From chips to turbines: Europe depends on these critical rare earth materials 

Europe’s race towards net zero and digital leadership depend on materials it does not control. Lithium, cobalt, nickel, copper and rare earth elements are the invisible foundations of wind turbines, solar panels, electric vehicles (EVs) and the magnets used in AI hardware. Demand for these minerals is rising faster than most policymakers realize. According to the International Energy Agency (IEA), clean energy technologies could increase four to six-fold by 2040. Each electric car requires about 200kg of minerals, six times more than a conventional vehicle.

This creates a paradox at the heart of Europe’s transition. To reach its 2030 goals — 69 % renewable electricity, 510 GW of wind capacity and 18 million European-made electric vehicles — the continent relies heavily on imported minerals.

China dominates almost every link in this chain: it produces about 95 % of the world’s rare-earth oxides and supplies 70 % of Europe’s imports.

The EU has virtually no domestic rare-earth production. It sources 98% of its rare-earth magnet demand from Chinese suppliers. Similar dependencies exist for magnesium, gallium and germanium — metals vital for semiconductors and defence technologies. When Beijing tightened export licences in 2025, magnet exports fell by three-quarters and several European carmakers were forced to halt production. For decades, Europe treated raw materials as a commodity issue, rather than a strategic one. That complacency is becoming costly. The European Central Bank estimates that more than four-fifths of Europe’s large companies are within three supply chain steps of a Chinese rare earth producer. This concentrated dependency means that firms sourcing components through intermediaries are still exposed to Chinese inputs and, therefore, to political risk.

What is at stake is climate targets and economic resilience. Shortages of rare earths, gallium or germanium could slow semiconductor fabrication, AI development and even wind-power installation. In short, Europe cannot build a green or digital future on supply chains it doesn’t control.

Clean-energy technologies are mineral-hungry. Hitting the EU’s target of 18 million domestically produced EVs and 510 GW of wind capacity by 2030 requires vast quantities of lithium, nickel, cobalt, manganese and rare earths. Each megawatt of offshore wind needs about 15 tons of minerals. Without secure access to these resources, Europe risks falling short of its climate goals and industrial ambitions.

Europe’s own extraction and processing remain limited. Even if all announced mining projects move ahead, according to Eurometaux estimates, they would raise European output by only around 9% for copper and nickel and 2% for cobalt by 2030 — helpful but far from sufficient. Recycling could fill part of the gap, yet recovery rates for rare earths are still below 1%. Ultimately, the continent’s clean-tech expansion is still built on imported materials.

The dependence is particularly acute in the digital economy. Rare earths are essential for the magnets used in motors and generators, while gallium and germanium underpin high-speed chips and fibre-optic networks. Meanwhile, constraints on semiconductor metals would slow progress in artificial intelligence, quantum computing and defence technologies.

There are, however, new opportunities. In Norway, the Fen Complex near Oslo — Europe’s largest known rare-earth deposit, discovered in June 2024 — contains an estimated 8.8 million tons of rare-earth oxides, including around 1.5 million tons of magnet-grade material. The European Raw Materials Alliance has also identified €1.7 billion in potential investments to support extraction, refining and magnet production, aiming to cover 20% of EU needs by 2030. These are encouraging signals, but they require accelerated permitting and coordinated financing to materialize.

The CRMA sets targets for domestic extraction (at least 10% of EU demand), processing (40%) and recycling (25%) and caps dependence on a single third country at 65%. To reach them, Europe must streamline approvals for strategic projects, clarify regulatory timelines and mobilize public/private partnerships that balance investment and environmental safeguards.

Bilateral supply agreements with resource-rich 'democracies' (not any country), such as Australia, Canada, Namibia and Indonesia, can secure alternative sources, while embedding environmental and social standards. Strategic reserves of rare earths, gallium and germanium would cushion short-term shocks and promising domestic projects like Norway’s Fen deposit should be fast-tracked.

Designing products for disassembly, prohibiting the export of critical metal scrap and scaling up recycling facilities across Europe are the fastest ways to ease pressure on primary supply. Investment in researching alternative materials, such as ferrite magnets, switched reluctance motors and sodium-ion or solid-state batteries, could also reduce reliance on rare earths.

Companies should secure long-term contracts with diversified suppliers, co-invest in European processing capacity and redesign products to use fewer critical materials. Joining EU-funded industrial alliances, such as the European Raw Materials Alliance, gives firms access to financing and policy influence. Digital traceability systems and AI-enabled supply chain mapping can help companies strengthen compliance with emerging sustainability regulations.

This includes avoiding persistent high deficits directed towards non-productive sectors and ensuring tax systems do not penalize productive economic activities, particularly those linked to innovation and industrial development. Clear, predictable and business-friendly fiscal and regulatory frameworks will encourage private investment in extraction, processing and recycling capacities. Aligning industrial policy with market incentives will be essential to mobilize capital, reduce dependency and foster long-term economic resilience.

Europe’s path to climate neutrality and digital leadership will falter unless it addresses its critical mineral dependency head-on. The CRMA is a good start, but it needs momentum: diversification of supply, development of domestic resources and a genuine circular economy scale-up. With coordinated action, such as recycling, innovation, partnerships and better risk management, in addition to political stability, Europe can reduce its exposure to geopolitical risks, strengthen its economic resilience and build a more technologically sovereign future.