Wrobel warns Europe’s reliance on China for rare-earth processing risks its green transition and defence unless diversification and investment accelerate.
A working paper by economist Ralph M. Wrobel warns that Europe’s clean-energy, digital and defence transitions are exposed by China’s dominance of rare earths.
Wrobel highlights that China controls roughly 70% of rare earth mining and close to 90% of refining and separation capacity, especially for heavy rare earths such as dysprosium and terbium used in high-performance magnets. That processing chokepoint, he argues, gives Beijing leverage well beyond normal trade dynamics.
The paper uses policy-economic analysis and two case studies—the 2010 informal export curbs during the Senkaku dispute and restrictions in 2024–2025—to show how export limits can be used as geopolitical tools. Europe’s demand is rising quickly from wind turbines, EVs, electronics and rearmament, intensifying vulnerability.
The European Union’s Critical Raw Materials Act sets diversification and domestic-processing targets (including a 65% cap aim for single-country sourcing), and projects are underway in Sweden, Norway, Estonia and France. But implementation is slow, recycling is nascent, permitting and environmental costs are high, and substitution remains costly.
Wrobel concludes Europe needs faster deployment of processing capacity, deeper recycling and more flexible industrial policy to avoid long-term strategic dependence on Chinese-controlled supply chains.