LONDON, July 16 — China’s rare earth export restrictions could put US$6.5 trillion (RM26.5 trillion) of downstream production outside the country at risk, the International Energy Agency (IEA) warned today.
China, the world’s largest producer of rare earths, expanded export controls in October last year to cover additional materials and introduced new licensing requirements, but later agreed to delay implementation for a year.
Rare earths are a group of 17 metals used in small quantities, but essential to products ranging from cars and aircraft to electronics and weapons systems.
If the controls take full effect, about US$6.5 trillion of production across the automotive, hi-tech, defence and energy sectors could be exposed to supply disruptions, the IEA said in its Global Critical Minerals Outlook report.
The United States and Europe would account for nearly half of the economic impact, the report added.
“Our latest analysis shows that 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.
The agency also warned of risks from China’s planned export controls on graphite, a key material used in electric vehicle batteries, which were announced at the same time and later postponed.
Full execution of the graphite controls could put about US$300 billion of downstream production outside China at risk, the report said. China accounts for more than 90 per cent of global processed graphite output.
Western governments have been trying to build alternative critical mineral supply chains. IEA said public financing commitments for new projects more than quadrupled between 2023 and 2025 to US$65 billion.
New rare earth refining projects in the US and Malaysia reduced China’s share of the global market to 85 per cent last year from 90 per cent in 2023, IEA said. If planned projects proceed on schedule, that share could fall to 70 per cent by 2035.
