Europe’s defence ambition in the 2020s has often been framed as a matter of military hardware, joint procurement and interoperability.

But a far subtler—and far more existential—vulnerability now lies in the raw materials that underpin modern weapons: rare earths. The sudden, deliberate tightening of Chinese export controls confirms what many had quietly feared: in the new age of strategic competition, supply chains are arms too.

Earlier this year, Beijing extended export licensing requirements on several rare earth elements and related technologies, citing national security concerns. These controls are not a collateral side-effect of tariff disputes. They represent the calculated escalation of resource dominance into a geopolitical weapon. Europe’s defence industry, reliant on imported permanent magnet materials and rare earth oxides, has found itself acutely exposed to authoritarian leverage.

It is now well documented that Europe depends on China for the lion’s share of refining capacity. While Europe may possess raw deposits, the processing chain—the step that converts ore into magnet materials or speciality alloys—is almost entirely offshored to China. In many cases, European firms import finished magnet components or intermediate products that use rare earths such as neodymium, dysprosium or praseodymium.

That dependence became a liability when Beijing moved to restrict exports, deliberately targeting defence chains. The result: European defence firms now face supply uncertainty, rising costs, and the risk of production delays or blackouts in defence R&D pipelines. In short, Europe is rearming on fragile foundations.

Worse still, the choke point lies further downstream—not in simple raw ore shipments, but in midstream processing and magnet manufacture. An academic study published this year confirms that the greatest trade risks lie precisely in the “intermediate” node products—components that Europe cannot yet replicate at scale. Thus even if Europe sources raw ore from elsewhere, unless it rebuilds its processing capacity, the strategic vulnerability remains.

For Brussels, the defence of “strategic autonomy” has become mantra. Yet autonomy means little when your defence complexes depend on the goodwill of an external power over which you have no leverage. The very logic of sovereignty crumbles when geopolitical coercion can sever your access to magnets, alloys or oxide materials critical to missiles, guidance systems, UAVs or radar.

From a political standpoint, the EU now faces this imperative: can it mobilise industry, capital and regulation to reforge a rare earth–secure defence base? Or will rhetoric outpace reality, leaving Europe dangling on China’s supply leash?

Brussels has already offered part of a response via its Critical Raw Materials Act (enacted in 2024), which mandates that by 2030 a portion of EU consumption must be processed and extracted inside Europe. Yet the ambition confronts multiple obstacles: environmental permitting delays, high capital costs, and the steep learning curve required to recreate industrial competences long lost.

Even more politically charged is the EU’s “anti-coercion instrument”—a trade defence tool that allows Brussels to retaliate (via surcharges, export restrictions or other measures) against economic aggression by third countries. But to use such a mechanism against China is a heavy decision—one with real risk of escalation, supply retaliation and economic fallout.

The scale and pace of the challenge

Rebuilding a rare earth–resilient industry is no incremental task. It is akin to launching a new postwar industrial revolution. It requires:

• Investment in processing facilities on par with Chinese capacity,

• Incentives and subsidies to offset cost disadvantages,

• Streamlined permitting and environmental regulation,

• A skilled workforce in metallurgy, chemistry and advanced materials, and

• Seamless cooperation among EU member states, defence ministries, industry and financing institutions.

In parallel, Brussels must secure long-term partnerships with democratic producers—Australia, Canada and countries in Africa or Latin America—that hold rare earth deposits. But partnerships alone are insufficient: Europe must also ascend the value chain, from ore to finished magnet, to regain sovereignty over critical nodes.

This is already beginning in some quarters. The EU has backed a new permanent magnet plant in Narva, Estonia, with funding of some €14.5 million—an effort to localise part of the assembly chain. In France, chemical giant Solvay is expanding its production at La Rochelle to supply rare earth oxides for European firms. These moves are encouraging—but they amount to early, cautious steps. The real test is whether Europe can scale 10x, 20x, or 50x from these nascent nodes.

Geopolitical tit for tat, or strategic recalibration?

China’s actions reflect decades of deliberate capacity building. The government invested heavily in refining, downstream processing and magnet manufacturing, along with coordinated industrial policies. It now uses licensing restrictions selectively—refusing export permission for defence-linked applications, while allowing commercial exports to maintain plausible deniability.

In response, Europe must adopt countermeasures that go beyond lip service. Brussels should:

1. Use the anti-coercion tool if required — making clear that weaponising supply chains invites consequences.

2. Prioritise funding guarantees for defence firms that commit to Europe-based rare earth sourcing.

3. Accelerate critical raw materials projects by streamlining permit regimes and reducing bureaucratic friction.

4. Coordinate procurement mandates to condition Defence Agency and member state contracts on supply chain resilience.

5. Forge transatlantic and allied cooperation on rare earth security, including shared stockpiling and joint investment.

In effect, Europe must behave not merely as an economic union but as a strategic bloc.

An epochal test for European defence

The coming years will reveal whether Europe’s rearmament is built on substance or illusion. A high-tech missile is no better than the magnets that steer it—or the rare earth oxides that enable its sensors. If China imposes another round of restrictions, or denies licensing to European firms, whole segments of defence innovation could stall.

This is not distant or hypothetical: in a world where AI-guided munitions, hypersonics, directed energy and advanced sensors are central, control over rare earth value chains is as strategic as heavy industry once was in the early 20th century.

Europe’s leaders must treat this moment like a strategic inflection point. They must cultivate ambition equal to the challenge, match words with investment, and accept that sovereignty today is as much about elements and alloys as it is about borders and treaties.

If Europe fails to grapple with this dependency, its hopes of strategic autonomy will rest upon a brittle supply chain—and that is the surest way to become dependent in new and insidious dimensions.