Rare earth elements: Investing through a geopolitical lens
The demand for rare earth elements has nearly doubled between 2015 and 2024, driven by the growth of electric vehicles and advanced defense systems. The US and EU are launching initiatives to reduce their reliance on China, which currently dominates the global supply of rare earth elements.
Rare earth elements are crucial for the 21st-century economy. Demand has nearly doubled between 2015 and 2024. China produces the majority of mined output and refined materials, giving it significant geopolitical leverage. The US has launched a $12bn mineral stockpile program to reduce reliance on China. The EU is also taking steps to diversify its supply chains. Other countries like Australia, Norway, and Brazil are expanding their rare earth production. Recycling is also becoming a promising source of rare earth elements, with governments supporting innovation in this area.
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