Severe Market Concentration Presents Geopolitical Risks
Rare earth elements (REEs) are critical inputs for strategic industries, exposing financial institutions to supply chain risks through credit, valuation, and investment channels. China’s dominant market position creates persistent geopolitical risk, expected to remain even in optimistic scenarios, meaning Chinese trade and industrial policy must be embedded in asset risk assessments.
Financial institutions face both risks and opportunities: While supply disruptions can impair borrowers and investments across the REE value chain, growing domestic supply chain investment and recycling initiatives create new prospects. Project valuation must account for price volatility, infrastructure constraints and system-level dependencies beyond the project itself. Environmental liabilities should be priced across the full lifecycle, and Indigenous consultation and benefit-sharing structures treated as material determinants of project viability, not secondary considerations.