China's Grip on Critical Minerals Tightens, IEA Warns of Risks

China has issued its first batch of rare earth mining and smelting quotas for 2025 without the customary public announcement, according to sources with knowledge of the matter. The move is seen as another sign of Beijing's tightening control over the strategic sector.

The quotas, which determine the production levels for the 17 elements crucial for electric vehicles, wind turbines, and defense applications, are closely watched as a barometer for global supply. China is the world's largest producer of these minerals.

According to the sources, the first set of quotas for the year was issued in June, a delay from the typical 1Q release. The companies receiving the quotas were reportedly instructed not to share the specific volumes for security reasons. 

This quiet issuance occurs amid heightened geopolitical sensitivity around rare earths. China has previously used its control over the supply chain in trade discussions with the United States and EU, adding several rare earth elements and related magnets to its export restriction list.

The delay in this year's quotas was reportedly due in part to a proposal to include imported ore in the quota system, which faced opposition from companies reliant on foreign feedstock. China has been consolidating the industry, with only two state-owned enterprises, China Rare Earth Group and China Northern Rare Earth Group High-Tech, being eligible for quotas. In 2024, China issued a total mining quota of 270,000mt, with annual supply growth slowing to 5.9% from 21.4% in 2023. The smelting and separation quota in 2024 totaled 254,000t, up 4.2% from 2023, reports Mining.com.

IEA Warns of Worsening Critical Mineral Supply Concentration

The International Energy Agency (IEA) warns that global supply chains for critical minerals are becoming more concentrated despite growing demand from the clean energy sector. Between 2020 and 2024, the Top 3 suppliers of refined materials increased their market share to 86%, with China and Indonesia driving most of the growth in battery metals like cobalt, graphite, and nickel. China alone refines 19 of the 20 energy-critical minerals and dominates the battery recycling sector.

The agency also raises concerns about future supply shortages, projecting a potential 30% deficit in copper by 2035 and a lithium deficit by 2030. Citing risks from export restrictions and price volatility, IEA argues that market dynamics alone are insufficient to drive diversification. It recommends government interventions, such as price stabilization mechanisms and guaranteed purchase volumes, to de-risk new projects and strengthen the resilience of global supply chains, as reported by MBN.