**The US is spending roughly eight times what Europe allocates to secure critical minerals outside China, threatening to leave European defense and industrial companies dependent on Beijing's supply.
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US outspends Europe 8-to-1 in $46 billion rare earths race
The US is spending roughly eight times what Europe allocates to secure critical minerals outside China, threatening to leave European defense and industrial companies dependent on Beijing's supply.
BRUSSELS — The US allocated about $46 billion for critical raw-material projects in the five years through February, roughly eight times the level committed by the European Union over the same period, according to an analysis by the French Institute of International Relations. The spending disparity has raised fears that an increasingly protectionist Trump administration will hoard the materials needed for jet fighters, tanks and advanced ammunition, leaving European allies vulnerable to Chinese supply restrictions.
"This is almost friendly fire to other Western countries," said Paul Atherley, chairman of UK-based mining company Pensana, which scrapped plans for a British processing plant last year to pursue a US-based option backed by up to $160 million in Export-Import Bank financing.
The US approach is multipronged and aggressive. Washington has negotiated preferential access to minerals in the Democratic Republic of Congo, the world's top cobalt producer, and in Ukraine. USA Rare Earth is acquiring Brazil-based miner Serra Verde Group, which secured a $565 million financing package from a US government agency and entered a 15-year deal to sell its magnetic rare earths to a US-backed vehicle. The company also bought UK-based Less Common Metals last year. The EU's industry commissioner learned the US had beaten him to a rare-earth deal in Brazil three days before he was due to travel there, he told a Dutch newspaper. "We were told that the Americans had stopped by, put money on the table, and bought up all production until 2030."
Why Europe is losing the race
The spending gap reflects a structural difference in approach. The US is deploying grants, loans and tax breaks through multiple agencies, including the Export-Import Bank and the Defense Department, which has ordered contractors to remove Chinese rare earths from their supply chains for magnets by 2027. The directive followed Beijing's restrictions on rare-earth magnet supplies last year as part of a trade fight with the US.
Europe is planning a €3 billion ($3.43 billion) financing hub to support alternative supplies, and a group of EU countries is working on a pilot project to stockpile critical materials. The bloc has raw-materials partnerships with more than a dozen countries, including Canada, Argentina, Norway and South Africa. By 2030, the EU wants to ensure that no single country supplies more than 65% of its annual strategic raw material needs.
But the scale gap is stark. "While we're talking, the next value chain is bought by the Americans," said Bernd Schäfer, chief executive of EU-funded EIT RawMaterials.
What's at stake for defense and industry
Critical raw materials are embedded in nearly every modern weapons system. An Arleigh Burke-class destroyer requires the equivalent of 2.3 tonnes of rare earth elements, according to US authorities. The F-35 fighter jet's airframe uses composites, aluminum and titanium, while its integrated power supply employs magnets made with cobalt and samarium. Tank armor uses titanium and tungsten alloys for high strength-to-weight ratios.
The US and EU signed a memorandum of understanding on critical raw materials in April, and European officials hope cooperation can be a bright spot in an otherwise strained trans-Atlantic relationship. But some are wary. "The US can be a partner in developing alternative sources, but it can also be a competitor," said Camille Grand, secretary-general of the Aerospace, Security and Defense Industries Association of Europe. He said he doesn't think the US would deliberately hold back materials from an ally, but if supplies run low, Americans would likely focus on their own needs first.
American customers already act faster and are willing to pay more to secure critical materials on the spot market, said Tim Borgschulte, head of finance at Berlin-based commodities trading house Noble Elements. That dynamic, combined with the 8-to-1 spending gap, suggests the US will continue to dominate the non-China supply chain for the foreseeable future — leaving Europe to decide whether to compete or cooperate.
This article is for informational purposes only and does not constitute investment advice.
