'Brussels Is Playing Catch-Up on Rare Earths, and the Clock Is Running Out', Megan Khoo
When the European Union’s Critical Raw Materials Act (CRMA) entered into force in May 2024, it was heralded as a turning point. For the first time, Brussels had binding targets: extract at least 10% of strategic materials domestically, process 40% within EU borders, and ensure no single country supplies more than 65% of any critical input. Forty-seven strategic projects were green-lit, backed by €22.5 billion in projected investment. Europe, it seemed, had finally woken up.
Then came 2025. Beijing imposed export licensing requirements on seven heavy rare earths in April, tightened the screws to twelve by October, and introduced an extraordinary extraterritorial dimension: a rule requiring Chinese approval for any foreign-made product containing even trace amounts of Chinese rare-earth content. Rare-earth prices in importing countries hit six times Chinese domestic levels. European carmakers cut production. And by May 2026, President Trump was in Beijing, negotiating for restored mineral flows.
The CRMA did not prevent any of this. It couldn’t. Because the law was written for the wrong threat.
The Act was designed around supply disruption, including scenarios in which a mine floods, a shipping lane closes, or a single-source dependency becomes an accidental bottleneck. Its 65% single-country concentration cap is a sensible industrial-policy guardrail for that world. But China’s mineral strategy is not accidental. It is deliberate, decades-long, and explicitly militarised.
The numbers are almost difficult to absorb. China controls roughly 60% of global rare-earth mining. It refines over 90% of the world’s supply. It produces close to 90% of finished permanent magnets and the components without which there are no EV motors, no wind turbines, no precision-guided munitions, and, increasingly, no AI data centres. For Europe, the concentration at the decisive refining stage is effectively total: the European Court of Auditors found that 100% of processed rare earths and 97% of EU magnesium imports originate in China.
This is not a supply chain vulnerability waiting for a market correction. It is a strategically constructed chokehold, built over four decades through subsidies, regulatory arbitrage, and sheer scale. One estimate puts Chinese investment in critical minerals at roughly €49 billion between 2000 and 2021. The United States and Europe combined spent around €1.7 billion in the same period.
The CRMA’s blind spot is not technical. It is conceptual. The law treats China as a supply-concentration risk rather than as an active geopolitical threat that has already demonstrated its willingness to weaponise mineral access: against Japan in 2010, against the U.S. and EU throughout 2025, and against Japan again in early 2026 after Tokyo’s prime minister suggested Japanese forces might respond to a Taiwan contingency. The message embedded in each of those decisions was not about trade. It was about power.
The European Court of Auditors confirmed in February 2026 what many suspected: EU diversification efforts “are not producing results.” Financing bottlenecks, permitting delays, and administrative fragmentation mean that many of the 47 strategic projects are unlikely to deliver supply before 2030. Meanwhile, Germany, which in 2023 committed to cutting critical dependencies on China, has in two years deepened them in nearly every named category.
The CRMA’s 65% cap, in this context, is less a ceiling than a comfort. It creates the appearance of a redline while doing nothing to address the fact that China can restrict exports it has already delivered, license end-uses it dislikes, and, through its October 2025 “foreign direct product” rule, extend its regulatory reach into supply chains it no longer formally touches.
The legislative path is clear enough. At minimum, the CRMA should be updated to name China explicitly as a strategic dependency risk and require that concentration assessments account for demonstrated coercive intent, not merely statistical exposure. A country that has halted exports as an act of foreign policy is categorically different from one that has not, and European law should reflect that distinction.
It would also mandate scenario planning against deliberate export restriction, not only accidental disruption. The two risk profiles require different responses: stockpiling timelines, alliance-based sourcing agreements, and demand-guarantee instruments that can attract investment to alternative producers in Africa, Asia, Latin America, South America, and Australia.
The deeper fix is institutional. The CRMA currently sits primarily in the hands of DG Grow—the European Commission’s department responsible for the European Union’s internal market, industry, entrepreneurship, and small and medium-sized enterprises—largely disconnected from the foreign policy work of the European External Action Service (EEAS) and from the defence procurement realities of ReARM Europe. Europe’s foreign ministers, defence ministers, and MEPs working on China do not routinely see the mineral dependency picture as part of their deliberations. That is a structural failure that Beijing understands and manipulates very well.
Finally, the EU’s €800 billion ReARM Europe initiative is premised on the assumption that the European defence industry can scale. It cannot, reliably, if the materials that flow into precision weapons, fighter-plane actuators, and drone motors remain subject to Chinese licensing decisions. The same dependency that shaped U.S. tariff policy in 2025 will, if unaddressed, shape European positions on Taiwan, on technology controls, and on Ukraine.
The CRMA was the right instinct. It is not the right instrument, as written, for the strategic moment Europe now inhabits. Amending it is not a technical revision. It is a foreign policy choice.
This article was published in The European Conservative on 2 July 2026.
Photo: Alexandre Lallemand on Unsplash