Estimated time of reading: ~ 5 minutes

The concept of “rare earths” has become familiar to the general audience all over the world in the last few years, as geopolitics and industrial developments, especially those related to the digitalization process, introduced the importance of such materials for modern economies and their future growth. This is especially true for the EU, as European countries discovered how few resources they can rely on, at least as far as the continent’s subsoil is concerned. More specifically, as experienced since 2022, global political strains and armed conflicts—most notably the war in Ukraine—have exposed the European Union’s dependence on a narrow set of foreign nations for vital raw materials. Much like the over-reliance on Russian gas in the past, the same vulnerability now applies to so-called critical raw materials—many of which are already controlled by a few countries in the world, with China playing an essentially central role in this dynamic.

Still, recognizing the strategic risks, the EU is striving for greater autonomy by enhancing its internal production capacity and broadening its import sources, as critical raw materials are indispensable to several of its flagship initiatives, such as the European Green Deal, the transition to a digital economy, defense and security systems, and aerospace and cutting-edge innovation. Many of these projects have been developed and presented even before the EU’s need for critical raw materials became clear to many policymakers, but it was probably well known by industrial groups and firms. Any failure to secure access to this kind of resource could curb European plans or increase the costs of the green transition. Moreover, if the rare earth and permanent magnet value chains remain underdeveloped or move outside the EU, it could negatively impact the European economy as well as employment prospects. Critical raw materials are, in fact, vital for producing permanent magnets used in wind turbine generators and electric vehicle motors.

The first issue to face is the one about mines, which are already opened in various countries “friendly” to the EU, such as Australia, Canada, and the United States. However, the separation and refining of rare earth oxides remain concentrated in China, and there are very few indications of a potential change of this reality in the near future. Even if the supply of ores were to diversify, the refining industry is thus likely to remain relatively concentrated. Looking at the European map, mining projects are primarily located in Greenland and Sweden, where they are mostly under the control of Australian and Canadian companies. Unfortunately, according to analyses, these mines will provide less than 10% of the global rare earth supply in the future, even in a best-case scenario. Considerable resources may exist in other European regions, such as the Balkans (as in the case of lithium mines in Serbia), but these areas are relatively underexplored.

In this account, we should highlight projects such as the EURARE, funded by the European Commission, that promote further geological exploration and the establishment of a viable exploitation scheme. As stated on the website of EURARE, the main goal of the project was to set the basis for the development of a European REE industry that could safeguard the uninterrupted supply of these materials, “crucial for the EU economy industrial sectors, such as automotive, electronics, machinery, and chemicals,” in a “sustainable, economically viable, and environmentally friendly way.”

Written by: Francesco Marino