China’s Rare Earth Curbs Threaten Europe’s Defense, Economy: Experts
Udumbara
.
China’s latest rare earth export curbs could severely disrupt Europe’s defense and economic sectors, experts warn, with calls mounting for concrete EU-U.S. cooperation to counter Beijing’s control over these critical minerals.
Europe’s Defense Industry at Risk
Alicia García Herrero, chief economist for Asia Pacific at Natixis Research, warned the restrictions exploit Europe’s heavy dependence on China.She said “China is basically weaponizing its relations with Europe,” which is a move that may leave some European defense companies heavily affected.
“The five new ones they have now included are even more pervasive, especially for precision weaponry. This is important for Europe now, because Europe is starting to manufacture its own precision ammunition, and that hits the European defense plan directly,” Herrero told The Epoch Times.
According to China’s Ministry of Commerce (MOFCOM), the five additional rare earth elements are holmium, erbium, thulium, europium, ytterbium, bringing the total number of controlled rare earth elements to 12.
Echoing Herrero’s view, Nabeel Mancheri, a senior adviser at EIT RawMaterials, said Europe will likely have to contend with the immediate impact on producing critical defense components like semiconductors and chips, as the continent lacks alternative sources for refined rare earths. EIT RawMaterials is an EU-funded organization focused on critical materials.
“They’re taking different steps, like funding different projects and collaborating with third countries. This effort will bear fruit in a couple of years, maybe by 2030, but in the short term, Europe will struggle with how to solve this,“ Mancheri told The Epoch Times.
Gavin Harper, a critical materials research fellow at the University of Birmingham in the UK, identified military drones as a key strategic vulnerability for Europe’s defense autonomy, citing Beijing’s control over the rare earth magnets essential for their production.
Automotive, Renewables Sectors Face Disruption
But the impact extends beyond defense, as Enrique Dans, a professor of Innovation and Technology at IE Business School in Madrid, Spain, notes that the new controls leave Europe’s economy “substantially vulnerable,” with the true choke point being China’s dominance over the processing of rare earths into permanent magnets.“The permanent magnet production sits at the core of electric vehicles, wind turbines, and many industrial electronic systems. So the real disruption does not come from a lack of raw material, but mostly from a lack of refining and magnet production outside China,” Dans told The Epoch Times.
Dans predicted that the automotive and renewables industries could expect delays, cost increases, and temporary stoppages in the short term, highlighting a systemic risk to the Eurozone economy that stems from its reliance on Chinese facilities to refine these critical minerals.
“The European Central Bank has warned of the Eurozone exposure and documented production disruptions tied to sudden drops in magnet shipments. Definitely, it’s an impact that they will feel,” Dans said.
Harper worried that China’s controls on rare earth magnet exports “will prove problematic” to the supply chains of these industries as other sources of these components are limited and will take time to develop.
Transatlantic Cooperation Necessary
Amid these challenges, Danish Foreign Minister Lars Løkke Rasmussen called for a “tough response” from the EU, while noting that this is an area where the bloc shares a “common interest” with the United States.Shortly after, G7 finance ministers—a group comprising Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—agreed on Oct. 16 to coordinate their response to China’s latest rare earth export restrictions.
Regarding potential cooperation, Herrero said Europe could team up with Japan to mitigate the impact of China’s export controls, given that Japan has some rare earth refining capacity, but cautioned this may not be enough.
“Without the U.S., it will be difficult because both fear China’s reaction,” Herrero said.
Dans said EU-U.S. coordination is necessary but far from sufficient, noting that both sides must implement concrete actions in the coming months.
“Actions needed range from coordinating export licenses to unblock stock shipments, joint purchasing to improve bargaining power, and temporary price support to make any non-Chinese processing project doable. You need to make them bankable,” he said.
“The real test will be whether they can build refineries, recycling hubs, and long-term offtake contracts fast enough to counter Beijing’s leverage,” Dans said.
.
