REUTERS

Goldman Sachs flagged mounting risks to global supply chains of rare earths and other critical minerals, emphasising China’s dominance in mining and refining, and outlining challenges for nations seeking to build independent supply chains.

China expanded export curbs on rare earths on October 9, adding five new elements and extra scrutiny for semiconductor users ahead of an expected summit of leaders Donald Trump and Xi Jinping.

In a note on Monday, Goldman Sachs said China controls 69 percent of global rare earth mining, 92 percent of refining, and 98 percent of magnet manufacturing.

Rare earth elements (REEs) have become a flashpoint in geopolitics, as they are critical to high-tech industries and essential in uses from batteries to computer chips, artificial intelligence, and defence equipment.

While the rare earth market was valued at $6 billion last year, just a fraction the size of the copper market, which is 33 times bigger, the bank warned that a disruption of 10 percent in industries reliant on REEs could result in $150 billion in lost economic output, besides inflationary pressures fed by the shortages.

Goldman Sachs flagged samarium, graphite, lutetium, and terbium as particularly vulnerable to export curbs.

Samarium, used in heat-resistant samarium-cobalt magnets, is key for aerospace and defense. Disruptions in supply of widely-used lutetium and terbium also pose risks of GDP losses. The bank highlighted light rare earths, such as cerium and lanthanum, as future targets for curbs, since China has a dominant role in refining and mining.