Critical-mineral supply concentration has become an immediate economic and national-security challenge. China’s 2025 export controls on rare earths disrupted industries such as automotive manufacturing, while expanded restrictions could potentially put around $6.5 trillion of annual sales at risk across energy, automotive, electronics, and defense. Export controls are also spreading to other minerals, including gallium, graphite, tungsten and cobalt, and are increasingly being introduced by other producing countries. Copper is also strategically important, given its essential role in power grids, data centers, electrification and the broader energy transition.
Diversifying supply chains is necessary but more expensive, as alternative projects can have significantly higher operating costs than established suppliers, according to the International Energy Agency. The IEA therefore proposes a “mineral security premium”, viewing the additional cost as a form of insurance against supply disruptions. This is particularly relevant because critical minerals often represent only a small share of final product prices. For example, rare earths account for less than 1% of an EV’s value, meaning that even a tripling of rare-earth prices would increase the car’s cost by only about 0.1%.
The investment required for diversification is also relatively small compared with the potential economic losses. Around USD 60 billion could be needed over the next decade to diversify magnet rare-earth supplies outside China, compared with trillions of dollars of economic activity at risk from disruption. The key policy challenge is therefore deciding how governments, industries and consumers should share this security premium while ensuring that support encourages competitive and efficient supply rather than permanently subsidizing uncompetitive projects.
