European Rare Earth Element Realities: Great Dependencies

Highlights

• The EU heavily relies on imports of critical raw materials.
• China dominates the supply chain for rare earth elements.
• Eurostat reports increased imports of critical raw materials between 2019 and 2022.
• Concentrated import sources pose supply disruption risks.
• Critical raw materials are essential for strategic sectors including:
  • Net zero industry
  • Digital industry
  • Aerospace
  • Defense

Heavily dependent on imports of select raw materials, such as rare earth elements including scandium and yttrium (REE+), magnesium, ferro-niobium, germanium, borates and gallium, the EU (opens in a new tab) remains vulnerable to the unfolding rare earths supply chain and refining dominated by China. In most cases,production within the EU is small and mostly involves processing andmuch less mining or extraction. Also, imports are often concentrated in one or two partners, which makes the EU vulnerable to supply disruptions in critical technology sectors.

Recently Eurostat (opens in a new tab), a Directorate-General of the European Commission located in the Kirchberg quarter of Luxembourg City, Luxembourg tasked with the production of high quality statistics, the group recently found the following:

• EU imports of critical raw materials increased between 2019 and 2022, except for borates
• In the case of magnesium, ferro-niobium, borates and gallium, the main partner accounts for more than 80 % of total extra-EU imports
• The import prices of almost all the products analyzed increased in 2022.

Indispensable for a wide set of strategic sectors including the net zero industry (opens in a new tab), the digital industry, aerospace, and of course importantly, defense, raw materials are and stand at the very beginning of each value chain. Amongst the non-energy, non-agricultural raw materials that are assessed by the European Commission (opens in a new tab), some are defined as critical based on objective criteria, including their economic importance and their supply risk. 

Below the depiction demonstrates the flow of critical raw materials and associated supply risk for Europe.

See the link (opens in a new tab) for a deeper dive into European rare earth element supply, demand, and related information.