Belgian chemicals group Solvay plans to create the second European site producing rare earths vital for the energy transition, as the continent rushes to break China’s dominance over the hard to extract elements.

The company said on Friday that its La Rochelle plant in France would be upgraded to separate a larger range of the 17 rare earths to include neodymium and praseodymium, which are crucial in the production of magnets for electric vehicles and wind turbines.

The decision to invest tens of millions of euros in the facility comes two days after EU leaders called for new legislation to address China’s grip over the supply chain for critical raw materials. The Asian nation controls 80 per cent of global rare earths processing capacity.

Disruption to gas supplies in the wake of Russia’s invasion of Ukraine has sharpened EU officials’ minds on the risks of relying on one country for materials needed for the transition to a lower-carbon economy.

“Lithium and rare earths will soon be more important than oil and gas,” EU commissioner Thierry Breton said this week. “Our demand for rare earths alone will increase fivefold by 2030.”

The 78-year-old La Rochelle plant, which supplies rare earths for automotive catalytic converter and semiconductor production, will help bolster Europe’s autonomy over the rare earth supply chain.

It will join Neo Performance Materials, which has a separation site in Estonia, in producing the rare earths needed for electric cars and wind turbines. The UK has a rare earths separation project under construction through London-listed Pensana.

“Rare earths are essential to ensure the green energy transition,” said Ilham Kadri, chief executive of Solvay, which recently settled a longstanding dispute with an activist investor. “Our investments in the magnets’ value chain will help Europe power its new economy.”

However, the rare earth supply chain involves many steps including turning separated rare earth oxides into metals and magnet production that analysts say are required to loosen Beijing’s control over the flow of critical materials and components.

“It’s a good step forwards,” said David Merriman, rare earths research director at Wood Mackenzie. “For automotive manufacturers, there are a few stages that need to be filled in to make it directly contact their supply chain.”

Europe imports about 16,000 tonnes a year of rare earth permanent magnets from China, meeting approximately 98 per cent of EU demand, according to a report by the European Raw Materials Alliance.

Under the proposed EU Critical Raw Materials Act, permitting will be streamlined, funding will be allocated to strategic projects and strategic stockpiles of materials will be built.

The EU has been much slower to build raw material supply chain resilience than countries such as Japan, which financed what is now the largest western rare earths producer Lynas, after China unofficially banned rare earth exports to the country a decade ago over a geopolitical dispute.