European governments are racing to rearm their militaries as they face up to a more aggressive Russia and an increasingly isolationist America. But that push must overcome a formidable roadblock in the shape of China’s restrictions on critical minerals.
China dominates the market for rare earth metals and permanent magnets, which are used in the production of missiles, jets, drones and a vast array of military hardware. Beijing has wielded this leverage in its trade wars with Washington and Brussels, tightening or loosening export controls on rare earths in negotiations over tariffs and other trade barriers.
The drama has spurred a flurry of action in Europe, with Ursula von der Leyen, the president of the European Commission, the E.U.’s executive arm, urging the bloc to “strive for its independence” on the critical minerals. But in the meantime, European trade officials have been frantically engaging with their Chinese counterparts to try to secure the bloc’s supply.
On Wednesday, ambassadors from across the 27 E.U. nations were told that China appeared to be willing to negotiate so-called general licenses to streamline rare earth exports to Europe. But there was no guarantee that such a solution would come quickly — or last for long. The bloc is focused on finding alternative supply options, said two diplomats briefed on the discussions, who asked for anonymity to discuss internal deliberations.
In the short term, the goal in the negotiations is to “provide more certainty to European industry,” said Olof Gill, a spokesman for the European Commission. “Engagement continues.”
Yet the twists and turns have made it clear to European leaders just how much their military buildup hinges on an increasingly unreliable relationship with China.
“Everything hangs on this,” said Joris Teer, a researcher at the EU Institute for Security Studies, the European Union’s think tank for security policy. Without a flow of critical minerals, he said, “there is no rearmament.”
After President Trump announced sweeping tariffs in April, Beijing quickly responded by limiting the export of seven rare earth elements and magnets for the entire world. It threatened to widen that list last month, before Mr. Trump and Xi Jinping, China’s top leader, agreed at a summit last week to delay that escalation by a year.
But the April restrictions remain in place for European buyers — and for all of the E.U.’s talk of diversification, Beijing has Brussels in a bind.
About 98 percent of the European Union’s imports of key rare earths come from China, making it even more dependent than the United States, which imports 80 percent of those rare earths from China. Although rare earths are found throughout the world, they are very difficult to extract and refine.
The European Union has been working to fix that dependency, and it passed an act meant to create a homegrown industry that took effect in 2024. Still, replacing China’s mining and refining capacity is no quick and easy endeavor.
Analysts at the consulting firm SFA Oxford recently predicted in a research note that “full diversification” from China would take eight to 12 years, given how long it takes to develop mines, construct refineries, expand manufacturing and work into the NATO supply chain.
And when it comes to the defense industry, Europe doesn’t have that kind of time.
European nations are scrambling to raise their spending on defense sharply as they try to develop key capabilities by 2030. To that end, the European Union has loosened budget rules and rolled out a 150 billion euro ($172 billion) loan program to help fuel military outlays.
A lack of access to critical minerals could disrupt that initiative, tilt the scales of geopolitics and shape Europe’s future.
“Autonomy in defense begins with autonomy in materials,” said Daniel Fiott, the head of a defense and statecraft program at Vrije Universiteit Brussel, a university in Brussels.
Since October last year, rare earth exporters in China have been required to provide the authorities with detailed explanations of how shipments would be used in Western supply chains. The rules gave Chinese authorities a view of the kinds and quantities of rare earths that companies around the world needed. The move in April to restrict access caused shortages and sent prices for rare earths like dysprosium — used to make heat-resistant magnets — skyrocketing.
Rare earth minerals are key in F-35 fighter jets, drones, submarines, Tomahawk missiles, radar systems and other military technologies that are made in either the United States or the European Union, and which Europe has been planning to stockpile as part of its rearmament plans.
“The end game of China, here, is to slow down the advancement of the United States, and Europe by connection,” said Benedetta Girardi, an analyst at The Hague Centre for Strategic Studies, a think tank. “If it hits the security sector of one, it also hits the security sector of the other,” she said.
Maros Sefcovic, the European Union’s trade chief, has noted that since Beijing began requiring licenses to export rare earths, only about half of the 2,000 applied for by E.U. entities have been “properly addressed.”
Even though China has rolled back its most recent threat of stricter controls, the fact that it has threatened broad restrictions could serve as a warning shot.
“I’m still concerned,” said Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, a think tank. “Even a pause in restrictions leaves us precarious.”
She said that Europe, the United States and their allies are not yet at the point where they can quickly replace the dysprosium in drone motors, for instance. The world also has no real alternative to China’s supply of samarium, a rare earth mineral crucial for magnets that can withstand high temperatures in advanced military gear.
Yet even as the risks of China’s rare earth dominance become clear, Europe is struggling to turn anxiety into action.
The United States is moving fast to ramp up investment in rare earth production: The Department of Defense has bought a $400 million stake in a rare earth company called MP Materials, and this week announced hundreds of millions of dollars in loans and potential stakes in Vulcan Elements and ReElement Technologies, which are partnering to make magnets from recycled rare earth minerals.
In Europe, companies in the rare earth business are not sure if Europe’s push to encourage a local supply chain — which involves joint procurement, access to finance and speeding up permitting — will suffice in a timely manner.
That is why diplomacy is likely to be the main, and perhaps only, hope in the short term.
“The Chinese are attempting to pull the rug from underneath the entire rearmament” push in Europe, said Mr. Teer of the EU Institute for Security Studies. “It’s not something that, as a defense official or an industry, you want to say out loud.”
Jeanna Smialek is the Brussels bureau chief for The Times.
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