Europe’s Rare Earth Dependence on China: Future Perspectives (December 2014)

In view of the EU 2020 energy targets and the indispensability of rare earths for the ICT and clean technology sector, European demand for rare earths will likely continue to increase progressively in the years to come. Whilst Europe has made considerable efforts to decrease its dependence on China’s rare earths by investing in domestic primary production and R&D of substitutes and recycling, it is today still fully dependent on external supply, mostly from China. Aiming at providing an analysis of the status quo and recent trends of Europe’s dependence on China’s rare earths, the briefing paper assesses developments on both the supply and demand side of the Sino-European rare earth market. After explaining China’s quasi-monopoly, Europe’s ICT and clean technology dependence on rare earths and the evolution of Chinese rare earth policies, it examines potential implications of the March 2014 WTO decision for China’s rare earths supply equation. The paper then analyses Europe’s efforts to increase and diversify its primary supply and to decrease its demand for rare earths. It makes use of interviews with European and Chinese rare earth policy and industry experts and concludes by sketching future scenarios for the Sino-European rare earths trade and Europe’s supply security.