In recent years, the rare earth elements (REEs) sector has become a focus of geopolitical manoeuvring and business strategy. These 17 critical minerals are integral to a wide range of industries, including defence, semiconductors, electric vehicles and renewable energy. As global demand for REEs surges, the economic and geopolitical dynamics surrounding their production and supply are increasingly shaping the future of diverse industries, making it imperative for exposed companies to adapt in order to ensure stable, sustainable, and secure operations.
Concentration and global vulnerabilities
While REEs are not inherently rare, the rarity of large-scale, high-quality reserves – and the complexity and resource-intensity involved in mining and processing them – has established them as strategic commodities with a highly concentrated supply chain and pronounced geopolitical implications.
China maintained a near-monopoly on the REE sector through 2024, accounting for around 60% of global mining output and around 91% of global processing. The country is especially dominant in production of downstream products including rare earth magnets, which have become essential to a diverse range of industries and are critical to clean energy infrastructure and advanced defence technologies – sectors which currently drive political, social and commercial imperatives for multiple key economies. This has granted Beijing strong influence over global technology supply chains, increasing risks of cascading disruption through strategic sectors.
This concentration of control to China has equally proved an effective lever in international trade and geopolitical negotiations. Xi Jinping's symbolic May 2019 visit to a rare earth magnet plant in Jiangxi, and – more concretely – China's announcement of stricter export controls on REEs and embedded products in April and October 2025, led to price and trade-volume shocks, heightened concerns about the extent of global reliance on China for critical materials and accelerated efforts, particularly by the United States (US), towards supply chain diversification.
In late October 2025, the US and China announced an agreement for postponement of the new Chinese export controls, with potential for easing the geopolitical and trade landscape around REEs in the near term. However, while it is possible that the stringency of the measures and plans for their enforcement may be further eased in the course of negotiations, the agreement itself has again highlighted the economic and geopolitical criticality of REEs, and as of mid-November a final US-China deal on the issue had not yet been reached. Moreover, while diversification projects continue across several regions – and some have announced robust expansion plans in response to China's export policy announcements – many have so far been impeded by capital shortfalls, long lead times, limitations of scale and scarcity of refinement infrastructure. When they enter into force, China's new restrictions could severely exacerbate these challenges and delays, materially impacting on international defence and strategic technological capabilities.
Outlook
As technological, logistical and political stresses to the REE landscape may be expected to continue, it is of course crucial for companies to monitor geopolitical developments and to consider the need for diversification in their own supply chains, both through establishing relationships with a broader range of suppliers and – for those placed closer to upstream processes – through the development of longer-term contracts with mines and refineries enabling reduced reliance on China.
Closer cooperation with governments may also serve both the needs of individual businesses and the market at large: for example, a public-private partnership between the Japan Organization for Metals and Energy Security and Australia's Lynas Rare Earths has contributed to the latter's emergence as the major rare earths producer outside of China, while helping to shore up access to REEs for Japan and other countries.
A focus on operational and technological sustainability is also likely to prove crucial: aside from the environmental externalities of mining rare earths, the converging needs of different sectors have been noted as compounding pressures in interconnected REE supply chains. Research and development towards replacement of REE-derived components with those produced from less critical elements, and towards efficient REE recycling (as seen in "urban mining" initiatives) would likewise help to reduce overreliance on specific geographies or suppliers for companies with greater exposure to or involvement in the sector.
Conclusion
REEs are no longer merely specialised industrial inputs, posing increasingly significant questions of economic resilience and technological competitiveness. For governments, investors, and companies alike, the coming years will demand sustained attention to the evolving risk landscape, from trade policy shifts to the practical limitations of diversification efforts elsewhere. Those actors that proactively adapt by strengthening supply-chain visibility, investing in alternative technologies, and collaborating across public- and private-sector boundaries will be better positioned to navigate future volatility. Ultimately, foresight and coordinated action will be essential to mitigating vulnerabilities and reinforcing prospects for long-term innovation, security, and sustainable growth.