Rhenium Supply Alert: Seismic Risks and Geopolitical Tensions Impacting Investor Strategies

A confluence of seismic activity and escalating geopolitical tensions is casting a shadow over the rhenium supply chain, creating both risks and opportunities for investors. Rhenium, one of the rarest elements on Earth, is a critical component in high-performance superalloys used in jet engines, industrial gas turbines, and various other high-tech applications. With an estimated average concentration of just 1 part per billion in the Earth’s crust, its scarcity makes it a strategic metal, vulnerable to disruptions. A recent study by the US Geological Survey (USGS) highlights the potential for significant losses in rhenium production due to seismic events, while ongoing geopolitical instability further threatens the stability of its supply.

The Seismic Threat to Rhenium Production

The USGS study quantifies the risks and potential losses that heightened seismic activity may create for copper and rhenium producers. Many of the world’s largest copper and rhenium production facilities are located in regions prone to high seismic activity, such as South America, East Asia, and the Pacific. Chile and Peru, significant copper producers, also hold substantial rhenium reserves, making them particularly vulnerable. The study estimates that earthquake-induced disruptions could lead to revenue losses ranging from US$337,000 to US$1.4 million for rhenium production capacity. This is because rhenium is typically extracted as a byproduct of copper and molybdenum mining. The analysis indicates an expected annual disruption (EAD) of 0.32–1.32 percent for rhenium production capacity, depending on the vulnerability model selected. Chile, with its large rhenium production capacity and high seismic hazard, faces the highest seismic risk in terms of total production disruption.

Geopolitical Tensions and Supply Chain Vulnerabilities

Beyond seismic risks, geopolitical tensions are significantly impacting the rhenium supply chain. Factors such as trade policies, political instability, and conflicts in key producing countries can disrupt production and affect global supply. For instance, Russia, one of the largest rhenium producers, faces potential disruptions due to ongoing geopolitical tensions, impacting the global supply. Export restrictions or embargoes imposed by producing countries can further limit the availability of rhenium. The ongoing trade disputes between countries, such as the export restrictions on gallium and germanium imposed by China, highlight the potential for similar actions affecting rhenium. As of February 2025, strategic metals like rhenium are increasingly viewed as geopolitical weapons, with China controlling a significant portion of rare earth production. This control can be leveraged to exert political pressure, potentially leading to supply disruptions and price spikes.

Rhenium: A Strategic Metal with Limited Substitutes

Rhenium’s unique properties, including its high melting point, exceptional resistance to heat and wear, and excellent electrical conductivity, make it indispensable in various industries. Over 80% of the rhenium consumed worldwide is used in superalloy production for turbine blades in jet aircraft engines and industrial gas turbine engines. These superalloys, containing up to 6% rhenium, enable engines to operate at higher temperatures with finer tolerances, prolonging engine life, increasing performance, and enhancing operating efficiency. The remaining 10% of rhenium consumption is primarily in platinum-rhenium catalysts used by the petroleum industry to produce high-octane, lead-free gasoline. These catalysts improve refinery efficiency and boost the octane level of refined gasoline. Secondary applications include electrical contact points, flashbulbs, heating elements, vacuum tubes, and X-ray tubes.

Investing in Rhenium: Opportunities and Risks

Investing in rhenium presents both opportunities and risks that investors should carefully consider.

Opportunities:

Increasing Demand: The aerospace and defense industries drive the demand for rhenium due to its critical role in manufacturing high-performance jet engines and missile components. As global air travel and military spending increase, the demand for rhenium is expected to rise.
Limited Supply: Rhenium is one of the rarest elements in the Earth’s crust, with its extraction primarily as a byproduct of copper and molybdenum mining. This limited supply, coupled with increasing demand, can drive up prices and create investment opportunities.
Geopolitical Hedge: In an era of heightened geopolitical tensions, strategic metals like rhenium can serve as a hedge against economic instability. Unlike defense stocks, the value of rhenium is driven by supply and demand rather than market sentiment.
Price Appreciation: Rhenium prices have shown a strong upward trend in recent years, increasing by 120% between May and November 2024. Industry experts predict this trend will continue, driven by space exploration and increased demand from the aerospace and defense sectors.

Risks:

Price Volatility: Rhenium prices are subject to volatility due to supply and demand dynamics, geopolitical tensions, environmental regulations, and technological advancements. Investors should be prepared for potential price fluctuations.
Geopolitical Risks: Trade policies, political instability, and conflicts in key producing countries can disrupt the rhenium supply chain, impacting availability and prices.
Seismic Activity: The concentration of rhenium production facilities in seismically active regions poses a risk of disruptions due to earthquakes, potentially leading to revenue losses.
Substitutes and Recycling: While rhenium has unique properties, advancements in material science could lead to the development of substitutes, reducing demand. Increased recycling of rhenium from used superalloys and catalysts could also impact primary demand.

Strategies for Investors

To navigate the risks and capitalize on the opportunities in the rhenium market, investors should consider the following strategies:

Diversification: Diversify investment portfolios to reduce exposure to price fluctuations and geopolitical risks.
Market Monitoring: Closely monitor market trends, key indicators, and geopolitical developments that could impact the rhenium supply chain.
Supplier Relationships: Establish relationships with reliable suppliers to ensure stable access to rhenium.
Long-Term Outlook: Consider the long-term potential for growth in the rhenium market, driven by increasing demand from the aerospace, defense, and energy sectors.
Risk Management: Implement risk management strategies to mitigate potential losses due to price volatility, supply disruptions, and other unforeseen events.

The Bottom Line

The rhenium market is at a critical juncture, with seismic risks and geopolitical tensions threatening its supply chain. While these challenges create uncertainty, they also present opportunities for informed investors who understand the dynamics of this strategic metal. By carefully assessing the risks and implementing appropriate investment strategies, investors can potentially benefit from the increasing demand and limited supply of rhenium in the years to come.

Contact us today for a consultation on how to strategically invest in precious metals and navigate the complexities of the rhenium market.