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China’s tightening grip on rare earth exports could jeopardise nearly $6.5 trillion worth of downstream industrial production outside the country, with the United States and Europe expected to bear the biggest impact, according to the International Energy Agency (IEA).
In its latest Global Critical Minerals Outlook, the Paris-based agency warned that if Beijing fully implements its planned export restrictions on rare earth elements, industries ranging from automotive and aerospace to defence, electronics and clean energy could face significant supply chain disruptions.
China, the world’s largest producer and processor of rare earths, expanded export controls in October last year to cover additional materials and introduced new licensing requirements. While Beijing later agreed to postpone full implementation by a year, the IEA said the proposed measures highlight the vulnerabilities of highly concentrated critical mineral supply chains.
“Vast amounts of economic value depend on relatively small volumes of critical minerals, whose supply chains remain highly concentrated and are therefore vulnerable,” IEA Executive Director Fatih Birol said.
Rare earths comprise a group of 17 critical metals used in small quantities but are indispensable for manufacturing electric vehicles, aircraft, smartphones, semiconductors, wind turbines and advanced weapons systems.
The IEA also flagged China’s proposed export restrictions on graphite, another key material used in electric vehicle batteries. If fully enforced, the graphite curbs could put around $300 billion worth of downstream production outside China at risk. China currently accounts for more than 90 per cent of the world’s processed graphite output.
The report comes as Western economies intensify efforts to reduce dependence on China for critical minerals. According to the IEA, public financing commitments for new critical mineral projects have more than quadrupled, reaching $65 billion between 2023 and 2025.
The agency noted that new rare earth refining projects in the United States and Malaysia have already begun to erode China’s dominance. China’s share of global rare earth refining fell to 85 per cent in 2025, down from 90 per cent in 2023, and could decline further to 70 per cent by 2035 if all planned projects are completed on schedule.
The findings underscore the growing geopolitical importance of critical minerals as governments race to secure resilient supply chains for future technologies and national security.
