IEA: "Full Implementation of China’s Rare Earth Restrictions Could Hit 9,600 Trillion Won in Global Industries"

Automotive, Defense, High-Tech, and Energy Sectors
$6.5 Trillion at Risk from Supply Chain Disruptions
Impact Focused on US and Europe..."Diversifying Supply Chains is an Insurance Premium"

The International Energy Agency (IEA) has warned that if China’s export restrictions on rare earth elements are fully implemented, production worth approximately 9,600 trillion won outside China—including in the United States and Europe—could face disruptions.

International Energy Agency (IEA) logo. Photo by Reuters Yonhap News

In its annual "Global Critical Minerals Outlook" report released on July 16, the IEA stated that if China’s export restrictions are fully enforced, production valued at roughly $6.5 trillion (about 9,600 trillion won), particularly in the automotive, defense, high-tech, and energy sectors, could be at risk of supply chain disruptions. Nearly half of the impact is expected to be concentrated in the United States and Europe.

Fatih Birol, Executive Director of the IEA, pointed out, "Enormous economic value depends on small quantities of critical minerals, and supply chains are excessively concentrated in certain countries." He also remarked that, in an era of significant geopolitical uncertainty, diversifying supply chains serves as “an insurance premium for supply chain security.”

Previously, in October of last year, China—the world’s largest producer of rare earth elements—expanded export controls on additional rare earth products and introduced a new export permit system. It was later agreed that implementation would be postponed for one year.

Rare earth materials were exhibited at the National Museum of China in Beijing on March 24. Photo by Reuters Yonhap News

In response to China’s regulations on critical mineral supplies, countries around the world are also pursuing diversification of supply chains. According to the IEA, commitments for public funding of new projects expanded more than fourfold between 2023 and 2025, reaching $65 billion (about 96 trillion won).

In fact, with the operation of new rare earth refining facilities in the United States and Malaysia, China’s share of the rare earth refining market fell from 90 percent in 2023 to 85 percent in 2025. The IEA projects this will decline further to 70 percent by 2035. In the copper and lithium sectors as well, the anticipated gap between demand and supply over the next decade is expected to narrow.

Additionally, the IEA analyzed that if export restrictions on graphite—a key material for electric vehicle batteries—are implemented, production worth $300 billion outside China could also be affected. China accounts for over 90 percent of global processed graphite production.

This content was produced with the assistance of AI translation services.