Europe is rearming. Since Russia’s invasion of Ukraine, defense budgets have surged, missile and ammunition orders have multiplied, and defense manufacturers have accelerated investment. Yet behind these rearmament announcements lies a far less visible constraint: securing the critical materials required to manufacture modern military equipment. While the United States, China, and several Asian powers have already implemented strategies to protect their supply chains, Europe is discovering that the success of its rearmament effort depends not only on its ability to manufacture weapons, but also on its ability to secure the materials needed to build them.
European rearmament is reshaping the industrial equation
European rearmament is no longer a political ambition, it has become a measurable reality. According to the European Defence Agency, defense spending by EU member states exceeded €320 billion in 2024, representing an increase of more than 30 percent compared with 2021.
This surge in spending is already translating directly into defense industry order books.
MBDA provides a clear illustration of this industrial acceleration. In 2024, the European missile manufacturer reported €4.9 billion in revenue, an order backlog of €37 billion, and €13.8 billion in new orders, while announcing €2.4 billion in planned investments between 2025 and 2030. The challenge extends well beyond expanding production facilities. MBDA relies on a network of approximately 4,000 suppliers, and the company estimates that around 60 percent of a missile’s value originates from its supply chain. It also reported producing and delivering 33 percent more missiles in 2024 than in 2023, with the objective of doubling production by the end of 2025 compared with 2023.
Rheinmetall illustrates the scale of Europe’s broader rearmament challenge. The German defense group recorded €16.6 billion in incoming orders during 2024 and now holds a record €55 billion backlog, including nearly €46 billion related to defense activities. To meet growing demand, Rheinmetall is expanding its industrial footprint across Europe. Its new facility in Unterlüß is expected to manufacture up to 200,000 rounds of 155 mm ammunition annually, contributing to a plan to increase the company’s global production capacity to more than 1.1 million rounds per year by 2027, compared with over 700,000 planned for 2025. At the same time, annual propellant production is scheduled to increase from 3,500 tonnes to 10,000 tonnes.
This expansion highlights a reality often overlooked in discussions about European rearmament. Every additional missile, artillery shell, radar, or armored vehicle requires substantially greater volumes of metals, energetic materials, specialty chemicals, electronic components, and other highly specialized industrial inputs.
European rearmament is therefore transforming critical materials into a direct factor of military capability.
Producing more weapons means consuming more strategic materials
Critical materials are embedded throughout the production chain of modern missiles, air defense systems, drones, and virtually every advanced military capability.
Modern air defense systems provide a first illustration. Active Electronically Scanned Array (AESA) radars increasingly rely on gallium nitride (GaN) semiconductors, a technology that delivers higher power output, greater energy efficiency, and improved detection performance. When China imposed export restrictions on gallium in 2023, the decision immediately drew the attention of defense manufacturers because it directly affected a material used in several critical military technologies.
Modern missiles demonstrate another strategic dependency. Their guidance systems, actuators, and certain electric motors rely on permanent magnets manufactured from rare earth elements. These components perform essential flight control and guidance functions. The United States now considers these materials sufficiently strategic to justify financing the reconstruction of a complete domestic industrial supply chain, from raw materials to the finished components integrated into military systems.
Drones provide a third revealing example. Their rapid proliferation across modern battlefields is driving a sharp increase in demand for batteries, electronic components, and advanced sensors. Behind these technologies lie graphite, rare earth elements, and several other specialized materials whose supply chains remain heavily concentrated in a limited number of countries.
Across all of these examples, the central issue is not the quantity of material required. The real question is whether industrial supply chains possess the capacity to sustain a long-term increase in defense production.
A global competition already underway
Europe is not entering a stable market, it is joining a global competition that has been underway for years.
For more than a decade, China has invested heavily in refining, separation, and processing capabilities for critical materials. According to the International Energy Agency, China now accounts for approximately 90 percent of global rare earth processing and holds a dominant position across several other segments of the critical materials value chain.
The United States has responded by implementing a strategy aimed at reducing industrial dependencies. The Department of Defense is funding multiple initiatives designed to rebuild a domestic permanent magnet supply chain, covering every stage from raw material extraction to the finished components used in military equipment.
Japan and South Korea have likewise pursued long-term policies to secure access to critical materials and reduce their exposure to disruptions in global supply chains.
Europe recognized the strategic implications much later. Published in 2024, the European Defence Industrial Strategy (EDIS) explicitly identifies supply chain security as a military preparedness issue. The strategy acknowledges that the ability to rapidly expand defense production depends as much on suppliers of materials and components as it does on prime defense contractors themselves.
Competition for critical materials is therefore no longer simply an industrial policy issue. It is steadily becoming a central element of strategic competition among major powers.
Europe’s real challenge: securing processing capacity
When critical materials are discussed, attention generally focuses on natural resources. Yet the primary bottleneck often lies elsewhere.
The real challenge is processing capacity: refining, chemical separation, purification, metal powder production, and the manufacture of intermediate components.
This distinction is critical. A raw material may be available on the global market while remaining effectively inaccessible to the defense industry if the required processing capabilities are concentrated elsewhere or cannot meet military-grade standards.
Recognizing this vulnerability, the European Union adopted the Critical Raw Materials Act (CRMA). The legislation establishes several targets for 2030: at least 10 percent of strategic raw material extraction, 40 percent of processing, and 25 percent of recycling should take place within the European Union. It also aims to ensure that no more than 65 percent of any strategic material is sourced from a single third country.
These objectives reflect a significant shift in European thinking. Critical materials are no longer viewed solely as an industrial issue, they are now considered a matter of economic, technological, and strategic resilience.
The challenge, however, lies in the timeline. Building new processing facilities typically requires years of investment, industrial qualification, regulatory approval, and production ramp-up. Even when funding is available, expanding capacity cannot be achieved overnight.
Why this battle will shape the pace of european rearmament
The consequences of these dependencies become particularly clear when viewed through the lens of a prolonged conflict.
Modern armed forces must do more than field advanced military equipment. They must also be capable of replacing battlefield losses, replenishing stockpiles, and sustaining production over many years.
From this perspective, critical materials become a decisive component of industrial resilience. A supply disruption may not immediately halt a defense program, but it can significantly slow production, increase manufacturing costs, and delay the delivery of systems considered operational priorities.
European rearmament is often presented as a budgetary or industrial challenge. In reality, it is equally a challenge of supply chain security. Critical materials, long regarded as a niche technical issue reserved for specialists, are rapidly becoming one of the key variables that will determine the speed at which Europe can rebuild its military capabilities.
Industrial capacity is becoming a strategic asset
Europe’s rearmament will not be decided solely in ministries of defense or inside weapons factories. It will also be determined by the industrial supply chains that provide the materials underpinning today’s military technologies.
The surge in orders for missiles, ammunition, radars, and drones is exposing a reality that remained largely in the background for decades: the ability to manufacture military equipment increasingly depends on securing access to critical materials, specialized components, and industrial processes that are often concentrated outside Europe.
The battle for critical materials has already begun. It will not determine the future of European rearmament on its own, but it will directly influence its speed, resilience, and long-term credibility in the years ahead.
