Goldman Sachs Warns of Rising Risks to Global Rare Earth Supply Chains
Goldman Sachs has warned of growing risks to global supply chains for rare earths and critical minerals, citing China’s dominance in both mining and refining. The investment bank said countries aiming to build independent supply chains face major structural and technological challenges.
China Expands Rare Earth Export Curbs
China recently tightened export restrictions on rare earths, adding five new elements to its list on October 9. The move came just days before an expected meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
According to Goldman Sachs, China controls 69% of global rare earth mining, 92% of refining, and 98% of magnet production. The bank described this dominance as a key point of leverage in global trade and technology competition.
Rare Earths: A Critical Geopolitical Flashpoint
Rare earth elements (REEs) are vital to modern industries — powering batteries, computer chips, artificial intelligence, and defense equipment. Despite their importance, the rare earth market was valued at only $6 billion last year — tiny compared to the $200 billion copper market.
Goldman Sachs warned that even a 10% disruption in REE-dependent industries could cause $150 billion in global output losses and spark inflationary pressures across manufacturing and technology sectors.
High-Risk Minerals Under Pressure
The bank identified samarium, graphite, lutetium, and terbium as minerals most vulnerable to export restrictions.
- Samarium, used in aerospace and defense magnets, is crucial for high-temperature applications.
- Lutetium and terbium, widely used in electronics and lasers, could trigger GDP losses if supplies tighten.
Goldman Sachs also flagged light rare earths such as cerium and lanthanum as potential future targets, given China’s overwhelming control of refining operations.
Western producers like Lynas Rare Earths and Solvay could help mitigate shortages, but global reliance on China remains substantial.
Barriers to Building Independent Supply Chains
Efforts to establish independent rare earth and magnet supply chains are facing multiple obstacles. Goldman Sachs highlighted issues including geological scarcity, technological hurdles, and environmental constraints.
The bank noted that heavy rare earths are extremely scarce outside China and Myanmar, with most deposits being small, low-grade, or radioactive. Developing new mines can take eight to ten years, while refining facilities often require an additional five years to build.
Even as magnet production expands in the U.S., Japan, and Germany, it remains limited due to China’s control over essential inputs such as samarium.
Investment and Commodity Outlook
Goldman Sachs suggested that investors could hedge exposure to these supply risks through equities linked to the rare earth sector. It named Iluka Resources, Lynas Rare Earths, and MP Materials Corp as key beneficiaries.
The bank forecasted a deficit in supplies of Neodymium-Praseodymium Oxide (NdPrO) — a core component in magnet production.
Beyond rare earths, Goldman Sachs also warned that cobalt, oil, and natural gas face mounting supply risks due to ongoing geopolitical tensions and trade restrictions.
