Abstract: The rare earth industry production and management reflect the external features, such as environmental pollution, sustainable development dilemma. It is necessary to establish risk reserve system for rare earth industry's sustainable development. This article analyzes the connotation and extension of risk reserve system for rare earth industry's sustainable development based on related concepts like "risk", "security", "sustainable development fund". Risk reserve can ensures the rare earth enterprises sufficient cash flow and the sustainable development, promotes rational resources exploitation. It can also prevent rare earth enterprises from converting private venture into public risk by reflecting government's macro-control intention.