EU Unveils Major Plan to Cut Reliance on China for Rare Earths Amid Growing Supply Chain Fears

The European Union is set to unveil a sweeping new strategy on Wednesday aimed at reducing the 27-nation bloc’s heavy dependence on China for rare earth elements — materials essential to industries ranging from electric vehicles and electronics to defence manufacturing.

The move comes as Beijing’s tightening grip on rare earth exports continues to rattle global markets and disrupt supply chains. China, the world’s dominant producer of rare earths, shocked industries in October by announcing new export controls on the elements used to manufacture high-performance magnets critical to modern technology. Although China later announced a one-year suspension of the curbs, the uncertainty has already prompted widespread concern across Europe.

Since April, Beijing has also required special licenses for certain rare-earth exports, further slowing global manufacturing and raising alarm among European firms.

‘A Racket,’ Says EU Industry Chief

EU industry commissioner Stéphane Séjourné has urged the bloc to “step up,” accusing China of running what he described as a “racket” that puts Europe’s strategic sectors at risk.

In response, the EU’s new plan aims to:

• Accelerate joint purchasing of critical raw materials

• Boost domestic production and recycling across Europe

• Expand partnerships with reliable international suppliers

• Fast-track new agreements to diversify sourcing

New European Center for Critical Raw Materials

As part of the strategy, the European Commission will propose establishing a European Center for Critical Raw Materials, a centralised hub modeled on Japan’s state-run Japan Oil, Gas and Metals National Corporation. The center would coordinate supply, support industry, and help the EU shield itself from geopolitical shocks.

Growing Pressure from the U.S. and China

The EU now finds itself squeezed between China’s export restrictions and the United States under President Donald Trump, whose administration is aggressively negotiating bilateral supply deals to secure its own access to critical minerals.

A recent study by the EU Chamber of Commerce in China revealed that:

• 60% of its members expect supply chain disruptions

• 13% fear production slowdowns or potential shutdowns due to China’s controls

“The situation is really urgent from our perspective,” warned Florian Anderhuber, deputy director general of Euromines, a major industry group. “Speed is now of the essence.”

Euromines has urged the EU to fast-track permits for new mines, cut bureaucracy, provide financing guarantees, and implement measures to narrow the cost gap between European and Chinese producers — a longstanding obstacle to building a competitive rare-earth industry in Europe.

Updated EU Economic Security Strategy Also Due

Alongside the rare-earths plan, Brussels will also present an updated EU Economic Security Strategy. The first version was released in 2023 as the bloc grappled with supply chain vulnerabilities exposed by the Covid-19 pandemic and Russia’s invasion of Ukraine.

The revised strategy will sharpen Europe’s most powerful trade tools, including:

• Stricter controls on foreign investment

• New export control mechanisms

• Policies designed to counter aggressive trade moves from global powers

As geopolitical tensions rise — particularly amid an assertive U.S. approach to global trade — EU officials say the bloc must move quickly to strengthen its resilience.

With rare earths underpinning everything from green energy technologies to advanced weaponry, Brussels now considers supply security a strategic priority — and Wednesday’s announcement marks one of its most ambitious efforts yet to break free from dependence on China.