The world is facing a critical challenge: ensuring a secure and diverse supply of rare earth elements, which are essential for modern technologies. These elements, despite their name, are not as rare as one might think, but their supply chains are incredibly concentrated and complex, posing significant risks to industries and nations alike.
The Rare Earths Conundrum: A Global Dependency
Rare earth elements are the lifeblood of our technological advancements, powering everything from smartphones and electric vehicles to advanced military systems and data centers. However, the world's reliance on China's supply chain has exposed vulnerabilities that threaten stability and resilience.
A Concentrated and Complex Web
The rare earths supply chain is a intricate network of processes, including extraction, leaching, thermal cracking, and refining. Each step demands specialized expertise and infrastructure, making it a technically demanding and capital-intensive endeavor. China's dominance in this arena is undeniable, controlling approximately 70% of global mining and a staggering 85% of refining capacity. This geographic concentration creates a fragile dependency, leaving the world vulnerable to disruptions.
China's Strategic Leverage
China's position in the rare earths market is not just a commercial advantage; it's a strategic tool. Their actions often seem less about the minerals themselves and more about advancing broader geopolitical goals. This control gives China significant influence over global supply and pricing, and any disruption, be it policy changes, natural disasters, trade disputes, or environmental regulations, can have far-reaching consequences, causing shortages and market volatility.
Export Controls: A Global Disruption
In recent years, China has wielded its rare earths dominance as a powerful strategic weapon. The ongoing trade tensions between the US and China have brought this issue to the forefront. In 2025, China responded to US tariffs and the inclusion of thousands of Chinese companies on an 'entity list' by imposing export controls and strict licensing requirements on several rare earths and the magnets they produce. They also halted the export of technology and equipment needed to develop rare earth mines and refineries outside China.
These export controls had a profound impact, causing market shocks and supply chain disruptions. European companies faced severe delays and price hikes due to raw material shortages, and some automobile factories even faced the prospect of shutdown. The affected sectors are vast and critical, including energy, automotive, defense, semiconductors, aerospace, industrial motors, and AI data centers. The tightening of this supply chain has threatened production, increased costs, and raised concerns about the resilience of global infrastructure.
In October 2025, China announced a temporary suspension of certain export controls on critical minerals to the US and the EU, following an agreement between the two nations. This move will likely benefit US end-users and their global suppliers. However, companies reliant on Chinese rare earths remain vulnerable to policy shifts.
Economic and Geopolitical Stakes
Given China's dominance, the US and other nations are seeking ways to reduce their reliance on imported rare earth elements. Governments are incentivizing domestic supply chain investment, streamlining regulations, and fostering international partnerships to enhance competitiveness. The US government, for instance, has announced plans to invest directly in the rare earths industry and has signed agreements with several nations to boost mining and processing projects outside China.
While these efforts present opportunities, analysts caution that the scale and sophistication of China's infrastructure mean that the risks associated with their dominance won't be immediately alleviated. Launching new mining projects is a complex, time-consuming process, requiring substantial financial and technical resources, regulatory approvals, and robust infrastructure. Government support is crucial in providing financing, policy reforms, R&D capabilities, and managing environmental and community relations.
Preparing for a Secure Future
Companies are increasingly prioritizing supply security and reliability. To navigate the volatile landscape, organizations should proactively address vulnerabilities by extending visibility beyond tier one suppliers, quantifying and modeling exposure to various risks, and building agility into sourcing strategies through technology-enabled decision-making. For mining companies, this may involve diversifying operations in other regions or exploring recycling to reduce primary mining needs and mitigate environmental impacts.
Platforms like Marsh's Sentrisk™, combined with specialist risk consulting, provide organizations with deep supply chain intelligence, enabling faster and more innovative responses. The insurance industry is also placing greater emphasis on supply chain risks, highlighting the need for companies to prioritize mitigation efforts.
In an era where rare earths are integral to critical technologies and national security, a secure and sustainable supply is non-negotiable. Investing in resilience, sustainability, and data-driven supply networks is crucial for the present and future.
The Role of Rare Earths in Supply Chains
Sentrisk™'s analysis of clients across various sectors and geographies reveals the significant role of rare earth elements and critical minerals in upstream supply chains. Over a third of Sentrisk™'s clients, spanning industries like aerospace, technology, healthcare, and consumer goods, have dependencies on critical minerals, with over half of these being on rare earth elements. This highlights the widespread and cross-sectoral importance of these elements in modern manufacturing and product development.
A key challenge is the lack of visibility into these dependencies within supply chains. Reliance on rare earth elements often emerges further up the supply chain, at Tier 2 and Tier 3 levels, making it difficult for companies to identify and mitigate supply disruption risks, underscoring the complexity of global supply networks.
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