A German town's bid to break China's grip on rare earths – DW – 08/20/2025

DW

6 hours ago

A small town in Germany wants to become one of the centers of the EU's push to cut reliance on Chinese rare earths vital for tech and defense. But can greener European solutions turn enough profit to make a difference?
With its orchards of low-growing fruit trees and a harbor dotted with yachts, Bitterfeld has an air of pastoral charm. But this former East German town about 140 kilometers (86 miles) southwest of Berlin also has a less bucolic side.
A shallow lake called the Silbersee is a reminder of a disused lignite mine that once provided fuel, while a tangle of pipes from what is one of Germany's oldest chemical facilities has long added an industrial twist to the skyline.
Recently, this town of two tales has taken on a third persona, quietly emerging as a hub for the EU's drive to source rare earths on home turf.
Vital to the manufacture of permanent magnets that show up in consumer electronics, renewables, and defense technologies, these chemical elements are largely sourced in China. As a result, Europe is dependent on exports — something it would like to change. Enter Bitterfeld.
The idea is to recycle rare earth elements from end-of-life electronic devices. In May 2024, the family-run German tech group Heraeus opened its facility — a grey rectangular building shielded by a high barbed-wire fence — for that purpose.
At its launch, the site was presented as "the largest rare earth magnet recycling plant in Europe."
Initially, it aimed to produce around 600 tons of rare earth magnetic powder per year, with plans to double this figure to 1,200 tons in the near future. But that's not quite how things have panned out.
A year after the launch, Heraeus says the facility is struggling to break even, despite the field's potential strategic importance.
"I cannot disclose the exact number, but we are nowhere near full capacity," David Christian Bender, co-head of Heraeus Remloy, told DW, adding that European recycling "cannot compete" with rare earth metal deliveries from China.
Four industrial sectors in Germany are particularly dependent on rare earth imports: the automotive industry, mechanical and plant engineering, energy, and defense. One of the key minerals they need is neodymium.
Found in countless smart devices, from electric motors and wind turbines to MRI scanners and smartphone speakers, this silvery-white metal is the holy grail of the high-tech economy. The element, primarily in the form of neodymium-iron-boron magnets, is also crucial for military applications.
"These magnets are used in precision-guided weapons, radar and sonar systems, satellite communications, and the acoustic signature reduction on military vehicles," Stefan Steinicke from the Federation of German Industries (BDI) told DW.
Although Europe possesses some reserves, it does not currently mine neodymium. In fact, the continent imports 100% of its heavy rare earth elements (REEs), such as terbium, and 85% of its light rare earth elements, including neodymium, from China. The country also produces 90% of the world's magnets.
"When it comes to electric motors, robotics and drones, import dependency is not only high, but system-critical," Steinicke said.
Short-term import stoppages lead to production delays, supply bottlenecks, and price hikes. Longer-term disruptions could result in project cancellations in key tech sectors and cause strategic uncertainty among investors.
In April this year, China severely restrictedits exports of several heavy rare earth metals and rare earth magnets, leading to a drastic shortfall in Europe. In some parts of Germany, production lines came to a standstill.
In 2024, the EU introduced its Critical Raw Materials Act. By 2030, Europe aims to mine at least 10% of the raw materials it requires, process 40%, and recycle 25%. Dependence on any single non-EU country is to be reduced to a maximum of 65%.
Experts welcome the targets but regard them as ambitious, saying the EU needs to move faster, make greater investments and be more creative with its policy tools.
The mining-to-magnet production chain is long and costly. "A green mine is an oxymoron. It always involves environmental degradation and pollution," said Pascal Leroy, Director General of the WEEE Forum, a Brussels-based non-profit focused on electronic waste.
Short-loop recycling, in turn, uses vacuum melting, skipping the dirtiest, most energy-hungry steps found in the longer recycling loop. It is, therefore, held up as a cleaner alternative to mining.
Aside from Heraeus Remloy, several other European companies are racing to lead in REE-recycling. But finding customers willing to pay extra to support European producers remains difficult.
Jan Giese, a senior manager at TRADIUM, a German metal products distributor says the challenges are due to "relatively high prices for interesting scrap material," higher European production costs, "lower recycling capacities and resulting poorer economies of scale."
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According to TRADIUM, the price of neodymium oxide has been gradually declining — albeit with certain volatility — since March 2022, reaching one of its low points around mid-2024. This further adds to recyclers' profitability struggles.
So far, less than 1% of the rare earths consumed in the EU are recycled, Rüya Perincek, press officer at the EU Commission, told DW. And though Brussels has approved several projects to help tap private funding, it is not likely to tip the scales in any big way.
Early next year, the EU is planning to launch a special platform connecting buyers and suppliers of strategic raw materials to diversify sourcing.
"Recycling quotas could be part of a solution," Jürgen Hardt, foreign policy spokesman for Germany's conservative CDU/CSU parliamentary bloc, told DW.
Highlighting the need for "a coherent political effort that combines a mosaic of measures," he did not rule out a tax credit for magnets manufactured domestically or made from reclaimed components. Such steps, however, should be taken "in close coordination within the EU," he added.
Nearly 50% of all e-waste in the European Union remains uncollected, and less than 40% is recycled. The Commission plans to revise the WEEE Directive — an EU regulation on electronic waste management — to better align collection, treatment, and market incentives.
According to Leroy, Brussels needs to introduce dedicated waste codes for permanent magnets so they can be traced and recycled before going missing or being exported.
Together with its partners, the WEEE Forum has also created an online Urban Mine Platform highlighting the volume of precious materials in EU waste — equivalent to roughly the weight of three million African elephants.
Bender, co-head of Heraeus Remloy, hopes to see a swift introduction of measures to boost the recycling of rare earth elements. He is calling for mandatory quotas and financial or tax incentives for using recycled European magnets, especially in the car industry.
"The situation is very challenging... If nothing is done right now, I can't see any change happening by 2030," he added — despite the goals set in Brussels.