Europe struggles to cut China reliance for rare earths

The U.S. and Europe's ambition to boost production of rare raw materials used in electric vehicles and reduce dependence on China will face obstacles, including higher costs and environmental concerns.

The European Union stepped up a push to become less reliant on imported raw materials, with the European Commission vowing to create a raw-materials alliance by the end of the year due to their importance in growing industries.

Two U.S. Congressmen this month introduced bipartisan legislation aimed at reducing dependence on China for rare earths, similar to what Senator Ted Cruz introduced in May.

Concern about the outsized influence of China gained more prominence as trade tensions increased between the U.S and China. Cost, access to the raw materials and environmental concerns may be the biggest stumbling blocks for creating an independent supply chain, according to analysts.

"It's very difficult to sustain, it's expensive to sustain," said Jennifer Bisceglie, the CEO of Interos, a supply-chain risk management company. "If you create an entire local supply chain, think about the expense in training the labor and getting the raw materials if they're not in your country."

Large multinational corporations rely heavily on smaller suppliers who have access to localized raw materials they might not be able to get elsewhere, she said.

China accounted for 80 percent of total U.S. imports of rare-earth compounds and metals last year. President Donald Trump ordered the U.S. Defense Department to spur production of rare-earth magnets as the trade war between the two countries sparked concern China will restrict exports of the products.