Abstract:
Rare earth elements (REEs) are critical for Europe's economic competitiveness, green transition, and national security. Yet the EU remains heavily dependent on China for their supply, particularly in refining and processing. This paper examines Europe's vulnerability to supply disruptions and geopolitical leverage stemming from China's market dominance. Rising demand for REEs in renewable energy, electric vehicles, and defence technologies exacerbates this dependence, while environmental and regulatory constraints hinder European extraction and processing. Case studies, including the 2010 Senkaku crisis and 2024-25 Chinese export restrictions, illustrate how REEs can be used as strategic tools of coercion. The paper evaluates Europe's policy responses, highlighting the Critical Raw Materials Act (CRMA), domestic processing projects, recycling initiatives, and international partnerships aimed at supply diversification. While progress is evident, challenges remain: recycling is nascent, domestic capacity is limited, and EU research programs are bureaucratic and slow. Overall, Europe faces a "geopolitical trap," requiring urgent action to secure REE supply and technological resilience.