Building resilience in Europe's aerospace & defense supply chains

By Rachel Hugo, Adam Healy and Alexander Baumgartner

Europe's aerospace & defense sector faces a critical challenge: securing access to the raw materials that underpin virtually all military and commercial platforms. In a new report, Roland Berger examines how concentrated supply chains for titanium, rare earth elements, and other critical materials create strategic vulnerabilities – and what industry and governments can do about it.

Why raw materials are now a strategic priority

For decades, globalization has treated critical raw materials as commodities. European companies excelled at leveraging critical raw materials to build sophisticated platforms, leaving their extraction and processing to others.

That era has ended. Recent geopolitical developments have disrupted supply chains and exposed deep structural dependencies, just as the Western nations confronts surging demand from electrification and clean energy amid decades-long underinvestment in domestic capacity.

NATO identified 12 critical raw materials where supply risk meets strategic necessity: titanium, aluminum, tungsten, platinum, cobalt, lithium, manganese, graphite, beryllium, gallium, germanium, and key rare earth elements. The European Critical Raw Materials Act identified 35 critical raw materials considered essential for Europe’s strategic autonomy and supply chain resilience.

Component dependency across aerospace and defense

These 12 materials have no viable substitutes in defense applications. They are embedded in air, sea, land, space and armament systems across the military complex, from airframe structures and engines to batteries, electronic warfare systems, and sensors.

Chokepoints upstream

Europe controls final assembly of its aerospace and defense components but upstream processing of much of the key raw material needed is concentrated in a small number of coutries such as China and Russia. This holdover from the globalization push has created structural chokepoints in the supply chain given today's deepening geopolitical crises. For example:

• ~50% of high-grade titanium sponge comes from China and Russia. Over the next decade, we could see a cumulative supply gap of 100 kilotons
• China controls 90% of global rare earth processing; most new capacity is absorbed by electric vehicles, forcing aerospace and defense to compete for scarce supply

Mitigation efforts

Three mitigation pathways exist, but each faces constraints:

• Scale domestic production: Secures supply but requires significant time and investment
• Expand recycling: Speeds up a measure of supply security but cannot yet meet full demand
• Develop substitutes: Few possibilities, as many material properties are non-negotiable

Uncertain road ahead

Europe's aerospace and defense sector faces an increasingly uncertain outlook as supply constraints for critical raw materials intensify. While Europe and the US have some industrial foundations and financial means, control over upstream supply chains remains limited, leaving access to key materials vulnerable to disruption.

Most critical raw materials are sourced and processed outside Europe, creating structural dependencies and exposing the sector to risks, particularly for materials such as titanium and rare earth elements. If access to upstream supplies from non-allied countries were disrupted, production lines could face significant delays or stoppages, regardless of increased defense spending.

Governments and industry have begun taking steps to strengthen supply resilience, including investment in production capacity and strategic partnerships. In the US, recent policy actions have further reinforced these efforts. While some of these actions directly support the defense sector, strengthening the resilience of critical material supply chains remains relevant across multiple sectors. Addressing these challenges will therefore require a shared effort, with governments supporting supply security through policy and investment, while companies take a more proactive role in securing critical materials and collaborating across the value chain.

Against this backdrop, companies are encouraged to identify their most critical material dependencies, evaluate alternative supply options, and develop tailored risk mitigation strategies, either independently or through industry consortia. Strengthening supply chain resilience will require coordinated action and sustained investment, rather than relying on any single solution.

We would like to thank Miguel Lopez for co-writing this report.

For practical solutions, such as scaling up domestic production, expanding recycling efforts, and developing tailored risk mitigation strategies, download the PDF report to access the full set of recommendations.