From the magazine – The lack of EU control over the supply of rare materials can cause serious obstacles for the European wish to decarbonise their shipbuilding and shipping by electrification. This warning is issued by the former CEO of Port of Rotterdam, Allard Castelein and Professor René Klein from Leiden University’s Institute of Environmental Sciences.
In every issue of SWZ|Maritime, SWZ|Maritime’s editor-in-chief Antoon Oosting writes an opinion piece under the heading “Markets” about the maritime industry or a particular sector within it. For the May 2025 issue, he goes into Europe’s dependency on China when it comes to rare earth materials. The opinions expressed in this article are those of the author and do not necessarily reflect those of the publisher, the SWZ Foundation, the KNVTS, or other editors.
Castelein sounded his warning during a Mare Forum webinar on 6 March and Klein did so in his presentation at the Strategic Maritime Innovation Event organised by the Dutch Maritime Network on 17 April at STC College in Rotterdam. Klein’s analysis was more general, but no less worrisome as he painted a penetrating picture of how China has usurped power and complete control of the supply chains of almost all major rare earth materials.
Castelein was more specific as he also focused on the risks for the construction of the new frigates and submarines for the Dutch navy. Nowadays, Castelein is special strategic advisor to the Dutch Ministry of Economic Affairs on critical rare earth materials in the context of wanting to build up greater resiliency into our industrial ecosystems.
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Lagging 35 years behind
According to Castelein, the Netherlands – just as other countries in the West – are lagging behind China by 35 years in developing a strategy to ensure our economies can rely on a sufficient supply of critical rare earths. Rare metals and rare earth materials are familiar ones like nickel, copper, gallium, germanium, graphite, magnesium, phosphor, platinum, and tantalum next to a number of less familiar ones.
At this moment, the energy transition in industry, the defence industry, the newbuilding of highly complex sustainable ships for our navies, the aerospace industry, the production of scanners for medical care and research in hospitals, think of the needed magnets, depend on how much China is willing to deliver.
According to Castelein, the People’s Republic of China started to develop a strategy to ensure that it always has a sufficient supply of critical rare earths as early as 1990. For about 34 such metals, China has ensured that it has a monopoly or near to it on some of them with mines either at home or under Chinese control in other countries.
In addition, China has ensured that it has a monopoly on the processing of many of these metals. Rare earth metals often must undergo numerous processing operations to get a composition that makes them usable.
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We have become overly dependent
‘The screen you are looking at, the mobile phone you use, the car you drive, all of them are full of rare earth materials. Your ship is full of rare earth materials. So, it is everywhere in our society. Now, why has this become so important in our society while it has already been there for ages?’ asks Castelein.
He personally had the pleasure to work in the Far East in the early nineties, where he followed the moves of several strategic players across the world. ‘And the Covid crisis has made it abundantly clear that in our ecosystems, and our ever more complex society, we have become overly dependent on global trade and just-in-time supply chains and logistics, on deficiencies and low-stock perspectives.’
And if you combine that approach with the acknowledgement of the fact that several value chains are controlled now by a very limited number of countries, this is not a healthy situation, both economically and politically. Castelein: ‘For example, in the medical field when it comes to medicine, you can argue that China and India are very dominant.’
But also, if you look at the global map where rare earth materials are to be found and mined – and there are 34 of them – and processed, ‘it’s abundantly clear that China has a very dominant position,’ Castelein says.
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Resiliency of our activities
The concern in the Netherlands about this dependency grew only very late and slowly. Castelein: ‘In an environment of global trade and normal business activities, sharing of information, cross fertilisation of activities, travels, education, culture, and the likes, you could argue that you should not be too concerned.’
However, with recent developments like the war Russia started with Ukraine and the trade policies of the new Trump administration, it is no surprise that geopolitics are now mainstream in every discussion. ‘From that perspective, all governments should consider the resiliency of their activities,’ Castelein says.
‘Brussels has acknowledged this and has embraced a critical raw materials act, which stipulates that no single EU country should have an overdependency, and that Europe should build up its own production capacity, revitalise its mining activities, and enhance its circular activities to build up that greater resiliency.’
Building new frigates
In his mission, Castelein also reached out to Damen CEO Arnout Damen, whose company is building the new frigates for the Dutch navy. ‘Do we know which critical rare earth materials we need to guarantee a fully operational frigate? The same applies for the French that are building submarines on behalf of the Dutch navy. Do we know, not only on a first supplier level, but also on the levels below, which rare earth materials go into having a fully operational vessel? I think that’s the challenge we are faced with, that we need to build up our understanding, to address our lack of knowledge of the full supply chain.’
Castelein: ‘Because Covid has clearly shown us, taught us, that when we miss the slightest element of a value chain, we have a near to finished product, but near to is not a finished product. And a near to finished product cannot be used and that’s what we witnessed during Covid. So, my journey is one of engaging with public and private parties, engaging with the knowledge institutes to get a better understanding of which materials we use to build a ship according to the specs and what quantities should we then have access to that we can rely on without any disruption in case of a geopolitical disturbance.’
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Shipbuilding also offers opportunities
Although the analysis is rather worrisome, Castelein is not pessimistic. ‘I sincerely believe the maritime business has an opportunity. Because when we address this properly, we could build up more resilient ecosystems. Hopefully, we can make better use of the circular economy, and I think, ultimately, we will without a doubt have a diversification of supply, we will achieve security of supply, and I think we will have a richer understanding of how private and public parties should collaborate to address the challenges we are faced with.’
Thanks to his intensive international contacts, he knows that there are quite a few countries in addition to China where these rare earth materials can be mined, for example in Latin-America, South-Africa, Namibia, Canada, Ukraine, and Australia. ‘This is fortunate. Every scenario I’ve seen does indicate a significant increase in volumes. So, there is sufficient supply across the globe,’ Castelein says.
150-200 processing steps
The other thing to bear in mind is that the material that is mined doesn’t do much as it is.
Castelein: ‘What ends up in your phone is significantly different from what has been mined. There are several processing steps in between. The dilemma here is that for these 34 critical earth materials intensive processing is needed. The full value chain is highly complex because it is so fragmented. From five, six steps for each one of these products, times 34, makes 150 to 200 processing steps. We are not going to get control overnight over that full value chain. Where Europe has an opportunity, is to develop in the field of co-creation. And that’s why I refer to public-private partnerships to co-create the necessary outcome.’
According to Castelein, it starts with legislation and regulations. ‘If you ask Damen, Thales and all suppliers for the systems needed to build the new frigates, they will indicate that the materials are the cheapest and of sufficient quality according to the specs when you source them from China. It is not an incentive for Damen and its subcontractors to source them from a different location, when that different location is more expensive. It is as simple as that.’
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Include circularity in the processing
Castelein: ‘If the governments of Europe pursue sovereignty of operations by control over value chains, co-creation and public-private partnership must come into play. Damen and the likes will have to be rewarded for developing the alternative supply chains.’
Castelein acknowledges that in case these materials are to be sourced from Korea or Japan, they probably will be more expensive. But once these rare earth materials are under one’s control, this also offers new opportunities to develop circular supply chains. ‘Rather than focusing on how we can compete on price and being totally dependent on China, we can include circularity in our production processes and diversify the supply chains and in that way create sovereignty, resiliency and independency,’ Castelein says.
Respond to this article by sending an e-mail to Antoon Oosting, editor-in-chief and author of this article: swz.rotterdam@knvts.nl.
Cartoon by Hans de Wilde/SWZ|Maritime.
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