Rare Earths, AI, and Digital Finance: Supply-Chain Risk and Managerial Implications

Rare earth elements (REEs) are an underexamined asset class at the intersection of digital finance, artificial intelligence (AI) and strategic resource management. AI infrastructure sustains demand for neodymium, dysprosium and terbium, whose supply chains remain highly concentrated in China. This paper analyses how REE supply-chain risk propagates into the equity markets of AI-intensive firms. Using open-source data from the International Energy Agency, the VanEck Rare Earth and Strategic Metals ETF (REMX) and the USGS Mineral Commodity Summaries, we characterise REE-sensitive instruments over 2020-2026 and propose a Shapley-value decomposition of REMX return predictions into concentration, geopolitical, technology-demand and macro-financial channels. The evidence suggests that REE concentration risk is a financially material and insufficiently priced systemic factor. We derive recommendations for portfolio construction, corporate disclosure and the regulation of digital finance infrastructure.