Rare Earths, AI, and Digital Finance: Supply-Chain Risk and Managerial Implications (WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS)

Summary

• China accounts for about 60% of rare earth mining and about 91% of refining globally in 2024.p.3
• China's share of sintered permanent magnet manufacturing reached 94% in 2024, up from 50% in 2005.p.3
• China exported 58,000 tonnes of rare earth magnets in 2024 across key industrial, automotive, and data center sectors.p.2
• Demand for magnet rare earths is projected by the IEA to increase by 50-60% by 2040 under the Stated Policies Scenario.p.3
• China is expected to retain a 77% share of global refined rare earth output in 2030 under the base case projection.p.3
• The VanEck Rare Earth and Strategic Metals ETF (REMX) exhibits a high beta of 1.55 and a 52-week ratio exceeding 3.p.4

Key insights

1. Rare earth elements represent a material and underpriced systemic risk factor for AI infrastructure and digital finance.p.4
2. China holds approximately 44 million tonnes of rare earth oxide reserves, representing nearly half of the world's total.p.2
3. REE market price movements lead AI-sector equity adjustments at low frequencies, revealing a lagged pricing of supply-chain risks.p.3
4. A Shapley-value framework decomposes REE-sensitive equity predictions into concentration, geopolitical, technology-demand, and macro-financial risk channels.p.3
5. The expansion of Chinese export controls in October 2025 to include parts, components, and assemblies directly affected downstream critical sectors.p.2
6. Authors propose a Critical Mineral Dependency Disclosure framework to allow firms to report equity return sensitivity to supply concentration.p.4
7. Digital finance infrastructure faces unaddressed vulnerabilities requiring regulators to mandate critical mineral supply disruption stress tests.p.4