The International Energy Agency (IEA) said a “mineral security premium” could help finance diversified critical mineral supply chains by treating their higher costs as insurance against supply disruptions. In analysis published on October 29, 2026, the agency estimated that full implementation of expanded rare earth export controls could put $6.5 trillion of annual sales at risk across energy, automotive, electronics, and defense sectors outside China.
IEA frames mineral security premium against USD 6.5 trillion risk
Controls on seven heavy rare earth elements began in April 2025 and expanded in October 2025, exposing vast downstream sales.
Mineral tariff codes under export controls have tripled since 2023, turning concentration from a theoretical vulnerability into an immediate security challenge.
The number of mineral tariff codes subject to export controls has tripled since 2023, covering materials including gallium, germanium, yttrium, tungsten, and tellurium. The IEA said projects in diversified supply chains can face operating costs around 50% higher than established supply bases, creating an obstacle to investment in alternative mining and processing capacity.
However, the agency found that critical minerals generally represent a relatively small share of final product prices. They account for around one-quarter of a battery cell’s price but about 3% of the price of an average electric vehicle. Rare earths represent around 40% of a permanent magnet’s price but less than 1% of a vehicle’s value.
According to the analysis, tripling battery material prices would raise final EV and storage system prices by around 5%. Tripling rare earth prices would increase the cost of a car by 0.1%. The calculations use 2025 global average material and product prices.
The IEA estimated that diversifying magnet rare earth supply chains to meet projected demand outside China in 2035 would require around $60 billion over the next decade. That compares with an annual magnet rare earth market of less than $10 billion and the trillions of dollars in downstream activity potentially exposed to disruption.
Potential policy instruments include price floors, contracts for difference, diversified sourcing requirements, trade measures, and support for capital and operating expenditure. The IEA cautioned that a security premium should not permanently subsidize inefficient projects. It said phased support, project reviews, production milestones, and industry qualification requirements could help limit inefficient spending and market distortions.
Source: iea.org
