German magnet maker calls Europe for tougher approach on critical rare earths

Europe must take far more decisive steps to reduce its dependence on Chinese rare earths or face deeper supply disruptions, a leading German magnet producer has warned, as the US accelerates efforts to rebuild its own supply chains.

Vacuumschmelze GmbH — which last week opened a rare-earth magnet plant in South Carolina — is among the first companies to achieve production in a new wave of US-based projects. Chief Executive Officer Erik Eschen said Washington’s aggressive approach contrasts sharply with what he described as Europe’s complacency.

“There’s a clear difference with the United States, which is leading the whole conversation,” Eschen said in an interview with Bloomberg. “I would expect that the European politicians, as well as the industry, fall back into their sleeping mode and just wait for a solution that will come from the US or China.”

China’s export controls became a key pressure point in its recent trade war with the Trump administration, threatening disruptions for global manufacturers and pushing governments to discuss alternative supply chains even after Washington and Beijing agreed to a truce.

The US has invested directly in MP Materials Corp. to build a national rare-earths champion, backed new domestic processing plants, and pledged funding for mining projects in Australia and Brazil. Treasury Secretary Scott Bessent, speaking at the opening of Vacuumschmelze’s South Carolina facility, said the US would proceed at “warp speed” to end its reliance on China.

Eschen said European expertise in the sector is now at risk. 

“There’s a lot of know-how in Europe, but what we see right now is a lot of this is being transferred to the United States, to Canada, to Australia,” he said. “We have to do something; otherwise we will lose our know-how, and in the longer term it’ll be disaster for Europe.”

Vacuumschmelze, founded more than 100 years ago, has been making rare-earth magnets for more than four decades. Its German operations source rare-earth “flake” from China and other suppliers, processing it into magnets used in vehicles and electronics.

The EU’s Critical Raw Materials Act — the bloc’s most comprehensive supply-chain legislation to date — came into force last year, but critics say it lacks sufficient funding and cohesion. Europe also remains divided on how best to counter China’s dominance in the sector.

Eschen’s remarks come as Germany, the EU’s largest buyer of Chinese magnets, seeks assurances from Beijing on access to critical raw materials. Finance Minister Lars Klingbeil said during a visit to China this week that officials there had promised European concerns about export restrictions “will be taken seriously.”

Vacuumschmelze’s new South Carolina plant has an initial annual capacity of 2,000 tons and aims to reach full production in the first quarter of 2026. Output could double in 2027, with a long-term goal of 12,000 tons. Nearby in North Carolina, startup Vulcan Elements Inc. plans to use $1 billion in public and private funding to build what the state’s governor says will be the world’s largest magnet plant outside China.

A lingering challenge is whether end-users are ready to shift away from China’s low-cost, highly efficient production. Eschen said North American companies are currently more proactive than those in Europe, where many manufacturers risk being caught unprepared in future crises.

“If additional customers come on a larger scale, they will have to wait another 12 to 24 months until we have the capacity up and running,” he said. “Until then, they won’t get anything.”

By Sabina Mammadli