Europe Should Break China’s Grip on Rare Earth Pricing, Industry Leader Says

Europe should create its own clear pricing mechanisms for rare earths and other critical minerals to reduce dependence on China and encourage investment in local sources, according to the head of EIT RawMaterials.

These materials are key components in electric vehicle motors, renewable energy equipment, electronics, and defense technologies. China currently dominates 90 percent of global rare earth output, which influences prices mainly through its internal markets.

Bernd Schäfer, CEO and managing director of EIT RawMaterials, said the lack of transparent benchmarks outside China makes it difficult for others to judge whether new mines and processing plants can be profitable.

As a response to this issue, the EU-backed organization partnered with the German digital trading platform Metalshub to create a European price index for these materials. The project aims to generate trustworthy market data that can support fresh mining, refining, and recycling initiatives across the region.

Schäfer noted that developing a credible index will not happen quickly. He added it would require sufficient trading activity, potentially at least 10 percent of volumes traded outside China, to become representative.

“What we are getting from China is neither representative nor, in strict microeconomic terms, a price,” he said.

The plan, discussed publicly last month, could include participation from traders in the United States, Australia, Canada, and Britain. An operational pilot version is hoped for within roughly a year.

The European Union has set specific goals under the Critical Raw Materials Act, which took effect in 2024. By 2030, it wants domestic mining to reach at least 10 percent of its strategic raw materials needs, processing 40 percent, and recycling 25 percent. It also aims to avoid reliance on any non-EU country for more than 65 percent at any stage.

Last December, the European Commission launched the RESourceEU Action Plan, which mobilizes 3 billion euros in funding to accelerate projects and strengthen supply chains.

Schäfer said judging whether these targets can be met is hard because of gaps in clear data on current volumes and future demand. He warned that without proper local processing capacity and pricing, any new European output would feed back into the existing global supply networks China has a chokehold on.

EIT RawMaterials is the world’s largest innovation-directed organization in the raw material sector, established and funded by the European Union. It connects more than 300 partners from business, research, and universities—aimed at helping the region secure raw minerals that align with green policies.

A separate stockpiling effort involving several EU countries, including Italy, France, and Germany, has begun identifying initial materials such as tungsten and gallium for storage.

Reuters contributed to this report.