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The European Union is looking to expand its rare earths production to help fuel an accelerated green transition, as the demand from countries in the bloc continues to grow in line with the deployment of more renewable energy capacity. Ramping up production would also help the EU reduce its reliance on China, the current global market leader in rare earths. Norway is leading the region in rare earth production, as other EU countries begin to invest in new production operations.
Several rare earth elements, alongside critical minerals, are needed to produce a wide range of renewable energy equipment, including wind turbines, solar panels, and electric vehicles (EVs), as well as the magnets used in artificial intelligence (AI) hardware and other electronics. At present, Europe relies heavily on imported minerals to meet its demand. China dominates the global rare earths supply chain, producing around 95 percent of the world’s rare-earth oxides and supplying 70 percent of Europe’s imports.
The EU’s domestic rare-earth production is almost non-existent at present. Therefore, China provides around 98 percent of Europe’s rare-earth magnet demand, as well as similar proportions of magnesium, gallium, and germanium, used in semiconductors and defence technologies. This year, China made export licenses stricter, reducing magnet exports by around 75 percent, leading automakers across Europe to halt production. This demonstrates the heavy reliance the EU has on China for rare earth imports.
Europe recently introduced the EU Critical Raw Materials Act, aimed at reducing reliance on foreign supply chains for extraction, processing, and recycling rare earths. In December, the EU also introduced an Economic Security Doctrine, with the aim of making Europe’s industry more self-sufficient. The strategy includes a plan for critical raw materials, entitled ResourceEU.
As the EU looks to expand its rare earths production capacity, several countries are investing in operations. The Belgian-French firm Solvay, which has been processing all 17 rare earths in its plant on France’s west coast for around 80 years, plans to expand its facility to respond to the growing demand. The French government is investing around $23 million in tax credits to support the expansion.
“This is a market that is growing fast, and, also, there is a greater demand for shorter supply chains,” said Solvay’s CEO Philippe Kehren. “When you have a material that is coming almost 100 percent from one specific location, if you are dependent on this, you want to diversify your sourcing. This is what we can offer,” explained Kehren.
Solvay’s facility is one of only two facilities in Europe that process rare earths, alongside another plant in Estonia. Until now, Solvay has processed rare earths for catalytic converters. However, as the demand for magnets across several of Europe’s rapidly expanding industries grows, the investment in the facility will help meet this demand.
Solvay plans to focus on recycling rare earths that are already in Europe and expects to be able to produce around 30 percent of the rare earths needed in the region solely from recycling end-of-life motors and other equipment. However, eventually it is expected to need to source the rare earths from mineral-rich regions of the world, such as Brazil, Canada, and Australia, as there are currently no operational rare earth mines in Europe.
In Norway, Rare Earths Norway is supporting the ResourceEU strategy with a new project in the south of the country. In June 2024, the company announced the discovery of Europe’s largest known rare earths deposit, giving hope for potential self-sufficiency. It’s Fen Carbonatite Complex is thought to hold 8.8 million metric tonnes of total rare earth oxides, and around 1.5 million tonnes of these are thought to contain the most vital magnet-related rare earths.
The company is currently pursuing approval for development and hopes to deliver its first rare earths by the first half of the 2030s. The firm has also appealed to domestic and EU policymakers to consider fast-track permitting. Rare Earths Norway aims to extract the resources using an “invisible mine” technique, which requires the drilling of a long, narrow tunnel diagonally underneath the village of Ulefoss and refilling extracted voids with waste materials, to reduce the environmental impact.
Meanwhile, in Sweden, the state-owned mining firm LKAB is developing its own rare earths project in the Arctic Circle in the city of Kiruna. In January 2023, the firm announced that it had discovered what it thought to be Europe’s largest known deposit of rare earths, close to the world’s largest underground iron ore mine. LKAB plans to move thousands of residents to a newly developed city centre to expand its conventional mining operations, so long as the expansion of the mine is deemed economically viable.
The recent discovery of rare earth deposits in Norway and Sweden offers hope to Europe, which aims to become more self-sufficient in rare earths mining and processing and reduce reliance on foreign powers such as China. The expansion of a processing facility in France will help quickly alleviate the supply-demand gap while the Nordic facilities are being developed, although the EU will also likely need to invest in mining operations in other parts of the world to boost its supply.
