Estonia emerges as key hub for EU rare earth supply amid China and Russia tensions

At the G7 summit in Canada, EU Commission President Ursula von der Leyen showcased a permanent magnet made from rare‑earth elements. The magnet was produced by Neo Performance Materials, a Canadian firm that operates a rare‑earth refinery and a new magnet plant in Estonia – facilities inherited from the former Molycorp operations.

Estonia has become a crucial conduit for rare‑earth material entering the EU. In 2024 the Baltic state imported over 3,700 tonnes of rare‑earth oxides from Russia, rising to almost 4,000 tonnes in 2025, while imports from Australia were negligible. The same Estonian plants export mixed‑oxide products to the United States, Japan, Switzerland and Germany. Neo has announced plans to replace Russian feedstock with alternative sources, citing a 2021 supply agreement with Energy Fuels.

The situation highlights a strategic dilemma: despite Estonia’s strong political stance against Moscow, its facilities process a large share of Russian rare‑earths, a resource critical for EU technologies seeking independence from China’s dominance.