Europe is exporting the scrap its defence industry needs. This report shows how the EU and NATO Allies can turn it into a secure supply of critical materials for defence and the energy transition.
By Giovanni Cisco, Gabor Papp and Petya Barzilska
10 November 2026
In brief
- Scrap is the new front line in the competition for critical raw materials (CRMs), and Europe is letting it go.
- Every one of NATO’s 12 defence-critical raw materials sits behind a supply chokepoint. For example, China makes 93% of permanent magnets.
- Recycling, often on existing industrial sites, can become a strategic supply line for defence and industry within Europe’s Readiness 2030 defence horizon.
- China restricts critical raw materials for military users. The US now keeps key scrap, such as tungsten scrap and black mass, at home. Europe is starting to act, but EU policy does not adequately treat recycled material as a defence resource.
- Europe has strengths in material recovery and recycling, but remains a net exporter of copper, aluminium and permanent magnet scrap, and only around 1% of rare earths are currently recycled.
- Europe should: phase in targeted export restrictions on magnet scrap alongside investment in recycling, create demand for recycled material, make recycling plants viable and improve traceability in defence.
- The EU must keep strong local content rules in the Industrial Accelerator Act (IAA). The Critical Raw Materials Act and Circular Economy Act alone will not create new defence supply. Watering down the IAA’s local content requirements would weaken demand signals and, with them, investment in European recycling.
of the world’s permanent magnets are made in China
of rare earths are recycled, while Europe exports magnet scrap
for a new mine to reach production. Recycling can add supply by 2030
Why this matters now
Competition for critical raw materials now extends to scrap and waste. China controls around 70% of rare earth mining, 90% of processing and 93% of magnet manufacturing. Every one of NATO’s 12 defence-critical raw materials sits behind a supply chokepoint like these.
In July 2026, the US authorised export restrictions on black mass (material recovered from used batteries), end-of-life permanent magnets and tungsten scrap. Sellers of tungsten scrap and black mass must sell to US buyers.
Europe has begun to act. The EU’s Critical Raw Materials Act (CRMA) aims for recycling to meet 25% of strategic raw material needs by 2030. In October 2026, the European Commission named 46 new Strategic Projects under the CRMA, including 24 involving recycling. From 9 December 2026, the EU will also ban exports of black mass to countries outside the OECD.
EU regulations do not adequately treat recycled material as a defence resource. Regulations hamper the movement of recycling feedstock across Europe, while strict certification and sourcing rules limit the use of recycled materials in defence and other supply chains.
Scrap critical materials can also supply wind turbines, EVs, batteries and power grids. Recycling them in Europe would increase security of supply and drive innovation in clean energy, automotive and other industries to reduce dependence on China.
The barriers are regulatory and economic, not only technical. Shipment rules, certification and origin rules decide whether recycled material can reach defence supply chains, as do power costs, feedstock and guaranteed buyers.
EU decisions in the coming weeks will shape Europe’s response, including the IAA and Critical Raw Materials Act negotiations, the Commission’s planned rules on scrap exports, the Circular Economy Act and implementation of the European Defence Industry Programme.
What Europe must do: four priorities
Europe must remove the barriers to recovery and processing, make recycling commercially viable, and connect recovered materials to industrial demand across borders.
Move the feedstock to European plants
- Phase in targeted export restrictions. Restrict exports of magnet scrap and magnet-containing waste gradually, matched by investment in recycling so the material can be processed.
- Simplify shipments. Harmonise customs codes and introduce faster, digital procedures so magnet-containing waste can reach recyclers in the EU and NATO Allied countries.
- Improve collection and dismantling. Invest in safely removing magnets from discarded equipment and recovering other valuable metals from the same waste.
Design for European recycling
- Create steady demand. Combine public procurement and long-term contracts with practical recycled-content requirements that preserve performance.
- Design for dismantling. Require clear information on where magnets and other valuable materials are in equipment, and how to remove them safely.
Make recycling plants viable
- Improve access to electricity. Speed up grid connections and help strategic recyclers secure competitively priced power through long-term contracts.
- Fund technologies that can reach the market. Back projects with secure scrap supplies, industrial partners and clear plans to operate commercially in Europe.
Improve traceability in defence
- Define European recycled material. Base EU support on where material is recovered and refined, not only where it is collected, while keeping existing defence sourcing rules.
- Agree common standards. Work with NATO Allies, defence manufacturers and recyclers to record material origin, composition and processing history, and test digital tracking.
- Create recovery agreements for steel and magnets. Combine material from retired military equipment with suitable civilian scrap to supply reliable volumes, backed by long-term purchasing commitments.
“Europe cannot rearm on materials it gives away. Recycling allows us to turn scrap into supply for European security and defence. Scrap must be treated as a strategic asset, backed by investment in domestic recycling.”
Petya Barzilska, Head of Policy and Research, EIES
Inside the report
- How the EU and US are using minerals policy as a strategic tool
- Certification, quality standards and traceability for recycled material in defence
- Closed-loop and open-loop recycling, and how to set priorities between materials
- Two case studies: recycled steel for armour, and rare earth magnet recycling
Download the full report (PDF, 400 KB)
About the authors
Giovanni Cisco
Research Associate, EIES
Giovanni specialises in supply chain security across strategic sectors including batteries, semiconductors, defence and domestic energy. He previously worked on critical minerals in semiconductor supply chains on a GIZ-funded project, and at the Council of the European Union and The Hague Centre for Strategic Studies.
Petya Barzilska
Head of Policy and Research, EIES
Petya leads EIES policy analysis and research. She has a decade of experience in political risk, energy policy and energy transition risks, including at ISS STOXX, S&P Global Market Intelligence and IHS Markit, working on EU trade, energy and security policy and supply chains.
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