Europe's Challenge in the Rare Earth Revolution: A New Step Towards Reducing Dependence on China

Changes in the "Small Magnets" Dependent on China—Can Europe's Rare Earth Reconstruction Save Japan?

Factories producing electric vehicles come to a halt, not due to large bodies or batteries, but because they cannot procure small magnets.

The issue surrounding rare earths is connected to our daily lives in such a manner. High-performance permanent magnets used in automobiles, industrial machinery, and wind power generation equipment. If their supply is disrupted, production cannot continue even if the facilities and personnel needed to create finished products are in place.

An article published on November 11, 2026, in FinanzNachrichten introduced how Europe is nurturing its own rare earth industry to reduce dependence on China. Magnet production is progressing in Estonia, and related facilities are being developed in France and Sweden.

In understanding this change, it is important to separate the story of "Europe finding rare earths" from "Europe being able to stably supply usable magnets."

Having resources underground alone does not make factories run. Processing ores, separating necessary elements, processing them into metals or alloys, and creating magnets with the performance customers demand. Reconnecting this entire process is Europe's challenge.

China's Strength Lies Beyond the Mines

Rare earths are a collective term for 17 elements with similar properties. Among them, neodymium and praseodymium are important raw materials for high-performance magnets. Dysprosium and terbium are used to enhance the heat resistance of magnets.

According to the International Energy Agency (IEA), in 2024, China accounted for about 60% of the world's mining volume and about 91% of the refining production volume of rare earths for magnets. In the production of sintered permanent magnets, this ratio reaches about 94%.

This is not a unified ratio for all rare earth products. It is necessary to read by distinguishing the target and the process. Nevertheless, the structure where supply becomes more concentrated as it approaches the product from raw materials is clear.

Even if mines are opened in countries other than China, if the subsequent processing relies on China, part of the dependence remains.

Europe is now focusing on this processing process and magnet manufacturing. They are aiming not only to increase mining sites but also to have the capability to turn materials into usable parts.

From "Establishment" to "Commercial Production" in Estonia

A visible advancement is the Neo Performance Materials' permanent magnet factory in Narva, Estonia.

According to the company's public information, the factory was established in September 2025 and transitioned to commercial production in September 2026. The nominal annual production capacity for the first phase is about 2,000 tons, with plans to expand to about 5,000 tons.

What should not be confused here is the establishment of the factory, the start of production, and the actual annual production volume.

Just because the annual capacity is 2,000 tons does not mean that 2,000 tons have already been manufactured and sold annually. There are stages of setting up equipment, stabilizing quality, and building up production for customers.

Even so, the transition to commercial production is significant. It means that the factory depicted in the conceptual diagram has begun to become an option for supply destinations.

The company also has a separation base in Sillamäe, Estonia. The effort to connect separation and magnet manufacturing within the region is meaningful in reducing the weaknesses remaining in the supply chain.

France Combines "Refining Power" and "Securing Raw Materials"

In France, Solvay's La Rochelle site plays an important role.

In April 2025, the company officially launched a production line for rare earths for permanent magnets. They have set a goal to supply 30% of Europe's demand for rare earths for magnets by 2030. This is a future goal and not a ratio that has already been achieved.

Furthermore, in November 2026, they announced a long-term raw material supply contract with Viridis Mining and Minerals. Shipments from Brazil's Colossus project are scheduled to begin in 2028.

This contract indicates that Europe's supply chain creation is not limited to the concept of "everything from raw materials to processing within Europe."

They procure raw materials from Brazil and separate and refine them in France. Through regional division of labor, they are increasing routes that were concentrated in specific supply countries.

Of course, signing a contract and actual delivery are different stages. Future supply plans cannot be counted as the supply volume currently available. Even so, the movement to set up factory capacity and raw material procurement as a set provides material for judging the feasibility of the plan.

Sweden Focuses on "What Is Already Being Mined"

Sweden's LKAB is working on extracting phosphorus and rare earths from residues produced in iron ore production.

On November 3, 2026, the company announced that it had started operational testing at a demonstration facility in Luleå. They have entered the stage of verifying the process under actual operating conditions and, if all goes well, plan to move to regular operation the following spring.

However, this is about the demonstration facility. Large-scale commercial supply to support Europe's demand has not yet begun.

Future test results will be used for investment decisions in larger facilities. The announcement also mentions remaining challenges related to relevant permits.

Even so, this method is worth noting. It aims to extract other values from substances that have not been fully utilized in existing mining, rather than relying solely on the development of new mines.

Securing resources is no longer just a competition of "where new deposits are located." It is also becoming important to see how much of what is already being mined can be fully utilized.

"A System That Continues to Be Purchased" Is More Difficult Than Completing a Factory

Diversifying supply chains costs money.

Those building new facilities need a prospect of having their products purchased over the long term. On the other hand, buyers want to confirm stable quality, delivery times, and prices before signing large contracts.

This time lag makes business difficult.

In an April 2025 Reuters report, Solvay also showed a stance that demand and purchase commitments from customers are important for full-scale expansion. Being able to increase facilities and being able to keep them running profitably are not the same.

This is an issue that also applies to Japanese manufacturing.

If you compare only the procurement price in front of you, suppliers with a proven track record and large-scale production tend to have an advantage. However, if an alternative cannot be found when one route stops, losses exceeding the savings on material costs may occur.

To what extent can the costs associated with diversification be accepted as costs for stable supply? Not only government support but also the judgment of purchasing companies is questioned.

On Social Media, Expectations for Employment as Well as Geopolitics

Looking at related social media reactions, the focus is not only on competition with China.

When news introducing the Estonian magnet factory was shared in a European community on Reddit in September 2025, posts highlighting the potential for factory expansion and employment for up to 1,000 people if the plan progresses smoothly were confirmed.

This does not indicate the number of jobs already realized but rather the expectation for future expansion.

There were also posts that mentioned the existing processing base in nearby Sillamäe and viewed the location of the new factory as connected to the region's industrial foundation.

These reactions show that resource policy is also being perceived as an issue of job opportunities in the region. In international political discussions, "dependency rates" tend to be the focus, but for the region, the jobs of engineers and the future of the industry are of immediate concern.

It should be noted that what is introduced here is not the reaction to the November 2026 article itself, but posts related to the 2025 news. The posts that could be confirmed are limited and do not represent the opinions of all European citizens.

Japan Is Already Participating in Europe's Supply Chain Creation

For Japan, this is not just industrial news from a distant region.

In March 2025, JOGMEC and Iwatani Corporation announced an investment of up to 110 million euros in France's Caremag. Through their joint venture, they have also signed a contract for the long-term supply of 50% of the heavy rare earths produced by Caremag to Japan.

The 50% mentioned here refers to the ratio of Caremag's heavy rare earth production and does not mean half of Japan's total demand.

This case shows that the facilities supporting Japan's stable supply do not need to be located only within Japan. Investing in overseas production bases, signing long-term contracts, and increasing supply options are also one method.

However, one cannot feel secure just by the amount of investment or the contractual ratio. Only when the factory starts up as planned and can continuously supply materials of the required quality does its value as a procurement source become realized.

When Japanese companies look at Europe's progress, they also need to confirm not only "whether a large investment has been announced" but also "what can be supplied, from when, and to what extent."

Recycling Is Promising, But a System for Collection Is Also Needed

If rare earths can be recovered from used magnets, it can supplement raw material procurement from mines. Scraps generated in the manufacturing process can also become reusable resources.

However, materials do not gather just because there is a recycling factory.

It is necessary to identify where magnets are used in products, collect, dismantle, and appropriately sort and transport them. Easy-to-recover product designs and systems for continuously collecting waste are also essential.

Europe is trying to establish a supply chain that includes this circulation.

For Japan as well, in addition to resource diplomacy and overseas investment, how to collect products that have been used domestically is an important issue. Future resources exist not only underground but also in the machines and products currently in operation.

It's Still Too Early to Judge "Freed from Dependence on China"

Europe's efforts are progressing. However, it is premature to count commercial production, demonstration tests, and future supply contracts together and see it as "dependency resolution completed."

There are four points to be confirmed in the future.

First, how much actual production will increase compared to nominal capacity. Second, whether the process from raw materials to magnets will be seamlessly connected. Third, whether long-term purchases by customers will be secured. Fourth, whether the business can continue, including environmental measures and agreements with the region.

The implications for Japan are also clear. It is necessary to not only increase the number of procurement sources but also confirm whether the same processing base is hidden beyond that.

The new supply chain emerging in Europe increases the routes that manufacturers can choose from. Even while continuing transactions with China, having another option is meaningful.

Being able to obtain small magnets when needed. The competition to maintain that norm is beginning to take concrete shape in European factories.

Sources and References

※The production capacities, goals, and supply start schedules of companies are based on their public information. They are distinguished from actual production volumes and achievements already attained.

1. FinanzNachrichten／wallstreetONLINE:An article dated November 11, 2026, introducing the development of Europe's rare earth industry.
   https://www.finanznachrichten.de/nachrichten-2026-11/70102683-seltene-erden-europa-kommt-voran-im-kampf-sich-von-chinas-dominanz-zu-loesen-049.htm

2. IEA: Rare Earth Elements — Executive summary
   Analysis on the concentration of rare earth supply for magnets, processing processes, recycling, and diversification of supply chains. The production ratios for China in the text are figures from 2024.
   https://www.iea.org/reports/rare-earth-elements/executive-summaryIEA

3. Neo Performance Materials: Official Information on the Estonia Project
   Confirmation of the transition to commercial production in September 2026, nominal annual capacity of about 2,000 tons, and expansion plans at the Narva factory.
   https://www.neomaterials.com/estonia/Neo Performance Materials

4. Solvay: Expansion of Production Capacity at La Rochelle
   Start of production of rare earths for permanent magnets and supply targets for European demand by 2030.
   https://www.solvay.com/en/press-release/solvay-advances-european-rare-earths-production-through-capacity-expansionSolvay La Rochelle

5. Solvay: Long-term Raw Material Supply Contract with Viridis
   Contract details anticipating the start of shipments from Brazil's Colossus project in 2028.
   https://www.solvay.com/en/press-release/solvay-and-viridis-sign-long-term-agreement-rare-earth-materials-supplySolvay

6. LKAB: Announcement on Demonstration Facility Dated November 3, 2026
   Start of operational testing in Luleå, verification of future processes, and confirmation of conditions for scaling up.
   https://news.cision.com/lkab/r/lkab-takes-the-next-step-in-its