AUSTRALIAN COMPANIES IN THE RARE EARTHS SECTOR DOING DEALS IN EUROPE

As the global race for clean energy and electrification accelerates, Europe finds itself at a crossroads.
The continent’s ambitions to lead in electric vehicles (EVs), renewable energy, and advanced manufacturing are under pressure due to a critical supply chain bottleneck: rare earth elements. These metals—particularly neodymium and praseodymium (NdPr)—are essential for EV motors, wind turbines, and other high-tech applications. Yet the European Union (EU) sources nearly all its rare earths from a single country - China.

China currently controls around 60% of global rare earth mining and over 90% of the processing capacity. For the EU, this dependency translates into significant vulnerability. Recent Chinese export controls on rare earth magnets and upstream materials have reinforced these concerns.

In April 2025, Beijing introduced new export licensing rules that led to temporary delays in shipments, sending ripples through EU industrial supply chains. From EV manufacturing to wind turbine assembly, the risk of supply interruptions has triggered urgent calls for diversification and resilience.

Several European auto-supplier plants have already shut down, with more outages coming, said the region's auto supplier association, CLEPA. The average electric vehicle uses about .5 kg of rare earths elements, and a fossil-fuel car uses just half that, according to the International Energy Agency.

German headquartered wind turbine maker Siemens Gamesa is looking to reduce its dependence on China in some critical parts of its supply chain with the company nearly 100% dependent on China for rare earths and permanent magnets, which are among the critical materials needed to make wind turbines.

Strategic Response: Policy, Partnerships, and the Critical Raw Materials Act

The EU has responded with a multifaceted strategy. Central to this is the Critical Raw Materials Act (CRMA), introduced in 2023. The Act sets ambitious 2030 targets: extracting at least 10% of critical raw materials domestically, processing 40% within the EU, and recycling 25%. It also aims to ensure no more than 65% of the EU's annual consumption of any strategic raw material comes from a single country.

While these targets are a long way from being met—especially for rare earths—they have galvanized action. The EU is investing in mining and refining projects, supporting recycling infrastructure, and developing strategic partnerships with resource-rich countries like Namibia, Canada, and Australia. Notably, Sweden recently announced the discovery of Europe’s largest rare earth deposit, though commercial production remains years away.

Building Resilient Supply Chains: Offtake Agreements in Action

European industries are also taking direct action. Companies are signing offtake agreements with rare earth producers outside China to lock in long-term supplies.

• Siemens Gamesa Renewable Energy has signed a five-year binding offtake agreement with Arafura Rare Earths (ASX: ARU) to supply neodymium-praseodymium oxide from the Nolans project in Australia. The material will feed directly into Siemens Gamesa’s wind turbine magnet production in Germany, helping shield European renewables from Chinese supply risk.
• Schaeffler, the German automotive supplier, secured a five-year agreement with Norway’s REEtec to supply rare earth oxides starting in 2024. This marks a milestone in Europe’s effort to build a rare earth value chain entirely outside of China.
• Hastings Technology Metals (ASX: HAS) has entered a 10-year offtake agreement with thyssenkrupp Materials Trading for the supply of up to 70,000 tonnes of rare earth carbonate from its Yangibana project in Western Australia. The deal guarantees 9,000 tonnes per year for the first five years and 5,000 tonnes annually for the next five. Thyssenkrupp will have exclusive global distribution rights, except for a few existing customers. The material—rich in neodymium and praseodymium—will support a broad range of EU clean tech applications.
• Australian Strategic Materials (ASX: ASM) has received a purchase order from Vacuumschmelze (VAC), a leading German based global manufacturer of magnetic materials and solutions. VAC has ordered 7.2 tonnes of neodymium-iron-boron (NdFeB) alloy across five custom specifications. This agreement builds on successful validation of ASM's materials and reflects the deepening strategic relationship between ASM and VAC, reinforcing Europe's downstream magnet supply resilience.

We expect further European interest in Kazakhstan and Brazil where several Australian companies are developing world class projects.

The Road Ahead

As Europe scales up its electrification and climate goals, reducing rare earth dependency on China has become not just an economic necessity, but a strategic imperative. The combination of policy initiatives, international partnerships, and forward-looking industry contracts is laying the foundation for a more resilient supply chain.

The EU’s efforts to diversify and secure rare earth supply are already influencing global investment flows and reshaping industrial strategies. By locking in new sources and investing in processing, Europe is moving toward a future where its green and digital ambitions are not held back by critical material shortages.
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