Rare earth reshore

The European Union wants to lower its reliance on China, especially when it comes to rare earths — the critical minerals that are essential in the manufacturing of green and digital technologies. But to achieve this goal, the EU has to do a lot more than simply dig up these minerals from the ground.

In an article for The Wire China, DIIS senior researcher, Luke Patey, finds that to turn its green aspirations into an industrial reality, the EU faces the meticulous task of building out all links of a long and complicated supply chain.

Along with other critical minerals, such as lithium and cobalt, the 17 rare earth elements are essential for the green and digital transitions. But China dominates the global rare earth business and Chinese suppliers provide an astonishing 98 percent of Europe’s rare earth demand. After the Covid-19 pandemic and Russia’s invasion of Ukraine exposed the risks of supply chain dependencies, however, many European leaders fear that their fraught relations with China could lead Beijing to cut the regional body out of these vital supply chains.

And the EU’s dependencies on China for these critical resources run even deeper. The EU has also become a big importer of many of the key components and finished products rare earths are used for, including permanent magnets, batteries, fuel cells, electric vehicles and solar pv-modules — energy technologies that, unsurprisingly, China has also come to dominate.

Rare earth deposits in Europe, such as those announced in Kiruna, Sweden, may provide some hope for the long-run, and international partnerships to exploit these minerals elsewhere can help diversify options away from China. But for Europe — and the U.S. — to succeed in their new critical mineral ambitions, they will need to build out links far beyond the mine.