In a squat warehouse not far from the Atlantic shoreline in La Rochelle, France, sits a cluster of giant metal tanks topped by gently whirring motors.
They are a gamble on the future of European industry.
Since April, the tanks have been purifying two rare earth minerals: a hot pink solution called neodymium and lime-green praseodymium. Both are turned into powder and then sold for use in permanent magnets — crucial materials in producing modern cars, wind turbines and military equipment.
For now, the quantities being produced are experimental and tiny. Solvay, the Belgium-based company that owns the plant, will increase production only if it can find customers. “We are just here signaling that we are available to Europe,” said Philippe Kehren, Solvay’s chief executive officer.
The company is an example of an unfolding trend. Europe is trying to get back into the rare earths business, but the barriers are towering, and whether it will succeed is uncertain.
Rare earth minerals are critical components to advanced technologies in industries including energy and transportation. Magnets made with rare earths are particularly powerful and resistant to heat, making them useful in small electric motors and other applications. Most of these 17 important elements — difficult and often dirty to mine and refine at scale — come from China, which has spent decades becoming the dominant producer.
Europe once had a substantial rare earth industry. The plant in La Rochelle, in operation since 1948, has long focused on the minerals. But in the 1980s and ’90s, Europe outsourced much of the pollution-heavy production to China.
Now, European policymakers have become painfully aware that Beijing has the continent in a chokehold.
In recent weeks, China has curbed global access to rare earths and to the permanent magnets they go into, part of its response to American tariffs and other global trade tensions. The limits have left European producers scrambling. While Europe was already working to shore up its supply of critical raw materials, some experts think the disruption could be the kick the continent needs to start diversifying in earnest.
Doing so is no easy task.
China has the technical knowledge, work force and scale to mine rare earths efficiently, and it has laxer environmental regulations. The combination makes it difficult if not impossible for European companies to rival Asian producers on cost.
“Europe understood that mining is a dirty business, so they outsourced it elsewhere,” said Alena Kudzko, a policy director at Globsec, a European research group. “And it became this snowball effect,” she added. “We made a choice decades ago, and now it would be very hard to reverse.”
Europe is even more dependent on China for the minerals than the United States is. About 98 percent of the bloc’s rare earth imports come from China, versus 80 percent for America.
“We are lagging behind — we are lagging behind China, we’re lagging behind the United States — in reviving our mining sector,” said Hildegard Bentele, a member of the European Parliament from Germany.
Policymakers have worried for years that China might weaponize its rare earth dominance. In 2010, China halted shipments to Japan for two months amid a diplomatic standoff, and in 2012, it placed broad export controls on rare earths.
Given that, China’s trading partners have been working to reduce their dependencies.
In 2023, the European Union passed a law meant to help secure its future supply of critical raw materials. The bloc has announced dozens of projects as part of the plan, with an eye on mining and refining cobalt, copper, lithium and rare earths.
But Ms. Bentele, who helped to shepherd the raw materials act into law, said that while the recent response was fast by European standards, “of course, that’s not enough.”
Part of the problem, she pointed out, is that for European production to work, companies would need to decide that having a reliable, nearby supplier was more important than minimizing costs.
“If you, as a company, go with the risky partner, then you run the risk,” she noted.
It’s not clear that businesses will make the higher-cost choice. That’s why Solvay has invested only a few million dollars to churn out rare earths in small amounts. If there is enough demand from car manufacturers and others, the company could supply up to 30 percent of Europe’s needs. But that would require sinking 100 million euros, about $117 million, into scaling up production.
“If we don’t have many buyers, we’re not going to invest,” Mr. Kehren said.
The current disruption could be a boon for the company if it speeds up Europe’s diversification. Some industry experts think that China’s latest rare earth restrictions could be the spur for European businesses to speed up diversification.
Since early April, China has required foreign customers to have export licenses to buy rare earth minerals. But officials have been slow to process the licenses, which has created the potential for widespread shortages.
The European Association of Automotive Suppliers said that only about half of export license requests had been approved as of late June, an improvement from earlier in the month but still enough to disrupt industry and leave executives scrambling.
On the license applications, Chinese trade officials have also asked for details that many European companies see as sensitive business information, said Luisa Santos, deputy director general at the lobby group BusinessEurope.
And though China’s Ministry of Commerce said in May that a channel had been established to expedite rare earth licenses for E.U. companies, delays have persisted.
“We’re all very conscious of the problem,” Ms. Santos said of the rare earth dependency. “We have had a system that was based on efficiency, cost cutting, but now that’s changing.”
The European Union has been approving projects to try to jump-start rare earth supply in the bloc, and government support could help companies to at least start production. Solvay has already locked down support from France and is in talks with the wider bloc to find funding for any potential expansion.
Ursula von der Leyen, president of the European Commission, recently took a permanent magnet made at a new factory in Estonia to show to her colleagues at the Group of 7 meeting in Canada.
“China is using this quasi monopoly not only as a bargaining chip, but also weaponizing it to undermine competitors in key industries,” she said. “Even if there are signals that China may loosen its restrictions, the threat remains.”
Europe is not looking to build a wholly homegrown industry. While the bloc is exploring mining and refining capacity within its own borders, it is also looking to secure supply from countries other than China. The point is to diversify.
Nor are European policymakers and firms bent on getting their rare earths from the ground. The bloc is also trying to recycle rare earths, which would pollute less. Under the critical raw materials act, the goal is to have 10 percent of Europe’s raw material needs mined, 25 percent recycled and 40 percent processed in Europe by 2030.
Because rebuilding a supply chain will take time, the problem in the near term is diplomatic. European officials are pushing China to improve access to rare earths, and the topic is expected to come up at a summit between Brussels and Beijing in late July.
For companies like Solvay, the question is whether today’s problems will remain in focus if the supply complications ease in the coming months and the need to source locally fades.
“At the C.E.O. level, yes, it’s strategic, but then, when the procurement teams come in, it’s still about price,” said Nils Poel, head of market affairs at the European Association of Automotive Suppliers.
But, he noted, that could be starting to change. “There’s a little more willingness, now, to pay a premium.”
Jeanna Smialek is the Brussels bureau chief for The Times.
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