European industrial groups are turning to a developing rare earths ecosystem in France as they attempt to cut dependence on China for critical minerals used in electric vehicles and wind turbines.
Beijing upended supply chains for minerals crucial to the energy transition and fuelled concerns about an impending shortage of permanent magnets when it imposed export controls in April, in retaliation for US President Donald Trump’s tariffs.
The restrictions led to a 51 per cent drop in China’s rare earth magnet exports that month, compared with March, posing a “critical challenge” to the global car industry, according to consultancy Wood Mackenzie.
France has become Europe’s leading player in efforts to break dependence on China. It has more “strategic” critical raw material projects than any country under an EU scheme aimed at increasing European supplies of certain metals, with nine out of a total of 47 projects, two of which relate to rare earths.
But it is still far behind China and several companies said they had been overwhelmed by an influx of requests from carmakers and industrial groups looking for the materials used to make permanent magnets for applications such as fighter jets, wind turbines and EVs.
“It’s very frustrating because there is lots of demand and we don’t have enough capacity to respond,” said Erick Petit, chief executive of permanent magnet maker MagREEsource, which is developing one of the projects supported by the EU’s Critical Raw Materials Act.
Solvay Silica, a unit of the Belgian chemicals company, has been inundated with “desperate” pleas from customers concerned that a shortage of rare earths will leave them with “immediate problems”, said its president, An Nuyttens. “We’re getting calls every day.”
Some executives said a number of niche trading houses that buy and sell rare earths were getting “greedy” and quoting prices up to 10 times higher than “normal”.
Over reliance on China has long been recognised as a key vulnerability by EU policymakers as the country supplies 98 per cent of EU rare earths magnet demand, according to European commission data.
The minerals are not especially rare — the challenge is finding deposits that are economically viable to mine. Separating and processing them is complex, and China has become dominant by investing heavily across the supply chain. Its companies have benefited from less strict environmental rules and state support that western rivals have struggled to compete with.
France’s place at the centre of Europe’s efforts to develop a rare earths industry comes from its history as a significant processor of the metals before it was outpaced by China. It also has abundant and relatively cheap nuclear energy, and investors have been enticed by President Emmanuel Macron’s re-industrialisation push.
Solvay has had a plant in La Rochelle, on France’s west coast, since 1948, which in its heyday in the 1980s and 1990s produced as much as 15,000 tonnes of rare earth oxides per year. It said in April it would restart the production of heavy and light rare earth oxides for advanced magnet technology, using mined materials from non-Chinese sources.
Rhône-Poulenc, a French chemicals group that was bought by Solvay in 2011, had an almost 50 per cent global market share in rare earths processing until the mid 1980s, said Emmanuel Hache, a researcher at France’s Institute of International and Strategic Relations (Iris).
“Expertise is a big part of the puzzle and France has a lot of it,” said Caroline Messecar, an analyst at price reporting agency Fastmarkets.
Carester a Lyon-based start-up founded in 2019, was on track to produce heavy rare earth oxides from 2026, also from non-Chinese sources, said its president, Frédéric Carencotte.
A subsidiary of the company, Caremag, in March secured €216mn from Japanese investors and the French government for a recycling and refining facility in Lacq, south of France, under the CRMA. The project has already allocated 70 per cent of its expected production over 10 years to customers, including carmaker Stellantis.
UK-based Less Common Metals is planning a €110mn plant in the same area to turn oxides into the rare earth metals and alloys that go into permanent magnets. The plant is contingent on LCM securing funding and long-term buyers, it said.
LCM, one of few companies outside China that can produce rare earth metals and alloys, a vital step between the separation of rare earths and their use in the permanent magnets used in cars and turbines, has been “working around the clock” to support customers, said chair Grant Smith.
Petit from MagREEsource, a spinout from France’s National Centre of Scientific Research (CNRS), said the domestic industry needed more political and financial support, and buyers who were prepared to pay a premium for locally-made magnets.
“We’re very happy with the support . . . But compared to what’s done in the USA or the support in China, it’s unfortunately not enough.”
The company, which raised €200mn from investors and public funds to produce permanent magnets from recycled materials, hopes to produce 1,000 tonnes of magnets per year by 2027 — still a tiny amount compared with the 16,000 tonnes that Europe imports from China each year.
A French government official said the country wanted to revisit the EU’s CRMA and introduce stockpiling requirements, as argued for by companies including Solvay.
Europe is “still quite far from having a fully developed value chain in place” even though France is doing “what we need right now”, said Edoardo Righetti from the Centre for European Policy Studies, a think-tank.
Still, European Commission president Ursula von der Leyen was keen to talk up progress at the recent G7 meeting in Canada, where she brought a permanent magnet made by start-up Neo.
It was, she said, “manufactured in Estonia by a Canadian company, using raw materials sourced from Australia . . . [and will end up] in German and French electric vehicles and wind turbines.”