Ending China's Rare Earths Dominance: A Call for European Action

Urgency to Diversify Rare Earth Supply Chains

As tensions escalate between the United States and China, the need for Europe to diversify its supply of rare earth elements has come to the forefront. Rafael Moreno, managing director of Viridis Mining and Minerals, has emphasized the urgency of ending China's dominance in this critical sector. His comments come as Donald Trump and China’s President Xi Jinping prepare for a summit, which could influence the future of rare earth exports.

Background on Rare Earths and China’s Role

Rare earths are essential materials used in various industries, including automotive, renewable energy, and military applications. Currently, China controls between 80% and 90% of the global supply of these materials, a situation that many industry leaders find alarming. Controls on rare earth exports were first implemented by China in April 2025, which had severe repercussions for auto industries across the EU, UK, US, and Japan.

Despite prior agreements between Trump and Xi to avoid stricter global restrictions, the landscape remains precarious. Moreno stated, “The market is nervous,” reflecting concerns within the industry as the summit approaches. Many hope the leaders will solidify a deal to extend the suspension of new restrictions.

Economic Implications for Europe

The economic stakes for Europe are high. The region currently faces an unsustainable deficit that amounts to €1 billion daily in transactions with China. This trade imbalance has driven EU trade commissioner Maroš Šefčovič to urgently seek effective strategies to mitigate the risks of a supply chain reliant on a single country.

The European Commission is prioritizing the diversification of supply chains and is actively engaging with companies like Viridis, which recently opened a demonstration plant in Brazil. This facility aims to process raw materials into more manageable forms, making it easier to integrate into European supply chains.

Strategic Partnerships and Future Prospects

Viridis Mining is eyeing a significant market share in the rare earth sector, targeting 5% of global demand by 2028. Moreno noted the importance of developing a domestic supply chain to support European manufacturers, stating that many original equipment manufacturers (OEMs) often opt for cheaper Chinese alternatives.

Current collaborations with companies like Solvay underscore a commitment to innovation in processing and refining these crucial materials. “What we’s started to design and build now is around 5% of the world’s rare earths market share,” Moreno explained, emphasizing the scale of their ambitions.

The Role of Political Summit Discussions

As the Trump-Xi meeting approaches, industry experts like Kurt Tong of the Asia Group project uncertainty regarding the outcome. He indicated that while a suspension agreement could potentially be delayed until November, particularly ahead of Trump’s expected visit to China for the APEC summit, the stakes remain high. The continued meetings of global political leaders on this issue reflect its strategic importance.

Conclusion: A Call to Action

The implications of a continued Chinese stranglehold on the rare earths supply chain are significant for Europe and the global market. As the EU navigates these geopolitical waters, the development of alternative sources and domestic processing capabilities, such as those championed by Viridis, will be crucial in ensuring that Europe can secure its manufacturing future without undue dependence on a single, dominant supplier. Without decisive action, the consequences could be dire for European industries reliant on these vital resources.