2026欧洲航空航天与国防供应链韧性研究报告：应对关键原材料供给风险

REPORT

ResilientEuropeanaerospace&defensesupplychains

Addressingcriticalrawmaterialvulnerabilities

Managementsummary

R

isingdemandfromelectrification,cleanenergy,andadvanced

technologies–combinedwithunderinvestmentinglobalsupplychains,overconcentrationinsourcinginahandfulofcountriesandincreasing

geopoliticaltensions–hasre-elevatedrawmaterialsasastrategicpriorityforaerospaceanddefense(A&D).Inresponse,theEUandNATOhaveidentifiedcriticalmaterials,includingtitaniumandrareearthelements(REEs),thatareessentialtoproduction.

ThesematerialsunderpinvirtuallyallA&Dplatforms,fromstructural

componentstopropulsion,batteries,andelectronicsystems,meaning

shortagescoulddirectlydisruptproductionandcapabilitydelivery.Structuraldependencyonupstreamextractionandprocessing–despitedomestic

resourcepotentialfromnon-producingcountries–createssignificantsupplychainvulnerabilities,particularlyatkeychokepointssuchastitaniumspongeandREEforwhichprocessingisdominatedbyRussiaandChina.

Whilemitigationstrategiessuchasscalingdomesticproduction,recycling,andsubstitutionareemerging,eachfacestechnical,economic,andtimingconstraintsthatmaylimittheirabilitytofullyoffsetprojectedshortfalls.Asaresult,thesectorisatastrategicinflectionpoint:securingaccesstocriticalrawmaterialsrequirescoordinatedgovernment–industryactionalongsidetargetedinvestmentsandsupplychainpartnershipsbyindividualfirms.

Ourthesismaintainsthatfocusingoneachrawmaterialthatisnecessaryforproduction,anddevelopingtargetedplanstosecuresupply,willbecriticalinthelong-termsustainmentoftheindustry.

Cover:AIGENERATED

2RolandBerger|ResilientEuropeanaerospace&defensesupplychains

3RolandBerger|ResilientEuropeanaerospace&defensesupplychains

Contents

Page

4

6

8

13

16

18

1

2

3

4

5

Introduction:Whyhaverawmaterialsbecome(evenmore)critical?

Practicalimplicationsofshortages-

Whichmaterialsimpactwhichcomponents?

Rootcausesofpotentialshortages-

WhatarewemissinginEuropeandmorebroadlyintheWest?

Mitigationsolutionsforpotentialshortages-Arethecurrenteffortsenough?

Anuncertainwayforward

Conclusion

4RolandBerger|ResilientEuropeanaerospace&defensesupplychains

1

Introduction:Whyhaverawmaterialsbecome(evenmore)critical?

Controloverrawmaterialshasbeenastrategicpriorityforindustrialpowersthroughoutmodernhistory.Fromcolonial-eraresourceextractiontoColdWarstockpiling,accesstocriticalinputshasbeenafoundationofnationalstrength.Thatimperativefadedtosomeextentinpartsoftheworldduringtheeraofincreasingglobalization,whensupplychainswereoptimizedforcostandefficiency,andrawmaterialsweretreatedascommoditiesratherthanstrategicassets.Inrecentyears,however,acombinationofsurgingdemand(drivenbycleanenergy,electrification,digitalization,andadoptionofadvancedtechnologies)andunderinvestmentinextractionandprocessinghasbroughtgeopoliticalrisksrelatedtorawmaterialsfirmlybackintofocus.

Inresponse,boththeEuropeanUnionandNATOhavemovedtodefineandprioritizethematerialsmostcriticaltoindustrialanddefenseresilience.TheEU'sCriticalRawMaterialsframeworkidentifies34substancesthatcombinehigheconomicimportancewithhighsupplyrisk.NATOhastakenamoretargetedapproach,releasingin2024alistof12(groupsof)defense-criticalrawmaterialsthatareessentialformilitaryreadinessandtechnologicaledge.Theseincludetitanium,rareearthelementsandothermaterialsandsubstancesthataredifficulttosubstituteandheavilyconcentratedinnon-alliedsupplychains.A

ThispublicationfirstexaminesthepracticalimplicationsofpotentialshortagesinNATO's12identifiedcriticalrawmaterialsforvariousaerospaceanddefenseplatforms.Itthendelvesintothechokepointsinthesupplychainsforthesematerials,exploringspecificallytitaniumandrareearthelements,thepotentialshortfallsthattheaerospaceanddefense(A&D)sectormayfaceinthenextdecade,andtheimplicationsoftheseshortfalls.Ultimately,akeyquestionemergesforthesector:shouldsecuringcriticalrawmaterialsbeaddressedattheEuropean,ifnotglobal,levelorcanindividualcompanieseffectivelysafeguardtheirspecificmaterialneedsindependentlyand/orselectivelyincollaborationwithgovernmentorotherindustryplayersfromacrossthevaluechain?

Rawmaterialsarefastbecomingacriticalrisktoaerospaceanddefensesupplychains.

Governmentsandindustrymustinvestnowinthepartnershipsrequiredforsourcingandrecyclingtoensurecontinuedaccessforgenerationstocome."

RachelHugo,SeniorPartner

5RolandBerger|ResilientEuropeanaerospace&defensesupplychains

AA&D-criticalrawmaterials(CRMs)identifiedbyNATOinthecontextofthe34CRMsidentifiedbytheEuropeanCommission

HOWTOUNDERSTANDTHE12A&D-CRITICALRAWMATERIALS?

118

periodicelementsandmanysubstances(combinationofelements)

EconomicimportanceforEurope'sindustryandpotentialsupplydisruptionrisk

NosubstituteforA&Dplatformsandhighgeopoliticalrisk

34

EUcriticalrawmaterials

12

criticalrawmaterials

A&DCRITICALITYANDRISKOFSHORTAGEFORTHE34EUCRMSCriticalitytotheA&Dsupplychain

High

Ti

Be

.KeyREEs(Nd,Pr).Ga

Co

●W●Ge

AI

.Pt

.Graphite

.Li

.Mn

LowRiskofshortageHigh

NATO's12criticalmaterialsRemaining22EUCRMs

Source:EuropeanCommission(CRMA2024);NATOIndustrialAdvisoryGroup(NIAG);TheInternationalInstituteforStrategicStudies;RolandBergeranalysis

6RolandBerger|ResilientEuropeanaerospace&defensesupplychains

2

Practicalimplicationsofshortages-

Whichmaterialsimpactwhichcomponents?

The12A&Dcriticalrawmaterialsarepresentinpracticallyalltypesofair,sea,land,andspaceplatformstosomedegree,andinmanytypesofarmaments.Thesematerialscanbeclassifiedintofourbroadcategories.B

BASEMATERIALS

Aluminum(Al)andtitanium(Ti):

Thesearemetalsthataccountforaconsiderableshareofthemassofstructuresandenginesofairplatforms.Aluminumismainlyusedinthefuselage,wing,andempennageofcivilandmilitaryaircraft,whiletitaniumisakeymaterialforthestructureoffighterjetsandairliners'pylons,andthemainelementusedinthecoldsectionofaeroengines.AshortageofthesematerialswouldsignificantlyimpacttheabilityofOEMstodeliveraircraft.

ADDITIVEMATERIALS

Cobalt(Co),lithium(Li),manganese(Mn),platinum(Pt),tungsten(W),graphite:

Thesearemainlymetals(exceptgraphite)thatamounttoasmallshareofthemassofplatforms'andarmament'sstructures,engines,andmechanicalsystems(e.g.,alloyingelements,coatings)butplayacrucialroleinenablingplatformperformance(e.g.,highperformanceofenginebyallowinghighhotsectiontemperaturesintheengine,lightweightingofstructures,increasedtoughnessandhardnessofarmor).Lackofthesematerialswouldaffectthedeliveryofaeroenginesandarmoredplatforms.

BATTERYMATERIALS

Cobalt(Co),lithium(Li),manganese(Mn),graphite:

Thesearethemaincomponentsofbatteriesthatpowerelectricpropulsionsystems(e.g.,fordrones),forwhichtheirelectrochemicalpropertiesareleveraged(whenusedasadditivematerials,itistheirmetallurgicalandchemicalpropertiesthatareleveraged).Ashortageofthesematerialswouldsignificantlyaffectdeliveriesofelectricallypoweredplatformsacrossdomains,especiallyunmannedsystems.

INSTRUMENTMATERIALS

Beryllium(Be),gallium(Ga),germanium(Ge),rareearthelements:

Thesearekeyenablersforcomponentsofelectronicinstruments(e.g.,radars)andelectricmotors(e.g.,permanentmagnets).Shortagesofthesematerialswouldresultindeliverydelaysforprimes(OriginalEquipmentManufacturers)duetoconstraintsinthesupplyofelectronicsystems,inparticularsensors(e.g.,electroniccountermeasures)andelectricalpowerandpropulsionsystemsforbattery-electricplatforms(e.g.,unmannedaerialvehicles).

Itisimportanttonotethatalthoughrareearthelementsarepresentedasanaggregatedgroup,theyareacollectionof17elementstypicallyfoundinsmallquantities,whichappearinnaturecombinedandwhichcanbedifficulttoseparate.Arguablythemostcriticaloftheseincludeneodymium(Nd),praseodymium(Pr),dysprosium(Dy),terbium(Tb),andsamarium(Sm),allusedintheproductionofhigh-strengthpermanentmagnetsfordiverseapplications,andthesubjectofmuchinvestmentinsourcingandrecycling.

7RolandBerger|ResilientEuropeanaerospace&defensesupplychains

BPresenceofthe12criticalrawmaterialsacrossA&Dplatforms

andmainapplicationswithinthoseplatforms(examples)

Mechanicalapplications

Additivesand

Domain

Structures

AITi

alloyingelements

Graphite

WPtCoLiMn

Air

(e.g.,

commercialandmilitaryaircraft)

Space

(e.g.,

commercialandmilitarysatellites)

Sea

(e.g.,dual-useandmilitary

vessels,andsubmarines)

Land

(e.g.,dual-useandmilitary

armored

vehicles,

includingtanks)

Armaments

(e.g.,missiles)

Airframeandenginecoldsection

Overallstructure(Al).Tiforspecificcomponents

(e.g.,brackets)

Alforinternalstructures.Tiforcorrosionapplications(e.g.,pipes)

Structuremainlymadeofsteel.Al

andTihavelimitedapplication(e.g.,TiinAbrams'turbine)

Missilebody

andenginecoldsection

Brake

systems

Enginehotsection

coatingandsuperalloys

Thermalshield

Alloying

elementsforcomponents

Nuclear

reactor

parts

(neutron

moderator)

Engine

components

Alloyingelementsforarmorcomponentsandcoatings

Nozzle

coatings

(formissileswithsolid

propellantengines)

Enginehotsection

coatingandsuperalloys

Electronicapplications

Batteries

CoLiMnGraphite

Battery

components

Instrumentsandmotors

BeGaGeREE

Components

forsensors,

engines

(magnets)

andoptics

Source:RolandBergerexperience

8RolandBerger|ResilientEuropeanaerospace&defensesupplychains

3

Rootcausesofpotentialshortages-WhatarewemissinginEuropeandmorebroadlyintheWest?

Today,Europe–andmorebroadlytheWest–doesnotcontrolthevaluechainformostcriticalrawmaterials.EuropeanandNorthAmericanactivitiesarenormallyconcentratedindownstreamprocessstepssuchastheproductionoffinalcomponents,whileupstreamextractionandbeneficiationtypicallyhappenselsewhere.Thisimbalancepersistsdespitethepresenceofuntappedmaterialreservesthatcouldbedevelopedwithsufficientinvestment.

C,D

Thepracticalimplicationisastructuralvulnerability:primes(OEMs)mayfacesignificantdeliveryrisksifdisruptionsoccurintheearlystagesofthesupplychain,particularlyinjurisdictionsbeyondtheircontrol.Theseupstreamdependenciescanactascriticalchokepoints.Toillustratethepotentialexposure,weexaminetwocasestudies–titaniumandrareearthelements(REEs)–toassessthevolumeofmaterialthatcouldbeatriskofshortage.

COverviewoftheminingandprocessingdistributionofkeycriticalrawmaterialsbycountry

Mineproductionandprocessingofcriticalrawmaterialsbycountry,2022[%]1

CobaltDysprosiumGraphiteLithiumManganeseNeodymiumPlatinum

Mining

Processing

ChinaChileDRCongoAustraliaSouthAfricaMalaysiaOther

1Shareoftotalminingandprocessing

Source:IRENA;RolandBerger

9RolandBerger|ResilientEuropeanaerospace&defensesupplychains

DValuechaincoverageofNATO's12criticalrawmaterialsbyEuropeandNorthAmerica,andrestoftheworld

Valuechainstep

Structural

materials

AlTi

Additive/Instrument&electricmotormaterials

alloyingBattery

elementsmaterialsBeGaandGeREE

Mineralreserves

Miningactivity

Metalextractionfromores

Semi-finishedproducts

containingthe

Finalcomponents

material

Europe,NorthAmericaRestoftheWorld

Source:RolandBergeranalysis

3.1/Titanium:

Astructuralbottleneckfromspongetofinalcomponent

Titaniumdemandforaerospaceanddefenseissettogrowsubstantiallyoverthenextdecade,drivenbytheramp-upincivilaircraftproductionandhigheranticipatedordersformilitaryplatformsamidescalatinggeopoliticaltensions.OurestimatesindicatethatA&D-relatedtitaniumdemandcouldreachroughly600–700kilotonsoverthenexttenyears,withabout60%attributabletoairframestructuresandmostoftheremainderforengines.Againstthisbackdropofrisingdemand,titaniumsupplyisexposedtoconstraintsattwodistinctlevels:attherawmaterialstageandatthesemi-finished/finishedproductstage.

Attherawmateriallevel,thesecurityofhigh-puritytitanium–over99.5%titaniumcontentwithminimaloxygenandironimpuritiestoguaranteeoptimalmechanicalbehavior–isalreadyfragile.Today,roughlyhalfoftheworld'shigh-gradetitaniumspongeoriginatesfromChinaandRussia,creatingaconcentratedgeopoliticalriskforWesternOEMs.Sanctions,exportcontrols,andtransportdisruptionslinkedtoRussia'swaragainstUkrainehavealreadyexposedthevulnerabilityofsponge-dependentsupplychains.

Atthesemi-finished/finishedproductlevel,theriskliesinforgings,castings,andmachinedcomponents,forwhichtherawmaterialmaycomefromChinaandRussia,orfromlessriskysourcessuchasJapan,Kazakhstan,orSaudiArabia.Beforethe2022war,WesternengineandairframeprogramswereheavilyreliantonlargeRussianforgings,adependencythathassincebeenreducedbutnoteliminated;currentassessmentsstillpointtoarounda20%exposuretoRussian-originforgedcomponents.Titanium-basedforgedandcastcomponentsforenginecoldsectionsarealsoatrisk,aseventhoughmoststructuralcastingsarenowproducedintheWest,capacityforsuchcastingsiswidelyexpectedtoplateauat2027–28levels,withleadtimesforforgedandmachinedA&D-gradepartsprojectedtolengthenfurtherundersustaineddemand.E

10RolandBerger|ResilientEuropeanaerospace&defensesupplychains

EOverviewoftitaniumdemandforA&D

TitaniumdemandforA&D,1cumulative2026-35['000metrictons]andkeysupplychainrisks

Refinedmaterial(Tisponge)

15-20%

MainlyKazakhstan&SaudiArabia

30-40%

Japan

Currentdistributionofglobalhigh-purityTisponge3

production,unlikelytochangeinthenextdecadewithout

newcapacityadditions

10-15%

Russia

30-40%

China2

600-700

Aerospacesemi-finishedproductsandcomponents

Materialatrisk

Rawmaterialinputrequirements

250-300600-700

15-20%atrisk

10-20%atrisk

350-400

~20%atrisk

Totaldemand

Aeroenginecoldsection

components

Componentsfor

aerostructures

&systems

1Titaniummetalandalloyrequiredtoproducethefinishedcomponentsmountedonmilitaryandcivilaircraft(>90%ispureTi,withtherestbeingalloyingelements);2Chinacurrentlyaccountsfor65-70%oftheglobal

Tispongeproduction,withagrowingshareofitsproductioncurrentlyconsideredhighpurity;3>99.5%TiandlowlevelofinterstitialssuchasO,N,H,CandFe

Source:RolandBergeranalysis

3.2/Rareearthelements:Smallquantity,outsizedimpact

Rareearthelementsperformawiderangeoffunctionsacrossaerospaceanddefense(A&D)platforms;however,NdFeBpermanentmagnetsrepresentoneofthemostcriticalandpervasiveapplications.Thesemagnetsareintegraltobrushlesselectricmotorsusedinelectricandhybrid-electricdrones,aswellasinmotorspoweringactuatorsystemsinbothcommercialandmilitaryaircraft.F

Inaddition,materialssuchassamarium-cobaltplaycriticalrolesinotherapplications.QuantifyingactualREEdemandinA&Dapplicationsremainsinherentlydifficultduetolimitedvisibilityintodefenseplatformproductionvolumes–particularlyformilitarydrones–andtheconfidentialitysurroundingequipmentbillsofmaterials.WhileindicativeestimatessuggestdemandoverthenextdecadecouldreachseveralkilotonsofREEmetals,theseprojectionscarryahighdegreeofuncertainty.

Attheplatformlevel,individualdronestypicallycontainonlytensofgramsofREEs,primarilyneodymiumandpraseodymiumusedinhigh-performancepermanentmagnets.However,large-scaledeploymentofunmannedaerialvehicle(UAV)systemsisexpectedtobeakeydemanddriver.Inparallel,civilandmilitaryaircraftproductioncontinuestoexpand,withREEcontentperaircraftreachingtensofkilogramsinactuator-relatedmagnetsystems.Inlargerplatformssuchassubmarinesandwarships,REEcontentismuchhigherduetothesheermassofthesystemstheycarry.

REEsupplyfacesacuterisksacrosstheentirevaluechain,asChinacontrolsapproximately90%ofglobalprocessing,refining,andmagnetproductioncapacity.G

11RolandBerger|ResilientEuropeanaerospace&defensesupplychains

FOverviewofrareearthelements

PERIODICTABLEOFELEMENTS

H

He

Li

Be

B

C

N

O

F

Ne

Na

Mg

AI

Si

P

S

Cl

Ar

K

Ca

Sc

Ti

V

Cr

Mn

Fe

Co

Ni

Cu

Zn

Ga

Ge

As

Se

Br

Kr

Rb

Sr

Y

Zr

Nb

Mo

Tc

Ru

Rh

Pd

Ag

Cd

In

Sn

Sb

Te

I

Xe

Cs

Ba

Hf

Ta

W

Re

Os

Ir

Pt

Au

Hg

Tl

Pb

Bi

Po

At

Rn

Fr

Ra

Rf

Db

Sg

Bh

Hs

Mt

Ds

Rg

Cn

Nh

Fl

Mc

Lv

Ts

Og

La

Ce

Pr

Nd

Pm

Sm

Eu

Gd

Tb

Dy

Ho

Er

Tm

Yb

Lu

Ac

Th

Pa

U

Np

Pu

Am

Cm

Bk

Cf

Es

Fm

Md

No

Lr

StrongpenetrationinA&Dofpermanent(NdFeB)magnets,

mainlyforelectricmotorsandactuators

LightREEs:Loweratomicnumbersandlargerionicradii;1typicallymoreabundantinnature

HeavyREEs:Higheratomicnumbersandsmallerionicradii;1,2typicallylessabundantinnatureOtherREEs3

1Ionicinsteadofatomicradiusbecause,innature,REEs(likemostelements)don'texistasneutralatoms,theyexistasions;

2Yttrium(atomicnumber39)isclassifiedasaheavyREEnotbecauseofitsatomicweight,butbecauseitsionicradiusfallsrightinthemiddleoftheheavyREErange;

3ScandiumisconsideredaREEbecauseitschemicalbehaviorissimilartothatoflanthanidesandittendstooccurinthesamemineraldepositsasthelanthanides

Source:RolandBerger

12RolandBerger|ResilientEuropeanaerospace&defensesupplychains

GOverviewofREEmetaldemandforA&D

REEmetaldemandforA&D,1,2cumulative2026-35['000metrictons]andkeysupplychainrisks

Complextoestimategiven

confidentialityaroundthebillof

materialsofmilitaryplatforms

0.5-1

1.5-2

~90%raw

materialandcomponents(magnets)

atrisk

Military3andCivilaircraftOthermilitaryplatformsTotaldemand

commercial4UAVsandequipment

Singledigitkilotonsdemandonlyfortheseapplications

~90%oftheREEmagnetsvaluechainiscontrolledbyChina

SharecontrolledbyChina

Valuechainstep

60-70%5

~90%

Miningandbeneficiation

Separationofrareearthoxides

Metallization

Stripcasting/flakecasting

Magnetmanufacturingprocesses

1IncludestheREEcontentforA&Dplatforms,whichismainlyconcentratedintheNdFeBmagnets

inbrushlesselectricmotorspresentinelectricandhybrid-electricpropulsionsystemsandactuators;

2DemandforrecreationalUAVsand~80%ofcommercialUAVsareexcludedfromtheanalysisgiventhe

marketdominanceofChinesedronesinthesesegments;3IncludesdemandforNATOandUkraineelectricandhybrid-electricUAVs;4Includesdemandfornon-Chineseelectricandhybrid-electriccommercialUAVs;5RemainderismainlyminedinUS,Australia,Myanmar,Thailand,etc.

Source:RolandBergeranalysis

13RolandBerger|ResilientEuropeanaerospace&defensesupplychains

4

Mitigationsolutionsforpotentialshortages-Arethecurrenteffortsenough?

TherearethreekeypathwaystomitigatepotentialshortagesofcriticalA&DmaterialsintheWest:

INCREASEOFPRODUCTIONCAPACITY

Scaleupmining,refining,andprocessingofrawmaterials,whichrequiressignificantinvestmentsandpotentialre-evaluationofcurrentenvironmentalregulations.

LARGE-SCALERECYCLING

Recoveryofmaterialsfromscrappedaircraft,engines,anddrones(orotherrelatedindustryscrapsuchascleanenergy)offersalower-energy,fasteralternativetonewmining,creatingareliabledomesticstockpileagainstimportrisks.Thiscanpresentdifficultiesiftherecyclingprocessisnotmatureoriflarge-scalescrapvolumesarenoteasilyaccessible.

DEVELOPMENTOFSUBSTITUTES

Advancedalloys,composites,andredesignedcomponentscanreplacescarceelementsinairframes,engines,andactuators.Thisrequirescarefulconsiderationinordernottocompromiseperformance,andrecertificationofcomponentsinplatforms.

Eachmaterialrequiresatailoredmitigationapproachsuitedtoitsspecificsupplyrisks.

4.1/Titanium:

ApotentialgapwithoutaccesstoRussia'sandChina'ssponge

High-puritytitaniumspongecapacityoutsideChinaandRussiaisconcentratedinJapan,Kazakhstan,andSaudiArabia,withJapancurrentlyexpandingoutputthroughOsakaTitaniumTechnologies.Atthesametime,severalrecyclinginitiativesareadvancingscraprecovery.InFrance,EcoTitaniumprocessesaviation-gradetitaniumscrapfromforgingandmachiningintorefinedalloyssuitableforhigh-performanceapplications.IntheUnitedStates,IperionXconvertstitaniumscrapintohigh-qualitypowderandmetalmeetingaerospacestandards.

Despitetheseefforts,acumulativesupplygapofapproximately100kilotonscouldemergeoverthecomingdecadeifspongeproductionandrecyclingcapacityoutsideChinaandRussiadonotscalemorerapidly.Substitutionremainslargelyinfeasible,giventitanium'suniquestrength-to-weightratioandcorrosionresistance,whicharecriticalforaerostructuressuchasenginepylonsandcoldsectionenginecomponents.H

InvestmentisbeingmadebyOEMsandenginemanufacturersfurtherbackinthevaluechain,includingincastingandforging.ExamplesareAirbusandSafran'sinvestmentinAubert&Duval,whichisactiveintitaniumrecyclingthroughEcoTitanium,andRolls-Royce'sexpansionofitsadvancedairfoilcastingcapacity(focusedonnickelsuperalloys).

14RolandBerger|ResilientEuropeanaerospace&defensesupplychains

HTitaniumdemandvs.supplyforA&D

Cumulative2026-35['000metrictons]

600-700100-150

5-105-10500-550

DemandGapAdditional

plannedcapacity

Planned

recycling

capacity

Basedon

currentcapacity

(excl.Russia

andChina)

Includingcapacityfrom

EcoTitanium,OsakaTitanium

TechnologiesCo.,Ltd.,IperionxLtd

EstimatedTisupplyforA&D1,2

1SupplyexcludesChinaandRussia;2A&Daccountsfor60-70%oftheglobalhigh-puritytitaniumdemand

Source:RolandBergeranalysis

Nosingleorganizationcansolve

thisalone.Buildingaresilientraw

materialsecosystemrequires

coordinatedinvestmentacrossOEMs,

suppliers,andgovernments."

AdamHealy,Partner

15RolandBerger|ResilientEuropeanaerospace&defensesupplychains

4.2/Rareearthelements:

CapturingproductioncapacityforA&D

ThelimitedrareearthelementproductioncapacityoutsideChinaislargelyorientedtowardneodymiummagnetsforelectricvehicles,consumergoods,andwindturbines.

WhilesubstantialREEcapacityadditionsareplanned,mostoutput–bothexistingandincremental–isexpectedtobeabsorbedbyautomotiveandindustrialmotorapplications,consumerelectronics(e.g.,soundandmotioncomponentsinlaptopsandsmartphones),andenergysystemssuchasdirect-drivewindturbines.Furthermore,whilesuchadditionsareaddressingNdPr,therearestillgapsinTbandDy,dopantmaterialscriticaltothefunctioningoftheseneodymiummagnets.

Meanwhile,large-scaleREErecyclingisunlikelytocontributemeaningfullyintheshorttermdespiteexistingpilotsandongoingresearch,giventhelimitedmaturityofrecyclingtechnologiesandthechallengesinaggregatingfeedstock.

TheallocationofREEstoawiderangeofsectorsthatrequirethesematerialsislikelytopersistunlessgovernmentssecurededicatedvolumesforaerospaceanddefense,orOEMsandtheirsupplychainsarewillingtopayapremiumtoguaranteeaccesstotheREEmetalstheyrequire–oneexampleofthisinpracticeistheUSDoD'sinvestmentinMPMaterials,whichincludessupportforexpandingitsheavyrareearthseparationcapabilitiesatitsMountainPassfacility,andanofftakeagreementfortenyears'worthofmagnetproduction.

IftheaerospaceanddefensesectorisunabletosecuresufficientREEsupply,substitutionisapotentialoption,andmanufacturersmayneedtotransitiontowardmagnet-freealternatives(andsomehavealreadydonesoforcostandperformancereasons),butinpracticethisisnotpossibleforsomeapplications.I

IA&DNdPrdemandcouldbeservedbyWesterncapacity,butitisincompetitionwithlargersectors

DemandvssupplyofNdPrmetal,cumulative2026-35['000metrictons]

1-5%of

current

non-China

capacity

NA40-45%AUS40-45%UK10-15%

Largest

capacity

additionsin

theUS

NA75-80%

AUS15-20%

UK5-10%

Additional

demandlikely

toincrease

A&Ddemand

to>5%oftotal

non-China

supply

.25-30.~50·20-25·

Estimated

Estimated

Total

Total

Additional

A&Ddemand

supplybased

additional

estimated

estimated

A&D

basedon

oncurrent

supplybased

supply

demand

demandfor

today's

capacity

onplanned

additional

capacity

expected

production

increase

production

SupplyfromoutsideofChinaSupplyfromChina

DemandforA&DDemandfornon-ChinaNdPrmetalDemandforChineseNdPrmetal

Source:RolandBergeranalysis

16RolandBerger|ResilientEuropeanaerospace&defensesupplychains

5

Anuncertainwayforward

Theindustryfacesanincreasinglyuncertainoutlookassupplyconstraintsforcriticalrawmaterialsintensify.DisruptionscouldbecomeatangibleriskifEuropeandtheUnitedState