewhere, final refining and processing are mainly done in China, making Europe vulnerable to Beijing’s decisions.
2.4 Weaponization of Resources
China has already restricted exports of gallium and germanium, used in semiconductors, demonstrating how raw materials can become a geopolitical tool.
3. Economic, Geopolitical, and Environmental Stakes
3.1 Industry and Economy
Increased dependence leads to higher costs, potential production slowdowns, and a loss of competitiveness for European industry. Affected sectors include automotive, electronics, renewable energy, and defense.
3.2 Geopolitics and Sovereignty
Dependence on China poses a strategic risk for European sovereignty. In military technologies, certain critical materials are required. The EU recognizes that over-dependence limits its autonomy and capacity to act.
3.3 Energy Transition and Environment
The green transition relies on these resources. Europe must ensure a sustainable and resilient supply chain, integrating ESG (environmental, social, and governance) criteria.
3.4 Risks and Challenges
- Substituting these materials or changing technology is complex.
- Production in Europe is costlier and heavily regulated.
- Recycling alone cannot replace newly mined materials in the short term.
4. Alternatives for Europe: Diversification and Innovation
4.1 Diversifying Sources
The EU seeks partnerships with Australia, Canada, and Africa to secure alternative supply chains, involving trade agreements, investments in extraction and processing, and infrastructure development.
4.2 European Extraction and Refining
Europe is beginning to reactivate its own extraction and refining capacities in Sweden, Portugal, and Finland. Though costlier and environmentally challenging, this reduces vulnerability to Chinese decisions.
4.3 Recycling and Circular Economy
Recycling batteries, motors, and electronics allows recovery of rare materials and reduces dependence. Specialized European recycling sectors are developing innovations to recover rare earths and lithium.
4.4 Technological Substitution and Innovation
- Research into alternative materials: rare-earth-free magnets, sodium-ion batteries, advanced storage technologies.
- Innovation in industrial processes to reduce use of critical metals.
- Promoting material efficiency and product durability.
4.5 Hydrogen and New Energy Pathways
Hydrogen offers a partial alternative to batteries for heavy transport and industrial applications. Developing green hydrogen in Europe could ease pressure on critical materials while advancing the energy transition. Electrolysis and transport infrastructure require significant investment but provide strategic potential for energy autonomy.
4.6 Industrial Alliances and Strategic Partnerships
- Cooperation with other industrial powers to secure access to critical materials.
- Creation of European consortiums to pool refining capacities and innovation.
- Sharing recycling and circular economy technologies.
4.7 European Policies and Regulation
- Critical Raw Materials Act (CRMA): limits 65% of supply from a single country.
- Financial incentives for developing local supply chains.
- ESG standards to ensure sustainability and social responsibility in supply chains.
5. Potential Consequences for China if Restrictions Are Excessive
If China pushes export restrictions too far, it could face several negative consequences:
5.1 Economic
- Market loss: European, American, and Asian companies could rapidly diversify suppliers, reducing China’s market share.
- Domestic price increases: local shortages could raise costs for national industries, affecting competitiveness.
- External innovation incentive: restrictions can accelerate alternative technologies outside China, reducing its long-term monopoly.
5.2 Geopolitical
- Strengthening Western unity: severe restrictions could unite the EU, US, Japan, and Australia around independence strategies.
- Risk of retaliation: targeted trade sanctions or measures in other Chinese sectors.
5.3 Industry and Investment
- Relocation of some production: clients may move sites outside China to secure supplies.
- Credibility loss: repeated restrictions could discourage foreign investors and slow long-term industrial projects.
China must therefore balance export restrictions to maintain strategic leverage while avoiding undesirable economic and geopolitical fallout.
6. Switzerland and Regional Impact
Although not an EU member, Switzerland is integrated into European industrial chains. Disruptions in critical material supplies directly affect Swiss industries: precision engineering, machinery, electronics, and pharmaceuticals. Swiss companies must anticipate risks, diversify suppliers, and invest in recycling and innovation.
Switzerland can also serve as a hub for innovation in new sectors, including hydrogen and battery recycling, offering shared solutions for the continent.
7. Conclusion
Europe’s dependence on China for rare earths and other strategic materials poses major industrial, geopolitical, and energy risks. The EU is developing strategies to secure supplies: diversification, recycling, technological innovation, and hydrogen development.
These measures aim to strengthen Europe’s industrial and energy sovereignty but require time, investment, and political coordination. The energy transition cannot succeed without a comprehensive strategy integrating resilience, sustainability, and strategic autonomy.
Europe now has the opportunity to turn a critical dependence into a driver of innovation and industrial leadership, preparing for a sustainable and sovereign future while recognizing the limits of China’s approach.