Ahead of Beijing summit, EU seeks to slash rare earth reliance on China

EU imports nearly all rare earths from China; experts warn of 'blackmail' risk as bloc faces pressure from Trump tariffs, Beijing's grip ahead of high-stakes EU-China summit

The European Union is under increasing pressure to reduce its dependence on China for rare earth elements, as tensions rise ahead of the upcoming EU-China summit. Lawmakers warn that Europe is vulnerable to geopolitical and trade pressures due to its near-total reliance on Chinese supplies, the South China Morning Post reported. 

The report quoted Bart Groothuis, a Member of the European Parliament representing the Renew Europe group, as saying that Europe is facing pressure on two fronts — from Trump’s tariffs and, more critically, from China’s strategic grip on rare earth. This is not just a side effect of the US-China conflict, but rather a deliberate move aimed at Europe, Groothuis said.

 

EU’s dependence and diversification challenges

According to EU data, the bloc imports all of its rare earths and 97 per cent of its magnesium from China. Renew Europe has urged the EU to diversify its sources, warning that the current dependence exposes Europe to “blackmail”, the news report said.

Analysts acknowledge the concern but say a shift away from China will take time, the news report said.

 

Recycling efforts and long-term strategies

One effort to build self-sufficiency is a rare earth recycling plant being set up in Lacq, France, by Carester founder Frederic Carencotte. The facility, expected to start operations by 2026, aims to produce 700 tonnes annually — far short of the 12,900 tonnes imported in 2024. 

Belgium-based Solvay also processes rare earths in France but depends on its Chinese site in Liyang. Meanwhile, trade deals for alternative sources, such as with South America’s Mercosur bloc, are slow to finalise, the South China Morning Post reported. 

Chinese Foreign Minister Wang Yi recently said that rare earth exports have not been a problem in China-EU ties and introduced a fast-track channel for European companies. Yet, experts believe full independence from China is unlikely. “We can reduce dependence, but we cannot get around it entirely,” Goerg said.

 

China threatens retaliation over Trump’s tariff move

On Tuesday, China issued a warning to the Trump administration against reviving trade tensions by reinstating tariffs on Chinese goods next month. Beijing also threatened to retaliate against countries that enter supply chain deals with the United States aimed at sidelining China, news agency Reuters reported. 

In June, Washington and Beijing reached a trade framework that restored a fragile truce. However, with key details still unclear, investors and traders remain cautious about whether the agreement will hold or collapse into renewed conflict. 

On Monday, US President Donald Trump began notifying trade partners about steep US tariffs that will take effect from August 1. This follows his earlier decision to delay most of the duties announced in April, offering countries time to negotiate new deals with the US. 

China, which was targeted with tariffs over 100 per cent in earlier rounds, has until August 12 to reach a settlement with the White House. Failure to do so could lead to the reinstatement of previously suspended import restrictions. 

 

  India to boost rare-earth magnet production

Meanwhile, India is preparing to launch an incentive programme worth up to ₹25 billion to encourage domestic production of rare-earth magnets, vital for electric vehicles and wind turbines, Bloomberg reported. 

The Vedanta Group, JSW Group, and Sona BLW Precision Forgings Ltd are among companies expressing early interest. The policy is expected to be submitted for cabinet approval soon.