Europe’s reliance on imported rare earth elements extends beyond mining to separation, refining, metal production and permanent-magnet manufacturing. These processing stages are among the most geographically concentrated parts of the global supply chain, while the EU’s current Carbon Border Adjustment Mechanism (CBAM) provides little direct coverage of the value chain.
Eurostat reported that EU imports of rare-earth elements increased 17.1% in 2025 to approximately 15,100 tonnes. China accounted for 46.8% by weight, followed by Russia at 25.9% and Malaysia at 23.1%. In Eurostat’s broader grouping measured by value, China remained the largest supplier. The figures underline the industrial and geopolitical importance of a relatively small-volume market.
Separation and Magnet Production Remain Key Processing Stages
Rare-earth separation involves complex chemical processing, while subsequent metal-making and magnet manufacturing require additional energy and specialised technology. Imported rare-earth oxides and metals do not currently incur a CBAM obligation solely because of their carbon footprint.
European projects therefore cannot rely on a carbon-border adjustment to compensate for potentially higher electricity, labour and environmental costs.
Strategic Customers and Supply Agreements
The commercial case for European rare-earth processing centres on supply security. Automotive manufacturers, wind-turbine producers, defence companies and electronics manufacturers may enter long-term supply contracts with European producers to reduce reliance on concentrated overseas processing capacity. Strategic-project status under the Critical Raw Materials Act (CRMA) can support these developments through faster permitting and greater policy visibility.
Recycling and Integrated Processing Projects
Recycling is becoming more important, although recovering rare earths from magnets and complex products remains technically challenging. Projects combining secure feedstock, separation technology, magnet customers and recycling may offer a more integrated approach than facilities focused on isolated processing stages.
Any future expansion of CBAM to critical minerals would raise methodological questions because carbon intensity varies across mining, separation and metal production. Those differences would need to be assessed in a market already characterised by concentrated supply. For now, Europe’s rare-earth strategy centres primarily on supply-chain resilience, with carbon-border policy playing a secondary role.
