De-risking critical mineral supply chains:

Rare earth elements (REEs) are a group of seventeen metallic elements. Four of these – neodymium, praseodymium, dysprosium and samarium – are critical for the production of the magnets used in offshore wind turbines, electric vehicles and a variety of defence applications. Rare-earth magnets are thus central to a range of the EU’s strategic projects, and they play a pivotal role in its ambitions to decarbonize the economy and scale up Europe’s defence capabilities.

Contrary to their name, rare earths are not particularly scarce in terms of geological abundance. However, they are typically dispersed in ores and found in very low concentrations, which makes their extraction and processing costly. Nevertheless, estimates suggest there are sufficient REE ore deposits in Europe to meet current demand. The two primary geological sources, carbonatite and alkaline igneous rocks, are especially abundant in Scandinavia, but can also be found in other regions of Europe including Spain and Romania.

Although French companies such as Solvay or Rhône-Poulenc once dominated REE supply chains – the latter had an almost 50% global market share of rare earths processing up until the 1980s – China has rapidly outpaced its European competitors. Today, Chinese firms account for approximately 70% of global rare earth extraction, 90% of processing and virtually all rare-earth magnet manufacturing. The EU relies on China for 98% of its rare-earth magnets, leaving it incredibly vulnerable to politically motivated trade restrictions.

The EU has taken steps to reduce this strategic dependency, and in March 2023 it passed the Critical Raw Materials Act (CRMA) to develop domestic capacities by 2030: at least 10% of the EU’s total annual consumption of critical minerals must be locally extracted; 40% domestically processed; and 25% recycled. In March 2025, the Commission designated 47 projects set to fulfil the Act’s benchmarks. Five of these are focused on starting production of REEs between 2026 and 2028: ReeMAP (Sweden) will be dedicated to extraction and processing; Caremag (France) and Puławy (Poland) are both charged with processing; and lastly, MagREEsource (France) and INSPIREE (Italy) will handle recycling and manufacturing.

In addition to the Act’s strategic projects, the Canadian group Neo Performance Materials recently opened Europe’s first mass-production facility for rare-earth magnets in Estonia. It is set to produce approximately 2,000 tonnes of magnets each year, eventually scaling up to 5,000 tonnes.While the EU needed approximately 10,000 tonnes of rare earth magnets in 2020, demand is expected to rise to 60,000 tonnes by 2050.

However, due to the current lack of ecologically and socially accepted exploitation practices, most of the CRMA’s projects remain in the exploration phase, casting doubt on the Commission’s ambitious 2030 benchmark. Indeed, the extraction and processing of rare earths can have considerable environmental impacts if not managed properly. Mining typically releases hazardous metals, radionuclides and chemical products into the environment. Moreover, the chemical-intensive methods required for processing can contaminate nearby bodies of water, posing risks to aquatic lifeforms and public health.

These environmental risks have at times elicited strong local opposition. For instance, Greenna Mineral AB’s plans to open the Norra Kärr mine, located 1.5 kilometres from Lake Vättern in Sweden, triggered widespread concern among local communities and environmental experts. Potential contamination risks involving the lake, which provides drinking water to more than 500,000 people, make opening a mine at Norra Kärr highly unlikely.

Deposit sites such as Kiruna in Sweden and Siilinjärvi in Finland may offer more immediate alternatives. Rare-earth extraction at these sites would take place within pre-existing mines, alongside phosphates mining at Siilinjärvi, and iron-ore mining at Kiruna. However, accessing the more plentiful Per Geijer REE deposit at Kiruna would require a significant expansion of the mine, threatening to displace 6,000 residents of the town. Even if regulatory approval for the expansion is obtained, it may be a decade before mining can start.

Other important deposits include the Fen carbonatite complex in southeast Norway, which holds continental Europe’s largest proven deposit of REEs, and the smaller Galiñeiro and Ditrau deposits located in Spain and Romania, respectively.

While achieving the benchmarks set out in the CRMA by 2030 may be an unrealistic ambition, the goals themselves are by no means impossible. The central objective of derisking its dependency on China requires the EU to strike the right balance between localized supply chains, innovation in recycling and alternatives to rare earths, in addition to a diversified portfolio of trade partners.