Cleaner energy, higher risk? Why critical materials are central to global strategic partnerships
With Viet Nguyen-Tien
This article appeared in CentrePiece (Volume 31, Issue 1) in 2026. An earlier version was published on the LSE USApp blog in October 2025.
Rare earths are a tiny share of world trade by value, but they are chokepoints for clean energy, electronics and defence. The article argues that the weakness lies in the structure of the value chain rather than in geology: the elements are found in many countries, but China dominates the later, higher-value stages, including around 94% of permanent magnet manufacturing. Its October 2025 rule requiring approval to export products containing more than 0.1% rare earths gives it both a tracing tool and leverage.
Having let magnet manufacturing go, Western economies face a long rebuild, so resilience depends on technological capability as well as on access to materials. Firm-level evidence links exposure to uncertainty over critical minerals with weaker revenue growth, especially in clean technology. The one-year truce between the US and China agreed in October 2025 buys time, but diversification, innovation and cooperation remain essential.