IEA Highlights Strengthening Rare Earth Supply Chains

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

Rare earth elements (REEs) have emerged as critical to the global military and civilian economies of the 21st century. But China's dominant share of the REE market creates sizable vulnerabilities for other countries. A new report from the International Energy Agency listed eight steps to building a robust and resilient international supply chain for REEs to reduce the world's reliance on China.

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Rare Earth Elements Grow in Importance

The U.S.-Israeli war against Iran has been primarily waged with F-35 fighter jets, Tomahawk cruise missiles, drones and radar systems. It is hard to imagine future conflicts being fought without these advanced technologies.

Rare earth elements (REEs) make possible those advanced military technologies. But the military's high reliance on REEs is only one alarming implication of China's lopsided control of the global REE market. China is far and away the world's dominant miner and processor of 17 REEs, and that nation has refused to export those elements to countries that plan to use them in military applications. It also restricted exports of those minerals in response to hefty tariffs imposed on China a year ago by President Donald Trump. The U.S. Supreme Court recently determined those tariffs were illegal.

But the vulnerability of the world's military forces to decisions made in Beijing is only one strategic problem. REEs also are needed to manufacture electric vehicles, smart phones, laptop computers, medical imaging, wind turbines, airplanes, fiber optics and the semiconductors that power artificial intelligence (AI).

It is not too much to say that the 21st century global economy--civilian and military--will rise or fall based on the availability and affordability of REEs and critical minerals. Earlier this year, Trump announced a $12 billion public-private initiative to procure and stockpile critical minerals for use by the civilian U.S. economy, a first step to building a robust and resilient supply chain for those vital minerals, which include some REEs. For more on that, see February 10, 2026, article - Trump Announces $12 Billion Plan to Stockpile Critical Minerals.

China's dominant share of the REE and critical minerals markets has long worried civilian and military planners as well as analysts at the International Energy Agency (IEA). The Paris-based agency on Wednesday released a report, "Rare Earth Elements: Pathways to Secure and Diversified Supply Chains," which has eight recommendations for the non-China world to build robust and resilient global supply chains for REEs in the name of mineral security.

The 104-page document seeks to inform the discussion of REEs at this year's G7 summit, scheduled for mid-June in France. The report is a follow-up to last year's more expansive IEA report, "Global Critical Minerals Outlook 2025." For more on that report, see June 9, 2025, article - IEA Flags Concerns Over Future Supply, Demand and Price of Strategic Minerals.

Time, Money Needed to Build a Supply Chain

"Developing fully diversified rare earth supply chains requires a major increase in investment," the report said. "Meeting demand for magnet rare earths outside (China) requires around $60 billion of investment over the next decade from both public and private sources."

This sum includes financing for announced projects that have yet to secure funding, as well as additional new capacity needed to close the remaining supply gaps. Refining accounts for nearly 50% of total investment needs while magnet manufacturing represents around 33% of the amount.

"Although significant, this investment requirement is modest compared with other energy minerals and dwarfed by the $6.5 trillion potential economic cost of supply disruptions," it added.

The export controls that China imposed last year on REEs, partly in response to Trump's April 2025 tariffs, had a significant impact on various parts of the world's civilian economy. Automakers and semiconductor manufacturers were badly hurt by the move, which China subsequently eased.

Building, or strengthening, resilient supply chains for REEs face a familiar chicken-and-egg problem: Investors and companies are reluctant to launch expensive new initiatives without clear market demand and companies that would use those REEs are unwilling to commit to contracting for those elements absent demonstrated production capability.

The IEA report noted, "Financing diversified rare earth supply chains is constrained by a combination of structural cost and market factors. Projects outside (China) face higher capital and operating costs, driven by smaller scale, higher input prices, complex permitting processes and stricter environmental requirements. These challenges are most acute at early project stages, where developers must commit significant capital before revenue certainty is realized."

China faces no such problem, the IEA noted. Long ago, it began building critical minerals and REE ecosystems that leverage "access to low-cost energy and inputs, skilled labor, vertical integration, shared infrastructure, strong balance sheets and large domestic offtake bases that provide robust demand signals."

IEA Recommendations

The report listed eight ingredients to build or strengthen global REE supply chains. The steps include:

• Understand rare earth needs and risk exposure
• Increase preparedness for potential disruptions and establish a buffer to mitigate short-term supply risks.
• Adopt a holistic supply chain and ecosystem approach.
• Strengthen financial and policy support to strategic projects through supply- and demand-side measures.
• Promote supply-side technology innovation.
• Embrace demand-side technology innovation.
• Develop targeted policies to unlock the full potential of recycling, and
• Accelerate efforts to enhance price transparency.

While Russia's invasion of Ukraine and the U.S.-Israeli war with Iran have reminded the world about the dangers of insecure supplies of vital resources, the report urged countries not to adopt a go-it-alone attitude.

Countries cannot build robust and resilient REE supply chains by themselves, the agency cautioned; international collaboration is needed. Some countries have the capital, others have the resources and still others have the advanced processing and separation technologies, specialized skills and supportive infrastructure. "No single country or region can develop resilient, end-to-end value chains in isolation," said the report.

Joseph Govreau, IIR's vice president of research for the Metals & Minerals industry, commented, "This is part of a growing trend Industrial Info is following where governments are investing big dollars to shore up supply chains for critical minerals, and diversify away from China."

"The U.S. has definitely stepped up its efforts to reestablish a domestic REE supply chain by providing financing support or direct investment in projects," he continued. "An example of this is the U.S. government's 15% buy-in of MP Materials, which operates the only U.S. rare earth mine in California. The funding supports MP Materials ongoing efforts to expand rare earth mining, refining, and downstream magnet production. Other countries reliant on China for supply including Canada, Japan, South Korea and EU countries are developing supply-chain support programs."

Key Takeaways

• Rare earth elements (REEs) have emerged as critical enablers for many advanced technologies in the civilian and military economy.
• China currently holds a dominant share of the REE market.
• A report from the International Energy Agency lists eight steps that should be taken in a coordinated, international fashion to build stable REE supply chains that reduce the world's reliance on China.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).