The European Union is preparing to propose a new partnership with the United States aimed at reducing both sides' reliance on China for critical minerals and rare earth elements essential to modern technology, defense systems, and the energy transition.

Under the proposal, the EU would sign a memorandum of understanding with Washington to develop a "Strategic Partnership Roadmap" within three months. Both sides are aiming to conclude negotiations within 30 days, according to a draft statement the U.S. and European Commission are expected to release Wednesday.

The initiative comes as Secretary of State Marco Rubio prepares to host dozens of foreign ministers and senior officials from allied nations at the State Department on Wednesday for a ministerial meeting on critical minerals. Vice President JD Vance is scheduled to deliver a keynote address.

A Shared Vulnerability

China controls approximately 70 percent of the world's rare earth mining and 90 percent of global processing capacity. That dominance has given Beijing significant leverage over supply chains that underpin everything from smartphones and electric vehicles to jet engines and missile guidance systems.

The vulnerability became acute last year when China imposed export restrictions on rare earth elements in response to tariffs levied by the Trump administration. The constraints were delayed in October as part of a deal between President Donald Trump and Chinese leader Xi Jinping, but American officials are now determined to accelerate efforts to secure alternative supplies.

The EU faces similar exposure. A report released Monday by the European Court of Auditors found that 97 percent of the bloc's magnesium—used in hydrogen-generating electrolyzers—comes from China. The bloc also imports 71 percent of its gallium, used in smartphones and satellite communications, and 31 percent of its tungsten, used in drilling and mining, from Chinese suppliers.

"Without critical raw materials, there will be no energy transition, no competitiveness, and no strategic autonomy," said Keit Pentus-Rosimannus, the ECA member responsible for the audit. "Unfortunately, we are now dangerously dependent on a handful of countries outside the EU for the supply of these materials."

What the Proposal Contains

The EU's draft memorandum outlines several mechanisms to reduce dependence on Chinese minerals.

The proposal calls for the two sides to explore joint critical mineral projects and price-support mechanisms designed to protect Western miners and refiners from being undercut by cheaper Chinese exports. It also recommends safeguards against market manipulation and oversupply from outside sources.

The memorandum suggests building secure supply chains between the U.S. and EU, exempting each other from export restrictions on critical raw materials, and collaborating on research and innovation across the entire value chain.

Information sharing would also be central to the partnership. The proposal calls for exchanging data on supply chain risks and working together to bring greater transparency to global markets. Measures to prevent disruptions could include joint stockpiling or the creation of a coordinated U.S.-EU response group.

Notably, the EU proposal insists that both sides respect each other's territorial integrity—language that appears to address recent tensions after Trump signaled interest in acquiring Greenland, a territory of EU member Denmark. The issue nearly ruptured transatlantic relations in recent weeks.

The European Commission said the talks were "vital to diversify our supplies away from any single country" but did not comment on the specific contents of its proposal.

Trump's $12 Billion Stockpile

The EU's offer aligns with Washington's own push to insulate manufacturers from supply disruptions.

On Monday, Trump announced the launch of "Project Vault," a strategic reserve of critical minerals funded initially by a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital. The stockpile is designed to shield American companies from sudden shortages and price swings.

"We don't want to ever go through what we went through a year ago," Trump said, referring to the showdown with China over rare earth exports.

More than a dozen major companies have joined the initiative, including General Motors, Stellantis, Boeing, Corning, GE Vernova, and Google. Three large trading firms—Hartree Partners, Traxys North America, and Mercuria Energy—will handle sourcing and purchasing materials for the reserve.

The EU's proposal also mentions the possibility of stockpiling critical minerals, suggesting the two sides may find common ground on the approach.

EU's Diversification Struggles

The partnership proposal comes as the EU acknowledges its own efforts to secure alternative mineral supplies have fallen short.

The European Court of Auditors report found that the bloc's 2030 targets—which call for 10 percent of critical minerals to be extracted domestically, 40 percent to be processed in the EU, and 25 percent to come from recycled materials—are "out of reach."

"The outlook is not promising," the auditors wrote. "Seven out of 26 materials needed for the energy transition have recycling rates between 1% and 5%, while 10 are not recycled at all."

The report noted that even when new deposits are discovered in Europe, it can take 20 years for a mining project to become operational. Processing capacities are also shrinking, partly due to high energy costs that undermine competitiveness.

The EU's strategic partnerships with third countries have also failed to deliver. The bloc has signed 14 such agreements over the past five years, seven of them with countries that have low governance scores. Imports from those partner nations fell between 2020 and 2024 for about half of the raw materials examined.

What Comes Next

The U.S. is pushing allied countries to agree on a pricing mechanism that would help insulate Western refiners and extractors from cheaper Chinese exports. Washington initially pressed some EU member states to sign bilateral deals, but the European Commission asked the bloc's countries to negotiate as a unit.

EU capitals have since given the commission a mandate to negotiate on their behalf.

Officials on both sides have expressed skepticism that a comprehensive agreement can be finalized quickly. But the EU's offer—and its alignment with U.S. priorities on stockpiling and price support—suggests negotiations are moving forward.

The draft statement expected Wednesday indicates that the EU, U.S., and other partners intend to explore a plurilateral trade initiative with like-minded nations. That could include coordinated trade policies such as border-adjusted price floors, standards-based markets, or offtake agreements.

Numerous U.S. administrations have made similar pushes on critical minerals over the years with limited success. Whether this effort produces different results may depend on how urgently both sides view the threat posed by continued reliance on China.