China’s rare earth export controls jeopardise $6.5 trillion in global production, IEA warns

According to the International Energy Agency (IEA), the full implementation of China’s rare earth export controls could put an estimated $6.5 trillion worth of annual downstream production at risk for other countries. The restrictions—which target vital minerals like heavy rare earth elements used in high-performance permanent magnets—directly threaten the automotive, defence, clean energy and high-tech sectors. The United States and Europe face the most severe exposure, with potential direct economic losses estimated at over $1.5 trillion each. To mitigate these vulnerabilities, the IEA recommends that nations establish strategic stockpiles of 11 high-risk materials. While doing so would require an initial investment of $9.2 billion, the agency emphasises that this “security premium” is minor compared to the massive financial fallout of a sudden supply disruption. Additionally, it advocates for policy-driven supply chain diversification, recycling and demand-side technological innovation to reduce reliance on the dominant supplier, said a report.

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