China’s Rare Earth Element Export Controls: A Wake-Up Call for Europe’s Circular Economy
June 2025 - Download the Circular Intelligence Association briefing - giving the entire picture of the Chinese Rare Earth Elements Export Controls system and its impacts.
China’s new export controls on Rare Earth Elements (REEs), effective since April 2025, have triggered major disruptions across global manufacturing—especially in Europe. With China mining 69% and processing over 90% of global REEs, these critical materials—used in electric motors, hard disk drives, screens, headsets, semi-conductors and defense systems—have become a strategic chokepoint.
Under the new Chinese dual export system, batch-level export permits are required for seven key REEs and REE-containing products, enabling selective exports. The controls ensure exported REEs in any form are not used for military purposes against China, aligning with international dual-use export control practices, as already in place in the EU and USA. European companies that want to purchase must provide extensive data to obtain approval per batch, and illegal export violations by China can result in harsh penalties. A national Chinese traceability portal, launched on June 1st, now also tracks every stage of the REE supply chain with monthly reporting requirements by enterprises, to crack-down on illegal exports.
For the EU, the impact is immediate, with only 25% of REE import requests by the 60,000 European companies relying on Chinese REEs at different manufacturing stages since April approved. Companies face delays, component shortfalls, skyrocketing REE component prices, and pressure to disclose sensitive customer data to Chinese authorities. In response, the EU commission is pushing for a carve-out for civilian REE applications ahead of the 24-25 July EU-China summit. Europe must urgently diversify to improve its resilience for REEs component including permanent magnets.
Pro-active companies can reduce their risk exposure in the short term:
analysing product lines to identify critical REE components,
Preparing digital declarations of REE containing components using Digital Product Passports,
Initiating collaborations with producer responsibility organisations and component recovery parties for component reuse and recycling, who benefit from REE declarations in Digital Product Passports.
And redesigning products for easier disassembly to extract REE containing components
Critical are novel REE circularity infrastructure initiatives including CAREMAG and MagFactory in France which seek to remanufacture recovered REE components and recycle REEs from end-of-life products. The missing link lies in the stage where REE components are recovered from used products, which needs an infrastructure solution in the form of large scale product disassembly hubs for component recovery using automated robotics technologies.
China’s move has highlighted Europe’s vulnerability. But with the right innovation and investment in circularity, the EU can build a more resilient, independent supply chain for critical raw materials. The challenge is clear—and so is the opportunity.