Framework for Resilience in Material Supply Chains, With a Case Study from the 2010 Rare Earth Crisis

TLDR

The 2010 Chinese export restrictions caused neodymium prices to spike tenfold, then fall back rapidly even though the restrictions persisted. The study seeks to assess the resilience of the NdFeB supply chain by applying resilience theory and material‑flow analysis. The authors identify three resilience mechanisms—resistance, rapidity, and flexibility—originating from distinct parts of the supply chain. They recommend measures to strengthen the NdFeB system’s resilience and argue that the same principles can be applied to other material supply chains.

Abstract

In 2010, Chinese export restrictions caused the price of the rare earth element neodymium to increase by a factor of 10, only to return to almost normal levels in the following months. This despite the fact that the restrictions were not lifted. The significant price peak shows that this material supply chain was only weakly resistant to a major supply disruption. However, the fact that prices rapidly returned to lower levels implies a certain resilience. With the help of a novel approach, based on resilience theory combined with a material flow analysis (MFA) based representation of the neodymium magnet (NdFeB) supply chain, we show that supply chain resilience is composed of various mechanisms, including (a) resistance, (b) rapidity, and (c) flexibility, that originate from different parts of the supply chain. We make recommendations to improve the capacity of the NdFeB system to deal with future disruptions and discuss potential generalities for the resilience of other material supply chains.