Urgent Acquisitions by American Companies
American companies are now actively seeking to secure rare earth minerals from Europe, despite an apparent one-year agreement between China and the United States to de-escalate trade disputes over these critical materials. This development occurs as China continues to restrict sales to entities associated with defense sectors and maintains significant control over global supply chains.
The scarcity of rare earth elements outside of China has consequently driven up their value and diminished available stock. Industry insiders suggest that Europe could face a critical shortage of usable rare earth minerals within a matter of months.
While European defense industries are still in the process of negotiating procurement strategies for these essential materials, American buyers are proceeding with swift acquisitions, depleting warehouses across the European continent.
These US entities are bypassing lengthy bureaucratic processes, securing necessary resources, and leaving European counterparts with limited options. Their operations are characterized by close collaboration with suppliers, efficient logistics, and direct governmental support.
Pace of Acquisition: Americans vs. Europeans
Tim Borgschulte, Chief Financial Officer at Noble Elements, a Berlin-based company, highlighted the disparity in transaction times. He stated, "If we look at how long it takes us on average to sell, say, a ton of terbium to a European partner, we’re talking about three to four weeks; with the Americans it’s more like three to four days."
This accelerated pace is evident across the market. Rare earth elements such as terbium, neodymium, and dysprosium are being rapidly purchased by US defense contractors at a rate that European buyers cannot match. The underlying reasons for this discrepancy are straightforward.
According to Jan Giese of Tradium GmbH in Frankfurt, American firms are leveraging their financial strength and market influence to secure contracts further up the supply chain. By acquiring materials early and maintaining a low profile for their deals, they effectively shield suppliers from potential Chinese retaliatory measures. This strategic approach grants them two critical advantages that Europe currently lacks: access to materials and greater control over the supply chain.
In contrast, European defense contractors are attempting to engage in direct purchasing, circumventing intermediaries and supplier support. This approach is further hampered by a lack of comprehensive planning. Borgschulte noted that many of his European clients are unaware of the specific types or quantities of rare earths they require until the very last moment. This situation inevitably leads to rushed transactions, supply shortfalls, and inflated prices.
Giese summarized the situation by observing, "The Americans have a sense of urgency, a financial might and people with both mandates and expertise making decisions, all of which are things that Europe is sorely lacking."
The impact of this trend is tangible. A source within a prominent German defense company reported that their American competitors have already significantly depleted the available market stock. Remaining quantities are both costly and scarce. Rare earth materials that were sold prior to China's defense export ban in April 2025 were the last to move freely. Currently, the market is exceptionally tight, with transaction volumes so high that tracking the total amount of rare earths in circulation has become challenging.
Europe's Response: Policy, Funding, and Missed Opportunities
The United States government holds an equity stake in MP Materials, the operator of the sole rare earth mine in the US. Furthermore, the Department of Defense provides a guaranteed minimum purchase price for ten years, thereby protecting MP Materials from market volatility. This exemplifies robust governmental backing.
Conversely, the European Union is still in the process of developing its policy frameworks. The Critical Raw Materials Act was enacted in 2024, and the EU is preparing to launch RESourceEU, an initiative aimed at reducing reliance on China by fostering alternative supply chains. Germany's state development bank, KfW, established a €1 billion fund last year to support investments in raw materials. However, the private sector has yet to experience substantial benefits from these measures.
Armin Papperger, CEO of Rheinmetall AG, indicated that his company conducts weekly stress tests on its raw material supplies. He acknowledged that the automotive division, rather than defense, faces greater challenges due to its higher demand for rare earth elements.
"We have billions in our stock at the moment," he stated. However, not all companies possess the resources of Rheinmetall. Smaller firms are unable to afford stockpiling materials or bear the risk of holding obsolete inventory.
Hans Christoph Atzpodien, head of Germany's defense industry association, contested the notion that Europe was unprepared. He argued that the primary bottleneck is not mining capacity but rather the processing of these minerals.
Europe, including Germany, possesses significant underground reserves of rare earths. However, the continent has historically relied on China for refining these materials, a dependency that is now proving detrimental. The processing of rare earth minerals generates hazardous waste and requires technological expertise that many EU countries currently lack.
In France, companies have resorted to recalling retired workers to revive specialized skills. Germany is also reportedly in discussions with Canada regarding a potential submarine deal that could include investments in Canadian mining operations. Canada holds substantial rare earth reserves, estimated at over 15 million tonnes.
Despite these efforts, the scale of the challenge remains significant. Thorsten Benner of the Global Public Policy Institute emphasized the urgent need for the entire continent to adopt a crisis-response mentality. He suggested that the approach should be akin to the "whatever it takes" strategy employed during the Euro crisis.
Currently, however, the sense of urgency appears to be predominantly felt on the opposite side of the Atlantic Ocean.