Europe faces critical material dependencies amid industrial and defense growth

Europe is facing a strategic challenge regarding its industrial resilience, specifically concerning high-performance materials and critical raw materials. While the continent has focused on AI, semiconductors, and renewable energy, the underlying materials required for these technologies—such as those used in aerospace, defense, and electric vehicles—are becoming a focal point of geopolitical competition.

A significant vulnerability exists in the supply of rare earth magnets, with Europe importing approximately 98 percent of its requirement from China. This dependency poses a risk to the growing European defense sector, including companies like Rheinmetall and HENSOLDT, as well as the green energy transition. China produces roughly 95 percent of the world's rare earth oxides and controls the vast majority of the permanent magnet market, which is essential for electric motors, wind turbines, and advanced military systems like radar and drones.

To address these dependencies, the European Commission is treating advanced materials as a strategic priority through initiatives like the proposed Advanced Materials Act. The goal is to transform scientific research into marketable industrial products and reduce reliance on non-European supply chains to ensure technological sovereignty.