As demand for rare earth elements has doubled since 2015, China's growing status as the world's largest supplier has created vulnerabilities that have quickly exposed real economic risks.

According to a report from the International Energy Agency (IEA), demand for magnet rare earths is expected to increase by more than 30% by 2030. However, rare earths are also among the most geographically concentrated minerals in the world across each stage of the supply chain. Two decades ago, China accounted for roughly half of the global permanent magnet output. Today, China accounts for roughly 60% of global mined production of magnet rare earths, as well as more than 90% of refining, and 95% of permanent magnet production.

The consequences of China's dominance have been laid bare in just the last year. Semiconductor export controls put into place by Beijing in 2025 created significant supply disruptions for carmakers in the U.S. and Europe, many of whom were forced to idle factories while waiting for shipments. And although some of those restrictions were later paused, the situation highlighted the risks posed by what's become a single-source supply chain. If Beijing were to fully implement export controls long term, up to $6.5 trillion of economic activity outside China could be at risk each year, the IEA estimates, with significant impacts to automotive, electronics and other transport sectors.

Although those vulnerabilities have been no secret, the IEA warns that progress toward fixing those issues has been slow. Current and planned projects to source rare earths outside of China are still well short of what's needed to meet projected demand, and by 2035, existing and announced capacities will cover only half of mining requirements, a quarter of refining needs, and less than a fifth of magnet demand outside of China.

To close that gap, global economies would need to invest around $60 billion over the next decade in diversifying rare earth supply chains. That's in addition to crucial investments in technology, equipment, machinery and labor that will be needed to ensure that these projects can be competitive long term. Recycling also offers an attractive complementary pathway, the report notes, with the potential to reduce the need for primary supply by up to 35% by 2050.