In a World War II bunker located east of Frankfurt, a massive steel door weighing over four tonnes guards Germany’s largest reserve of rare earths. This hidden vault is a critical asset in the growing global struggle for control over these essential materials. The exact location remains undisclosed, and the site is under constant video surveillance to ensure security.
Inside this secure facility, Tradium, a German company specializing in trading rare earths, stores thousands of barrels of these precious materials—almost all sourced from China, the world’s leading producer. The contents of the bunker include elements such as dysprosium, terbium, and neodymium, which are vital for manufacturing modern technologies like smartphones, electric vehicles, and wind turbines.
Despite its strategic importance, Tradium operates with a small team of fewer than 40 employees. The company anticipates reaching a turnover of 300 million euros ($346 million) this year. However, the geopolitical tensions surrounding rare earths have created significant uncertainty. In April, China imposed restrictions on rare earth exports, making them subject to licenses with strict conditions.
According to the International Energy Agency, China controls more than 60% of rare earth mining and over 92% of refined production globally. This dominance has placed European industries, particularly Germany’s automotive sector, at risk. The reliance on rare earth magnets for manufacturing has left European companies vulnerable to supply disruptions.
Matthias Rueth, president and founder of Tradium, noted that “nervousness is rising” among his clients. One industrial customer warned that further shortages could lead to production halts. Meanwhile, Rueth observed that Chinese suppliers are also unhappy, as the government’s policies have limited their ability to trade freely.
“The rest of the world is currently in a dilemma,” Rueth said. “There’s a shortage of these raw materials, prices are exploding, and no one really knows how things will turn out.” Despite efforts by some countries to reduce dependency, the reality remains challenging.
China’s dominance in the rare earth market has roots stretching back decades.
Rueth explained that since the 1990s, Chinese governments have viewed rare earths as a strategic asset comparable to the Middle East’s oil reserves. Martin Erdmann, from the Federal Institute for Geosciences and Natural Resources (BGR), pointed out that Europe never developed a comparable mining industry. Instead, it opted to import these materials at lower costs from countries with less stringent environmental regulations.
The United States, once the global leader in rare earth production until the 1990s, abandoned the sector due to cost and environmental concerns, allowing China to take over the market.
Although US President Donald Trump claimed that an agreement with Chinese President Xi Jinping in late October would ease some rare earth restrictions, the situation remains unclear. According to Erdmann, the April restrictions are still in place, with Beijing requiring mandatory licenses that involve disclosing industrial secrets and proving that the materials will not be used in defense industries. Few European companies can meet these conditions.
‘Already too late’
About 15 years ago, Japan faced a similar crisis when supply chain issues with China disrupted its access to rare earths. In response, Japan diversified its sources, developing alternative suppliers in Australia and building strategic reserves. Erdmann emphasized that for Europe, learning from Japan’s experience and investing heavily in alternatives is crucial.
In 2024, the European Union adopted the Critical Raw Materials Act, aiming to secure supplies of 17 strategic raw materials. The legislation sets targets for 2030: at least 10% of rare earths consumed in the EU to be extracted within the bloc, 40% of necessary processing to be done locally, and 25% of recycling to be achieved.
However, meeting these goals will be difficult. Erdmann pointed out that the rare earth market remains dominated by low prices, likely maintained deliberately by Beijing to prevent profitable exploitation outside China.
Rueth stressed that “our modern life entirely depends on these materials,” but finding alternatives when they become scarce is extremely challenging. Reflecting on Europe’s current position in the race for critical rare earths, he concluded grimly, “It’s already too late.”