China's export curbs on rare earths risk global supply chains: IEA

Global supply chains for critical minerals face risks from trade restrictions and price spikes, says an IEA report. China's export controls on rare earths could put USD 6.5 trillion of downstream production at risk annually, it stated.

Global supply chains for critical minerals face acute economic security challenges as trade restrictions, price spikes, and heavy geographic concentration disrupt key markets, according to the International Energy Agency's Global Critical Minerals Outlook 2026 report.

China's Export Controls and Global Impact

"In April 2025, the Chinese government introduced major export controls on seven heavy rare earth elements, with significant impacts across downstream industries, forcing some automakers to reduce utilisation rates or temporarily halt operations," the report said.

In October 2025, China expanded measures to internationally-made products containing rare earths sourced from China or produced using Chinese technologies. Although the expanded measures were suspended for one year until November 2026, the vulnerabilities remain. "Their full implementation could put an estimated USD 6.5 trillion per year of downstream production outside China at risk across the automotive, high-tech, defence and energy sectors," the report stated.

Price Volatility and Market Recovery

Critical mineral prices rebounded sharply in 2025 and early 2026 following prior declines. Prices for base metals like copper, aluminium, and tin rose by a third between January 2025 and April 2026, driven by tight market conditions. Battery materials also staged a recovery, with lithium prices more than doubling due to strong energy storage demand. Strategic minor mineral prices doubled, led by a sixfold surge in tungsten costs amid rising demand from high-tech and defense industries.

Concentration in Refining and Supply Growth

The top refining nations, led by China for key energy minerals and Indonesia for nickel, accounted for over 75 per cent of total growth in refined supply over the last two years. Excluding rare earths, the average market share of the top refining country reached 72 per cent in 2025.

Investment Decline and Project Imbalances

Meanwhile, critical mineral investment dropped 9 per cent in 2025, with capital spending in battery metals falling by more than 20 per cent.

"As critical minerals generally represent a small share of final product costs, much of the additional cost of diversification could be absorbed with limited impact on consumers, although some intermediate sectors may face greater cost pressures and require targeted support," the report noted. Project pipelines also reveal significant imbalances, as refining and downstream capacity continue to lag behind mining developments outside dominant supplier regions.

Addressing Vulnerabilities: The Role of Stockpiles

To address these vulnerabilities, the IEA stated that strategic stockpiles provided an important short-term buffer against supply disruptions. For 11 high-risk materials assessed, the net annual cost of stockpiling for countries outside the dominant supplier was estimated at less than USD 900 million. (ANI)

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