By Eric Onstad

LONDON, Dec 5 (Reuters) - Europe has finally taken major steps to build up its rare earths sector to counter Chinese dominance, but the region also needs to guard against being overwhelmed by the United States, the head of an EU-funded agency for key minerals said.

Bernd Schaefer, CEO of EIT RawMaterials, welcomed Wednesday's release of a new EU action plan to secure critical raw materials used in electric cars, wind turbines and semiconductors.

The European Commission's REsourceEU plan includes investing 3 billion euros ($3.49 billion) over the next year to fast-track projects that could cut reliance on supplies from a single country.

"It is certainly a real step change from ambition to delivery, but it's still missing a couple of things," Schaefer told Reuters in an interview.

The EU needs to step up negotiations with third countries that can supply it with key minerals, he said.

"Many memorandums of understanding have been signed in recent years with international partners, but this is only a starting point," Schaefer added.

"We must become more of a deal-maker and get away from our prosaic attitude and just talking about everything."

Europe also needs to make sure it does not continue to lose key rare earth assets to the U.S., he said, citing the recent acquisition by USA Rare Earth USAR.O of Less Common Metals, one of the few companies involved in a key processing step, turning rare earth oxides into metals and alloys.

"There is a danger we are moving into a situation where this rare earths value chain is pulled to a substantial level into the U.S.," Schaefer said.

"The U.S. could become a second China, so to speak, in terms of another country for us to be import-dependent on for magnets."

($1 = 0.8584 euros)

(Reporting by Eric Onstad; Editing by Andrew Heavens)

((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))