New Projects, Partnerships, & Policies Are Needed to Address Supply Chain Risks for Rare Earth Elements

The International Energy Agency (IEA) has released a report highlighting the urgent need for new projects, partnerships, and policies to address the growing supply chain risks associated with rare earth elements (REEs). These 17 elements are critical to a wide range of technologies, including electric vehicles, artificial intelligence data centres, robotics, and defence systems. Demand for magnet-related rare earths such as neodymium and praseodymium has doubled since 2015 and is expected to rise by over 30% by 2030, driven by the increasing digitalisation and automation of economies worldwide. The report draws attention to the highly concentrated nature of rare earth supply chains, particularly the dominant role of China, which currently controls around 60% of global mined production and over 90% of refining capacity for magnet rare earths. China’s near-monopoly extends to permanent magnet production, accounting for almost 95% of output, a significant increase from two decades ago. Recent export controls imposed by China in 2025 caused notable disruptions, exposing the vulnerability of industries reliant on these materials and potentially putting trillions of dollars in economic activity at risk outside China, especially in automotive and electronics sectors. Despite widespread recognition of these risks, progress towards diversifying supply chains remains inadequate. The IEA report warns that existing and planned projects outside China will only meet a fraction of future demand by 2035, covering roughly half of mining needs, a quarter of refining requirements, and less than 20% of magnet production. The imbalance is particularly pronounced in downstream segments, with magnet manufacturing projects lagging behind upstream mining developments. To close this gap, the report estimates an investment of around $60 billion over the next decade is necessary to build resilient and diversified supply chains. Beyond investment, the report emphasises that diversification challenges extend to technology, equipment, and skills shortages, requiring a holistic approach to strengthen the entire rare earth ecosystem. Recycling and innovation are identified as vital complementary strategies, with recycling potentially reducing primary supply needs by up to 35% by 2050. The IEA calls for enhanced international cooperation, as no single country possesses the full range of resources and capabilities to develop integrated value chains independently, and outlines eight practical measures including emergency preparedness, increased investment, innovation acceleration, and improved price transparency to support supply chain resilience.