Highlights

• Energy risk has shifted from fuels to materials: China dominates refining for 19 of 20 strategic minerals with approximately 70% market share, creating a critical bottleneck in the global energy transition despite falling oil and coal prices.
• Refining concentration is the real vulnerability: Countries may mine rare earths, but most must send ores to China for processing, making export controls or disruptions capable of stalling electric vehicles (EVs), renewables, grids, defense, and AI hardware simultaneously.
• Lower energy prices breed dangerous complacency: While fuel costs eased, electricity demand surged from electrification and AI data centers, exposing fragile infrastructure where a single disruption in China's processing sector could halt global energy deployment.

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In a January 2026 policy brief (opens in a new tab), Rim Berahab (opens in a new tab), Senior Economist at the Policy Center for the New South in Morocco, delivers a sober warning hidden beneath otherwise calming headlines about falling energy prices. While oil and coal markets softened in 2025 and are projected to ease further in 2026, Berahab’s analysis shows that the real vulnerability in the global energy transition now lies elsewhere—in the extreme concentration of critical mineral refining, particularly rare earth element (REE) processing, overwhelmingly dominated by China.

Rim Berahab, She holds a State Engineering degree from the National Institute of Statistics and Applied Economics (INSEA).

Her core finding is stark but accessible: energy risk has shifted from fuels to materials. Modern energy systems—wind turbines, EV motors, grids, batteries, and increasingly AI data centers—depend on refined minerals more than raw ores. And while many countries mine minerals, very few can process them. China can—and does.

Study Approach: A System-Level Risk Assessment

This is not a geological survey or a mine-by-mine inventory. Berahab uses a macroeconomic and systems-risk framework, synthesizing data from the International Energy Agency, World Bank, and market forecasts to assess where shocks would propagate fastest. She examines price trends, electricity demand growth, grid constraints, AI-driven power loads, and—critically—refining concentration across strategic minerals, including rare earths.

Key Findings: The Processing Bottleneck

Berahab identifies refining as the most concentrated—and dangerous—node in the energy supply chain. According to data cited in the brief, the top three refining countries control roughly 86% of global refined output across key energy-related minerals, and China alone dominates refining for 19 of 20 strategic minerals, averaging about 70% market share.

For rare earths, this means:

• Countries may mine ore, but must still send it to China for separation and refining
• Substitution is extremely limited in the short term
• Export controls or disruptions can ripple simultaneously through EVs, renewables, grids, defense, and AI hardware

In plain terms: rare earth dominance is not about digging—it’s about chemistry, scale, and infrastructure.

Why This Matters Now

A key insight of the paper is counterintuitive**: lower energy prices can breed complacency**. While fuel costs eased, electricity demand surged—driven by electrification and AI data centers—and infrastructure struggled to keep pace. At the same time, mineral supply chains remained tightly concentrated. The result is a fragile system where a single policy move or disruption in China’s processing sector could stall global energy deployment, regardless of how cheap oil or coal becomes.

Implications for Policymakers and Investors

Berahab’s conclusion aligns closely with REEx’s long-standing position:

• Mining diversification alone is insufficient
• Real resilience requires refining, processing, and downstream manufacturing capacity
• Permitting delays, ESG hurdles, and capital intensity mean diversification will be slow

For investors, the signal is clear: projects tied to midstream and downstream capabilities—especially outside China—carry a strategic premium, while mine-only stories remain structurally exposed.

Limitations and Open Questions

The brief is intentionally high-level. It does not model specific rare earth projects, cost curves, or timelines for non-Chinese processing capacity. Its conclusions rely on secondary datasets and system-wide indicators rather than granular project data. Still, the direction of risk is unambiguous—and widely corroborated by industry experience.

REEx Conclusion

Berahab’s important work reinforces a critical truth: the global energy transition is constrained not by ambition or capital, but by industrial concentration. Until rare earth processing is diversified, energy security will remain vulnerable—no matter how many mines are announced or how low oil prices fall.

Citation: Berahab, R. (2026). What 2025–2026 Tells Us About the Future of Global Energy. Policy Brief PB-02/26, Policy Center for the New South.