The European Union’s plans to expand its defence capabilities are being hindered by China’s export controls and sales restrictions on critical raw materials.

In response, EU leaders are urging member states to accelerate efforts to diversify supply chains.

According to Nikkei Asia, the European Commission announced last week that it would propose new legislation requiring companies across the bloc to broaden their supplier base in an effort to address economic imbalances, although it did not explicitly name China.

The war in Ukraine and growing uncertainty over Washington’s security guarantees have pushed European governments to increase military spending and defence production.

At the same time, according to a report published in May by Joris Teer, a policy analyst at the European Union Institute for Security Studies (EUISS), China accounts for at least 70% of global mining or refining activity in 17 of the 34 materials classified as critical by the EU. Eight of those 34 materials are currently subject to Chinese export controls.

“China is undermining Europe’s rearmament efforts,” Teer wrote. “Simply by activating this tool, China has already increased its leverage and demonstrated both the capability and willingness to restrict supply whenever it chooses.”

The Aerospace, Security and Defence Industries Association of Europe also warned that geopolitical developments and intensifying global competition for critical raw materials are further underscoring the need to strengthen European supply chains.

The organisation represents more than 4,000 companies, including Britain’s BAE Systems, France’s Thales and Germany’s Rheinmetall.

European defence manufacturers are pursuing a range of strategies, including vertical integration, recycling, diversification and stockpiling.

Rheinmetall told Nikkei Asia that it has “no dependencies” and is “well prepared” regarding critical minerals.

A company spokesperson said: “Rheinmetall has stockpiled key raw materials sufficient for several years. We have also implemented IT systems that allow us to centrally monitor and precisely manage raw material consumption across the entire group.”

Analysts, however, caution that stockpiling alone will not be sufficient. Maria Shagina, a researcher at the International Institute for Strategic Studies, said: “Stockpiling serves as an important buffer against sudden disruptions, but on its own it is unlikely to mitigate structural damage over the long term.”

Shagina added that replacing the volume and diversity of critical minerals controlled by Beijing with alternative sources would take years.

In 2024, the EU enacted the European Critical Raw Materials Act, aimed at rebuilding domestic supply chains for such minerals.

The legislation sets 2030 targets for domestic extraction, processing and recycling while limiting dependence on any single third-country supplier to 65%.

A €3 billion ($3.5 billion) fund was established last year to accelerate strategic projects.

Nevertheless, the European Court of Auditors has noted that the 2030 targets are not legally binding and that the EU remains far from achieving them.

Industry groups argue that policy inconsistencies could further slow progress.

The Cobalt Institute, which represents a sector vital to jet engines, advanced batteries and defence alloys, warned that proposed EU chemicals regulations risk undermining the industry.

“Europe has one foot in and one foot out,” said Michael Blakeney, head of government and public affairs at the London-based institute. “It says the right things, but its actions are inconsistent.”

Europe’s efforts are unfolding alongside a more aggressive US strategy to secure critical mineral supply chains.

Shagina said:

“The US is investing more capital to secure and expand capacity, taking greater financial risks and, in some cases, acquiring equity stakes. Europe, by contrast, is generally more cautious, which places it at a relative disadvantage in the competition for critical minerals.”

In April, the EU signed an agreement with the United States to coordinate supplies of critical minerals. Although some member states initially resisted over concerns that the deal could weaken the bloc’s strategic autonomy, they authorised the Commission in early June to join the US-led “Pax Silica” initiative, which coordinates investment and export-control policies.

Teer urged Europe to use ongoing US-EU-Japan negotiations as the nucleus of a broader coalition aimed at making critical mineral production outside China financially viable through state support, minimum-price mechanisms and supply rules.

“Particularly important are countries that either produce raw materials or possess significant mineral deposits, such as Malaysia, the Democratic Republic of the Congo, Brazil and Indonesia, as well as countries like India with large pools of skilled labour,” he said.

Teer also argued that the EU should activate its Anti-Coercion Instrument, which allows the bloc to impose tariffs and restrictions in response to economic pressure on countries outside the union, in order to deter China from introducing further restrictions.

A European Commission spokesperson said the bloc had “long been aware of the risks associated with the EU’s dependence on critical raw materials.”

“The objective is clear: to anticipate disruptions early and reduce the EU’s vulnerabilities while strengthening our industrial and defence capacities,” the spokesperson said.

SpaceX has sharply criticised a European Union plan to restrict access to satellite spectrum, arguing that the proposal risks degrading connectivity in Ukraine and disrupting emergency communications services.

In a document shared with European officials and reviewed by the Financial Times, SpaceX warned:

“This proposal significantly increases the likelihood that Europeans will be deprived of direct-to-device satellite services, or that new European operations will create global interference issues, including for emergency services such as those operating in Ukraine.”

In a proposal unveiled in May, the EU recommended reserving part of the spectrum band used for direct satellite-to-smartphone connectivity for European operators, thereby limiting the frequencies available to US and Chinese providers.

The 2 GHz frequency band in question is currently used by two US companies, Viasat and EchoStar.

SpaceX argued that the EU plan prioritises “an operator’s country of establishment over economic, technical and regulatory realities.”

When the proposal was announced, EU technology chief Henna Virkkunen defended the move, saying the bloc wanted to “increase European capacity in this sector.” She added that other parts of the frequency band would remain open to international operators, arguing that prioritising European providers was justified.

Other participants involved in discussions over the proposal said some EU officials were specifically seeking to limit Elon Musk’s Starlink satellite network.

Europe’s initiative follows a warning from Washington. In March, the US Federal Communications Commission (FCC) cautioned that it could take retaliatory measures if the EU chose to favour European satellite operators over alternatives such as Starlink.

At the time, FCC Chairman Brendan Carr told the Financial Times: “Some of the discussions in Europe regarding satellite sovereignty concern us. If Europe decides to move down that path, then, as you know, we will have to consider reciprocal measures.”

The European Commission’s proposal has not yet entered formal negotiations with EU member states or the European Parliament.

A source close to SpaceX said the company remained hopeful of influencing the outcome of the process, given concerns raised by both businesses and several European governments.

Bulgaria has said it is prepared to use its veto power to block the inclusion of Patriarch Kirill, head of the Russian Orthodox Church, in the European Union’s latest sanctions package. Bulgarian Prime Minister Rumen Radev, speaking on the sidelines of an EU summit, said Sofia would not support sanctions that could harm the country’s interests.

In comments reported by Nova.bg, Radev said: “What concerns me is not what the Patriarch has done, but the entire Russian community that belongs to the same Eastern Orthodox Church as we do. We are one family. When sanctions of this kind are being discussed, the views of the Bulgarian Orthodox Church must also be taken into account.”

He added that Bulgaria was prepared to veto the draft decision.

The Bulgarian prime minister also said the government opposed sanctions that threatened the country’s economy. As examples, Radev cited potential risks to the operations of Lukoil, the supply of spare parts for the Sofia metro system and fertiliser imports.

“We will discuss this later, but if a serious risk emerges to the operation of Lukoil Neftohim Burgas, we will also demand that the facility be removed from the sanctions list,” Radev said.

Continuing his criticism of the proposed measures, he added: “What message are we sending by extending sanctions and waging a war against religion? Do we understand where this could lead? I have said it before: the era of the Crusades is over.”

Opposition to symbolic measures with limited economic impact

Bulgarian Foreign Minister Velislava Petrova-Chamova also said Sofia opposed sanctions that carried no meaningful economic impact and could ultimately prove counterproductive.

Arguing that sanctions should function primarily as an instrument of economic pressure, Petrova-Chamova said restrictions targeting the leader of the Russian Orthodox Church were largely symbolic in nature. She added that freezing the patriarch’s assets could trigger accusations that Europe was interfering in church affairs.

Earlier, Politico reported, citing diplomatic sources, that Bulgaria had blocked part of the new sanctions package, although no details were provided.

Euronews subsequently reported that the proposed measures included restrictions targeting Patriarch Kirill. A similar sanctions proposal failed in 2022 after being vetoed by Hungary.

According to EU High Representative for Foreign Affairs and Security Policy Kaja Kallas, the bloc’s 21st sanctions package envisages restrictions against 170 individuals and entities.

Politico reported that the new measures could target Russian banks, the so-called shadow fleet and organisations linked to the Russian Orthodox Church.

The Russian government maintains that Western sanctions are illegitimate and ineffective. Vladimir Legoyda, head of the Russian Orthodox Church’s Synodal Department for Relations with Society and the Media, described the possible inclusion of Patriarch Kirill on the sanctions list as a meaningless step.