Highlights

• Europe launches €3 billion REsourceEU plan to build critical minerals capacity, but loses key processing asset LCM to U.S. acquisition, signaling a strategic shift from China dependence to potential U.S. reliance.
• EIT RawMaterials CEO warns Europe risks swapping one supply chain hegemon for another as U.S. capital and Pentagon backing rapidly absorb European rare earth processing capabilities.
• The rare earth competition has evolved from China vs. West to West vs. West, with U.S.-EU industrial rivalry poised to reshape offtake flows and drive premiums for European REE assets.

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A fresh EU strategy meets an unexpected warning shot.  A new Reuters report (opens in a new tab) by Eric Onstad captures a striking twist in Europe’s rare earth narrative: after years of trailing China, the EU finally launches a €3 billion fast-track plan to build its own critical minerals capacity—only to be warned that the next strategic risk may come from Washington, not Beijing.

Bernd Schaefer, CEO of EIT RawMaterials (opens in a new tab), an EU-funded agency, applauds the Commission’s new REsourceEU (opens in a new tab) plan as a long-overdue shift from “ambition to delivery.” Yet he flags a sharper concern: Europe is now losing core rare earth processing assets to the United States, and could wake up dependent on a new hegemon.

The Real Story Beneath the Headlines

The Reuters piece rests on several accurate observations:

• Europe remains far behind China in mining, separating, and alloying rare earths.
• The EU has indeed issued dozens of MOUs with resource-rich partners—but few deals have translated into actual offtakes or processing facilities.
• The U.S. has moved aggressively, often with Pentagon backing, to acquire, co-develop, or subsidize rare earth assets, including USA Rare Earth’s acquisition of Less Common Metals (LCM)—one of Europe’s few metal-and-alloy makers.

Schaefer is correct: LCM’s loss is strategic. Europe had precious few midstream assets; now it has one fewer.

But is Europe truly at risk of swapping a China problem for a U.S. problem? That’s where the framing becomes more speculative.

Where the Analysis Edges Into Alarmism

Schaefer warns that “the U.S. could become a second China”—a country able to dominate the magnet supply chain and force Europe into import dependence.

This is an overstatement, for three reasons:

1. U.S. rare earth capacity is still embryonic, with no commercial-scale Dy/Tb separation and limited alloy production.
2. Europe still has unbuilt but viable projects, including Norwegian, Swedish, Estonian, and French initiatives that require financing, not fantasy.
3. Washington’s strategy is not mercantilist extraction—it's de-risking. The U.S. is racing to rebuild its own supply chain, not absorb Europe’s.

Still, Schaefer’s warning carries merit: Europe has been slow to “do the deal-making,” and U.S. capital is moving faster.

Why Rare Earth Investors Should Pay Attention

The notable development here isn’t the €3 billion headline—it’s Brussels’ acknowledgment that the race is no longer China vs. the West, but West vs. West for scarce processing expertise.

If European firms cannot secure domestic financing, U.S. buyers will, and Europe’s midstream will hollow out—quietly, transaction by transaction.

For investors, that means:

• Premiums for European REE assets may rise.
• EU co-funding for magnet and alloy capacity may accelerate.
• U.S.–EU industrial rivalry could reshape offtake flows.

This is the next phase of the rare earth realignment—and the stakes are only getting sharper.

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