As the EU hopes to resolve a trade dispute with China over critical raw materials - such as lithium, cobalt, nickel and other rare earths - it is already looking at ways to diversify its supplies and boost its own mining and production. Which EU member states are in the spotlight?
The European Union is trying to resolve a trade dispute with China over controls on the export of rare earths. At the same time, the Union is seeking to reduce its dependence on valuable materials from the East Asian economic powerhouse, writes in an article on the topic the European Newsroom, a platform for cooperation between the agencies of 23 European countries, including BTA.
But while the EU is still struggling to respond to China's restrictions, the United States has made progress in its negotiations with Beijing.
On Thursday, US President Donald Trump said he had reached an agreement with Chinese President Xi Jinping over the dispute over controls on the export of rare earth elements from China. However, it is not yet clear what impact this deal will have - if any - on the negotiations between the EU and China.
A European Commission spokesman said on Thursday in Brussels: "In principle, we welcome any development that removes barriers to global trade flows". He added, however, that "the EU is fully focused on its own bilateral trade relations with China, including rare earth minerals" and confirmed that high-level technical discussions will be held in Brussels today (October 31, 2025).
Earlier this month, China announced new restrictions on the export of rare earth elements, a key component for the production of magnets used in the automotive, electronics and defense industries. The crisis erupted after the Netherlands decided to place Chinese chipmaker "Nexperia" under surveillance and remove its Chinese CEO. Beijing responded by banning re-exports to Europe.
The crisis prompted European Commission President Ursula von der Leyen to advocate on Saturday for a package of measures to rapidly reduce Europe's dependence on raw material imports from China.
The EU said the restrictions had forced some companies in the bloc to halt production and had caused economic damage. The export restrictions recently announced by the Chinese government threaten the stability of global supply chains, so European companies can expect direct consequences, von der Leyen said.
"In the short term, we are focused on finding solutions with our Chinese partners, but we are ready to use all the tools at our disposal to react if necessary," she said.
Why is the EU so dependent on China for rare earth elements?
Europe is heavily dependent on imports of critical raw materials from China, which are considered key to the transition to zero-emission energy and a green transformation, experts told the Czech news agency CTK.
These include rare earth elements, lithium, cobalt, nickel, but also solar panels. The dependency also extends to batteries or semiconductors, they said.
China dominates the world’s production and processing of rare earths. These minerals and the magnets made from them are used in key technologies such as smartphones, televisions, electric motors, semiconductors and turbines.
Although rare earths are abundant in China, extracting them is expensive and environmentally damaging, requiring significant amounts of water and energy. The large reserves give China a near-monopoly on the global market, although Brazil, India and Australia also produce rare earths.
According to Dominika Remžová of the Association for International Affairs, a non-governmental organization based in Prague, the greatest risk is associated with the processing or refining phase. Rare earths needed for wind turbines and lithium for batteries are particularly affected. Although Europe has its own reserves, it does not have the processing capacity that China has been systematically building for decades.
"Most of these dependencies threaten European industry, especially in the automotive sector, energy and renewable energy, or the chemical and pharmaceutical industries," said Zuzana Krulicova of the Institute for International Studies at the Faculty of Social Sciences at Charles University in Prague.
The EU recognises these dependencies and has therefore adopted the Critical Raw Materials Act, which aims to ensure reliable and sustainable supply by strengthening the EU's own value chain for these materials. However, Remzová warned that demand is growing faster than Europe can reduce its dependency.
The EU's path to independence
According to Volker Trayer, head of foreign trade at the German Chamber of Commerce and Industry (DIHK), the EU must engage with China on its own on rare earths. "The EU must start negotiations with the Chinese on its own. "Moving in the shadow of the US is not a sustainable strategy for Germany and Europe," he told radio station RBB in Berlin.
"Whether it's energy or raw materials, defence or digital, Europe must strive for independence and now is the time to do it," said Commission President von der Leyen on Saturday. Investment in strategic projects for the production and processing of important raw materials in the European Union will be increased, and partnerships with countries such as Ukraine, Australia, Canada, Kazakhstan, Uzbekistan, Chile and Greenland will be accelerated, the European Commission chief said.
Earlier this year, the Commission selected 47 "strategic projects" to secure and diversify access to raw materials in the European Union. The projects are located in 13 EU member states: Belgium, France, Italy, Germany, Spain, Estonia, the Czech Republic, Greece, Sweden, Finland, Portugal, Poland and Romania.
Within the EU, Spain is one of the most resource-rich territories in terms of critical raw materials. It supplies almost a third (31 percent) of the world’s strontium supply and mines and processes other elements such as tungsten, wolframite and feldspar, according to the European Commission.
Spanish companies have not reported any potential supply shortages or risks to their production due to China’s restrictions on rare earths and other raw materials, although, like the rest of the EU, they depend on Beijing for most of their supplies.
Neighboring Portugal is also seeking to position itself as a strategic partner within the European Union in the energy transition and the security of critical raw materials supply chains. Although the country has significant lithium reserves and potential for mining other minerals, such as tantalum and tungsten, it currently does not have a significant production of rare earth elements and therefore remains heavily dependent on imports, mainly from China.
The Portuguese government has expressed its support for the EU's Critical Raw Materials Act and has shown interest in attracting European investment for sustainable exploration and local processing of resources in order to reduce external dependence and generate economic value in the country.
In the Czech Republic, the EC has also listed the lithium mine in Činovec in the Ore Mountains. According to Zuzana Kruličová, the mine could play a role in the EU's path to independence, as it is the largest deposit in Europe, she added.
"This is a significant opportunity for the Czech Republic across the entire supply chain. "However, there are also risks, for example for the environment, associated with the project, and at the same time the deposit will cover only a part of the future needs within the EU," Krulichova added.
The European Commission is creating a common platform for purchasing and storing critical raw materials, similar to the model adopted for energy - the so-called REsourceEU program. Details are expected to be presented in November.