IEA says China's rare earth restrictions threaten global economic security

The IEA's new report reveals that China's export controls on rare earth elements put $6.5 trillion in annual industrial output at risk. The proliferation of mineral export restrictions directly threatens economic security.

Scraper SystemJuly 16, 2026, 08:07 PM

IEA says China's rare earth restrictions threaten global economic security

The International Energy Agency (IEA) announced that China's restrictions on rare earth element exports threaten global economic security. The agency's "Global Critical Minerals Outlook 2026" report warned that increasing export controls worldwide pose a serious risk.

According to the report, the proliferation of export controls has turned concerns over excessive supply concentration into a direct economic security issue. China's rare earth element controls, initiated in April 2025, have forced some automotive companies to reduce production or temporarily suspend operations.

$6.5 trillion in output at risk

The IEA stated that Beijing's restrictions in this area jeopardize $6.5 trillion in annual industrial output outside China. Although the scope of controls was expanded in October 2025 and implementation was postponed by one year, this massive production volume will remain at risk if they are fully enforced.

Supply chain concentration and price fluctuations

The report noted that base metal prices recovered in 2025 and early 2026 as supply tightened, a trend exacerbated by new export restrictions from major suppliers. Due to geopolitical tensions, mineral prices fell 9 percent in 2025, ending consecutive years of growth.

The report highlighted increasing geographic concentration in mineral supply chains, particularly in refining. Over the past two years, the largest refineries accounted for more than three-quarters of total refined supply growth. Nickel refineries in Indonesia and other base metal refineries in China's energy sector led this growth. In many markets such as manganese, nickel, and graphite, almost all supply growth came from the dominant supplier.

EU response and China's new regulation

The European Union announced various measures to reduce dependency in response to China's restrictions on rare metals and critical raw materials. In turn, China's Ministry of Commerce imposed new restrictions on October 9 on the export of rare earth elements and the transfer of equipment or technology related to their production or processing, citing "national security." Under the new regulation, exporters are required to obtain an "export license" from the ministry.

Rare earth elements comprise 17 chemical elements, including neodymium, dysprosium, and lanthanum. These elements are used in the production of radars, missiles, fighter jets, electric vehicles, and super-strong magnets.

IEA says China's rare earth restrictions threaten global economic security