China’s Rare-Earth Export Controls Spark Critical Concern for EU, Trade Chief Warns
Brussels is sounding the alarm over Beijing's increasingly assertive use of rare-earth export controls, with European Commission Vice-President Maros Sefcovic explicitly stating that these measures are "causing a lot of problems for European companies." The comments underscore a growing chasm in trade relations and a deepening concern within the EU about its strategic vulnerability to Chinese policies.
Sefcovic's remarks highlight the severe implications for Europe's industrial base, particularly as the continent strives to accelerate its green transition. Rare earths, a group of 17 metallic elements, are indispensable components in everything from electric vehicle batteries and wind turbines to advanced defense systems and high-tech electronics. Any disruption to their supply chain, therefore, doesn't just impact profit margins; it threatens the very foundations of the EU's future economic competitiveness and geopolitical autonomy.
China’s dominance in the rare-earth sector is well-documented. For decades, the nation has controlled an estimated 80% to 90% of the world’s refined rare-earth output, thanks to early investment, lower production costs, and, historically, less stringent environmental regulations. This near-monopoly has given Beijing significant leverage, which it has not shied away from using in times of geopolitical tension. The latest controls, though framed by China as necessary for national security and environmental protection, are widely interpreted in Brussels as a strategic tool to exert pressure.
"European manufacturers, from auto giants to specialized electronics firms, are already feeling the pinch," noted one industry analyst, preferring anonymity due to the sensitive nature of the topic. "They're grappling with increased procurement costs, extended lead times, and the constant threat of further restrictions. It's an operational nightmare that forces them to reconsider long-term investment strategies within Europe."
The rare-earth issue isn't an isolated incident but rather a potent symbol of the broader, escalating tensions between Brussels and Beijing. Beyond trade, disagreements over human rights, market access, and China's stance on the war in Ukraine continue to strain relations. The EU views China's export controls as a form of economic coercion, designed to slow European technological advancement and make the bloc more dependent on Chinese supply chains.
In response, the EU has been actively pursuing strategies to bolster its supply chain resilience. A cornerstone of this effort is the recently proposed Critical Raw Materials Act. This ambitious legislative package aims to diversify sourcing, boost domestic mining and processing capabilities—such as the significant rare-earth deposit discovered by LKAB in Sweden—and enhance recycling efforts within the bloc. However, establishing new, secure supply chains for rare earths is a capital-intensive, multi-year endeavor, often facing significant environmental and social challenges.
Companies are also exploring "friend-shoring" or "near-shoring" initiatives, seeking to partner with politically aligned nations or develop sources closer to home. Yet, the scale and complexity of the rare-earth industry mean that completely decoupling from China anytime soon is an unrealistic prospect. For now, European firms are largely focused on building inventory, diversifying suppliers where possible, and investing incrementally in research for alternative materials or more efficient use of existing rare earths.
The stakes couldn't be higher. As Maros Sefcovic's candid assessment reveals, China’s rare-earth policies are not merely a trade irritant; they represent a fundamental challenge to the EU’s industrial future, its green ambitions, and its strategic autonomy in an increasingly fragmented global economy. Brussels knows it must act decisively to secure these vital materials, or risk having its economic future dictated by external geopolitical maneuvers.
