The Geopolitics Of Critical Minerals: China’s Grip & The West’s Response

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Recently, I stood — virtually — before an audience of global institutional investors, invited by Jefferies investment bank to speak alongside six other experts on the deepening geopolitical tensions between the U.S. and China and their implications. Amid this intense discussion, one of the central themes was the rapid return of industrial policies to Western economies after four decades of dominance by market-driven ideologies. This represents not merely a cyclical shift but a structural response to a profound reshaping of the global economic landscape, particularly in the context of energy transition and decarbonization through the end of this century.

For years, I’ve analyzed and projected key trends in decarbonization, covering everything from renewable energy and electrification to advanced battery chemistries and the scaling of green hydrogen. Underlying these projections has always been a recognition of the necessity for a reliable supply of critical minerals. In recent years, as I’ve sharpened my analysis through a blend of technical feasibility, economic modeling, and assessments of human factors such as regulatory frameworks and geopolitical risks, one persistent risk loomed large: China’s control over critical mineral supply chains. The implications of this dominance have become starkly clear, especially in the past year.

Well before headlines caught up, it was evident to me and others closely watching China’s strategic moves that Beijing was preparing export controls on a range of strategically critical minerals. China’s actions on gallium, germanium, antimony, tungsten, and rare earth elements, among others, represent a carefully calibrated assertion of geopolitical influence. According to the International Energy Agency (IEA), China’s control over processing and refining these minerals ranges from 80% to over 90% globally, making it an indispensable node in the technology and energy supply chains. This strategic chokehold is precisely what has forced Western nations to reconsider their longstanding reliance on unfettered global markets and to re-adopt industrial policies after decades of relative neglect.

This article is my slides and talking points from the presentation, expanded somewhat.

The term “critical minerals” carries varying connotations depending on the perspective one adopts — strategic, economic, technological, geopolitical, or environmental. Understanding these nuances is increasingly important as governments, industries, and investors grapple with a new era of resource constraints, technological transformations, and geopolitical tensions.

From a strategic standpoint, critical minerals are defined primarily by their necessity for national security applications, particularly defense technologies, military hardware, and aerospace equipment. Rare earth elements are a classic example, as they play vital roles in the production of fighter jets, missile guidance systems, and advanced radar technology. Gallium, similarly, is crucial for high-frequency radar systems and advanced communications infrastructure. The strategic definition emphasizes minerals whose availability can directly influence a country’s military preparedness and geopolitical leverage, thus highlighting the vulnerabilities nations face when such materials are controlled by geopolitical rivals.

An economic definition shifts the focus slightly, characterizing critical minerals as those vital to major industries that form the backbone of national and global economies. These include electric vehicles, renewable energy systems, semiconductors, and various advanced manufacturing sectors. Lithium and cobalt, for example, have gained substantial economic prominence due to their role in battery technologies, underpinning the explosive growth of electric vehicles and stationary energy storage solutions. Similarly, graphite is essential for battery anodes, and silicon serves as a fundamental material in semiconductor manufacturing. According to recent analyses by the International Energy Agency (IEA), demand growth in these economically critical minerals is projected to accelerate dramatically, creating both market opportunities and supply-chain risks.

The supply-risk definition of critical minerals revolves around geopolitical vulnerability and the fragility of global supply chains. This perspective identifies minerals whose extraction, refining, or processing is concentrated in a small number of countries, creating potential chokepoints. Rare earth elements again offer a prime example, with China dominating approximately 85% to 90% of global refining capacity, per data from the IEA. Cobalt’s concentration in the Democratic Republic of Congo, where human rights and governance issues create ethical and geopolitical challenges, further underscores the complexity inherent in the supply-risk dimension, and led to R&D that has reduced or eliminated its use in batteries. This definition is increasingly informing national policy decisions, driving investments aimed at diversification, reshoring, and developing alternative or recycled sources of minerals.

The technology-critical definition of minerals is innovation-driven, emphasizing materials that are essential for emerging or disruptive technologies. These technologies could profoundly reshape economic structures, security paradigms, and global competitiveness. For instance, germanium is vital for fiber-optic communication systems, essential for advanced telecommunications and quantum computing. Indium is critical to the manufacturing of LCD screens and next-generation displays, while graphite’s role in battery technology underscores its importance in the ongoing electrification of transport and the rapid growth of grid-scale battery storage. According to a Nature study, shortages or supply disruptions in these innovation-critical minerals could substantially delay technological progress, impacting a wide array of downstream industries.

Finally, an environmental definition emerges strongly in the context of global climate policy and the energy transition. Minerals categorized under this definition are crucial for decarbonization technologies — solar panels, wind turbines, electric vehicle batteries, and the infrastructure necessary for a low-carbon energy grid. Lithium is essential for electric vehicle battery technology; copper underpins electricity transmission, distribution infrastructure, and renewable generation equipment; and nickel plays a key role in advanced battery cathodes. According to IEA forecasts, achieving global decarbonization targets will necessitate unprecedented scaling of these minerals, thus intensifying environmental scrutiny, sustainability challenges, and supply-chain complexities.

Each of these definitions carries important implications for policymakers, businesses, and investors. They illustrate why the recent revival of industrial policy in the West after decades of reliance on market-driven approaches is not merely reactive, but strategic and multifaceted. Industrial policy today seeks to address national security vulnerabilities, support economic resilience, promote technological innovation, and accelerate the energy transition simultaneously. In doing so, governments face complex trade-offs and decisions about investments, regulatory frameworks, and international partnerships.

These overlapping yet distinct definitions of critical minerals highlight the layered nature of the issue. Western nations, having operated under the assumption that global markets would reliably allocate resources, now find themselves revisiting foundational questions about security, innovation, sustainability, and strategic autonomy. 

China’s recent tightening of export controls on critical minerals did not emerge in isolation; rather, it represents the latest escalation in a long-running geopolitical dynamic rooted in strategic competition, domestic requirements, environmental pressures, economic leverage, and technological dominance. To fully appreciate these recent developments, it’s essential to step back to earlier incidents that set clear precedents, notably the 2010 export restrictions that jolted Japan and reshaped global perceptions of mineral dependency.

In 2010, China briefly curtailed exports of rare earth elements to Japan amid a diplomatic dispute over territorial rights in the East China Sea. It wasn’t even a national embargo, but a specific Chinese port that made the decision, and one that was overturned by the national government in due time. 

That event marked a turning point, highlighting to the international community how effectively China could leverage its dominant position in critical mineral markets to exert geopolitical pressure. Though the embargo was relatively short-lived, it sent shockwaves through global supply chains and prompted major economies, particularly the U.S., EU, and Japan, to re-examine their vulnerabilities. According to the IEA, that 2010 incident directly stimulated international efforts to diversify supplies and invest in alternative processing capabilities — efforts that continue today, albeit unevenly.

However, despite initial global awareness, practical steps toward reducing reliance on China for critical minerals progressed slowly, hindered by complacency and the persistent belief in free-market dynamics. China’s calculated patience allowed it to maintain and even enhance its dominant position, particularly in rare earth processing, where it consistently controlled around 85–90% of the global market. This dominance made clear that despite international intentions to diversify, genuine progress remained limited.

Meanwhile, US tariffs on China were ratcheting up under a bi-partisan consensus that China was the enemy, as opposed to a major supplier and buyer of goods. Trump’s 2025 tariffs are simply the latest, biggest and most all encompassing of the tariffs and other restrictions the U.S. has put on China.

Beginning in July 2023, China started leveraging its global minerals dominance by implementing stringent export licensing requirements for gallium and germanium, minerals essential in advanced electronics, semiconductors, and defense technologies. While initially presented as a regulatory refinement rather than a direct embargo, the move served as a clear signal to Western nations increasingly dependent on these minerals. Subsequent tightening in December 2023 further targeted graphite exports, introducing rigorous end-use verification processes specifically aimed at restricting supplies to the U.S. Graphite, critical to battery technologies, notably electric vehicle anodes, became another focal point in the strategic competition between China and the West.

In September 2024, China escalated its restrictions significantly, extending controls to antimony — a mineral essential to defense, flame-retardant materials, and battery technologies. Antimony’s role in ammunition production and semiconductor manufacturing made it particularly strategic, and in December 2024, China outright banned antimony exports to the U.S., explicitly citing national security concerns. 

The antimony story is nuanced, just as the 2010 Japan embargo was. As Gavin Mudd, Director of the Centre for Critical Minerals intelligence in the British Geological Survey, shared with me recently on Redefining Energy – Tech, antimony is unique in being less produced now than in 2010. The reason is that China shifted its stance on environmental consequences of minerals processing and refining 15 years ago. Antimony could be made cleanly, but in much smaller tonnages than the dirty processes allowed, so it stopped producing as much. And what it did produce, it ensured went first to domestic industries that required it.

The situation escalated further in February 2025, when China, in response to Trump’s new tariffs and geopolitical bluster, imposed new export licensing requirements on a suite of minerals crucial for defense, renewable energy, and high-tech sectors, including tungsten, tellurium, bismuth, indium, and molybdenum. Tungsten, for instance, is vital in military-grade alloys and precision tooling, while tellurium plays a critical role in solar panel manufacturing. Indium, essential for LCD screens and advanced electronics, and molybdenum, used heavily in aerospace and industrial applications, further deepened global concerns. According to a recent CSIS analysis, the licensing process introduced extensive documentation and potential delays, effectively tightening China’s grip on these crucial global supply chains.

Then, most recently, in April 2025, China targeted heavy rare earth elements — specifically samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium — by requiring complex export licenses. These rare earths are not only fundamental to defense technologies such as missile guidance systems, radar, and fighter jets, but also crucial to renewable energy infrastructure, particularly wind turbines, and automotive applications like electric vehicle motors. China’s control over the refining and processing of these rare earths, again exceeding 85% globally according to the IEA, positions Beijing to substantially disrupt supply chains at will, thereby reinforcing its geopolitical leverage.

China’s strategic tightening of critical mineral exports represents a clear progression from the seminal 2010 Japan incident to today’s comprehensive restrictions targeting key Western economies. The moves reveal not only China’s sophisticated understanding of industrial dependencies but also highlight the vulnerabilities inherent in a globalized economy overly reliant on a single source for strategic resources. 

As Western nations grapple with their dependence on critical minerals, especially given China’s tightening grip on the supply chain, it’s essential to understand precisely why efforts to develop domestic resources have been consistently frustrated. Mining is inherently challenging, especially in advanced democracies where permitting processes can stretch for decades. Take, for instance, the infamous Pebble Mine in Alaska, a rich deposit containing copper, gold, and molybdenum. After roughly 35 years of extensive exploration, planning, and legal wrangling, not a single ounce of metal has been commercially produced. Resolution Copper in Arizona offers an even more striking example; after nearly half a century of proposals, environmental reviews, and community opposition, the site still remains inactive. These drawn-out timelines are not anomalies — they represent a fundamental challenge to quickly scaling domestic mineral production in democratic countries.

The reasons for these delays are multifaceted. Complex permitting processes, designed to protect environmental standards and manage public opposition, often extend project timelines dramatically. Environmental groups, Indigenous communities, and local residents frequently oppose mining developments on grounds ranging from habitat preservation and water quality to cultural significance. While such rigorous oversight serves legitimate and critical environmental and social objectives, it also contributes significantly to the uncertainty and extended timelines that can deter investors. High capital intensity compounds these challenges, as projects costing billions of dollars often face significant risk before even securing basic approvals, let alone reaching production.

It’s worth pointing out that in the United States, a lot of permitting is local, not national. The United States has lost the ability to build directly at the federal level and can now only fund what is permitted locally, whether it makes sense or not. The $504 million DOE loan for a hydrogen storage and generation facility in Utah was really only a local attempt to keep a coal town of 3,600 people alive, not an intelligent and thoughtful solution, for example. 

Even if mining challenges could be overcome, processing and refining capabilities in Western countries remain strikingly underdeveloped. According to a study published by the IEA, refining and processing critical minerals such as rare earths, lithium, cobalt, and graphite are energy-intensive and costly operations, typically requiring massive capital investments in specialized facilities. Much of the Western world’s existing refining infrastructure was dismantled or outsourced over the past four decades, leaving behind limited capacity and a diminished industrial knowledge base. Consequently, ramping up processing capabilities domestically now involves not just significant financial investments but also rebuilding entire industrial ecosystems nearly from scratch — a process that requires significant patience, capital, and political will.

Moreover, building out these critical supply chains also demands significant investment in human capital. Skilled personnel, ranging from geologists and chemical engineers to technicians capable of running complex refining processes, are in short supply. Decades of neglect in workforce development, driven by the offshoring of industrial production and a cultural shift away from mining and heavy industry, have resulted in profound skills gaps. According to reports by consulting firms such as Deloitte and McKinsey, training new cohorts of skilled workers takes years and requires systematic support through targeted educational programs and workforce initiatives. This slow build-up of talent is not something that can be accelerated easily, even with aggressive government interventions or financial incentives.

When I was on a speaking tour of New Zealand a couple of years ago through the Australasian Institute of Mining and Metallurgy (AusIMM), talking about the global transition to a minerals-enabled economy from a hydrocarbons-enabled economy, one thing that startled me was that university programs for mining engineering and metallurgy were being shut down. Since then, I’ve confirmed that this is true across the West. We’ve allowed mining to be portrayed as dirty and environmentally unfriendly, while giving fossil fuels a relatively free pass, especially natural gas. As a result, we have a dearth of students willing to go into mining programs, the exact programs we need today.

On top of human capital, intellectual capital, particularly research, development, and innovation in new processing technologies and recycling methods, is similarly challenging. Developing new, more efficient extraction and processing methods often requires lengthy timelines for testing, validation, and commercialization. Per studies published in Nature, novel extraction techniques, recycling processes, and improved metallurgical practices typically take upwards of 10 to 20 years from initial laboratory concept to large-scale industrial deployment. This slow pace of innovation and scaling further constrains rapid domestic capacity development, limiting how quickly Western countries can realistically reduce their mineral dependencies.

In stark contrast, China’s dominance of critical mineral supply chains reflects decades of sustained strategic investment and industrial policy. China has systematically cultivated a mature ecosystem that combines efficient regulatory structures, generous subsidies, massive infrastructure investments, and an integrated industrial strategy. As a result, China currently controls approximately 60–90% of the global refining and processing market for key minerals including rare earths, lithium, cobalt, graphite, and various other strategic metals. This dominant position is not simply a result of resource availability but of decades of coordinated effort, continuous investment in R&D, and deliberate industrial strategy — all factors Western nations are only now beginning to reconsider seriously.

An often overlooked fact is the relatively small size of the total critical minerals market, especially when it comes to rare earth elements. According to the U.S. Geological Survey, the entire annual domestic and import market for rare earths in the United States is only about $450 million. This limited market size is largely due to the extremely small quantities of rare earth minerals required for most industrial processes — even in strategically important applications like magnets for electric motors or aerospace components. This economic reality complicates investment logic. While strategic vulnerabilities make clear the urgent need for domestic supplies, the relatively modest market size makes massive private-sector investments less appealing unless bolstered by substantial government incentives or strategic guarantees.

Western nations seeking to respond to China’s tightening of export controls face profound challenges across multiple fronts: mining complexities, refining infrastructure gaps, critical shortages of skilled human and intellectual capital, and challenging economic realities in small but strategically critical markets. Confronting and overcoming these barriers requires not only substantial financial investments and proactive government policy but also careful, realistic, and sustained commitment. Without strategic foresight and determined political will, the vulnerability of Western economies to critical minerals disruptions, especially as geopolitical tensions intensify, is likely to remain an enduring challenge for decades to come.

The Biden administration’s efforts to secure critical mineral supply chains marked a significant strategic shift in U.S. industrial policy, contrasting sharply with earlier neglect and the disruptive policy swings under prior administrations. The administration made targeted investments aimed at strengthening domestic capacity for mining and refining key minerals. Leveraging the Defense Production Act, Biden’s administration allocated over $150 million specifically to enhance domestic production capabilities in strategic minerals such as tin, graphite, and rare earth elements. 

Another central pillar of Biden’s approach involved substantial incentives for clean energy technologies and battery manufacturing, prominently featured in the Inflation Reduction Act (IRA). This landmark legislation provided extensive subsidies and financial incentives intended to catalyze private sector investments in domestic manufacturing capacity, particularly targeting electric vehicle battery production, renewable energy technologies, and associated infrastructure.

Simultaneously, Biden’s team actively pursued international collaborations designed explicitly around the concept of “friendshoring,” essentially reorienting global supply chains toward trusted allies and partners. One such effort was the Minerals Security Partnership, established in coordination with major economies including Japan, South Korea, and the European Union. Friendshoring aimed not only to diversify sources but also to enhance overall resilience against geopolitical shocks and market manipulations.

However, these proactive moves toward mineral security were not without friction. Biden’s administration encountered criticism, notably from conservative think tanks like The Heritage Foundation, for maintaining and even tightening environmental regulations that delayed or entirely blocked key mining projects, particularly in sensitive regions such as Alaska and Minnesota. The administration’s emphasis on stringent environmental and social governance standards reflected legitimate concerns about ecological sustainability and community impacts, but it inevitably complicated rapid expansion of domestic mining activities, creating tension between strategic urgency and regulatory compliance.

In addressing this tension, the administration significantly expanded efforts at supply chain mapping and resource identification through the Earth Mapping Resources Initiative, or Earth MRI. Initially established under the Trump administration during his first term to systematically survey domestic mineral resources, the Earth MRI program faced temporary defunding during Trump’s second term, reflecting inconsistent commitment to mineral security. The Biden administration invested anew in comprehensive geological surveys and resource characterization efforts aimed at precisely mapping domestic deposits of critical minerals. This effort, as highlighted in reports from War on the Rocks, aimed to provide crucial geological data to policymakers, investors, and companies, facilitating better-informed decision-making about resource development and supply chain diversification.

The United States’ recent aggressive push to secure overseas sources of critical minerals, initiated primarily under the Trump administration’s second term, represented a distinct shift from decades of relatively hands-off market-driven policies. This approach — described by some analysts as a new form of resource colonialism — resulted in heightened geopolitical tensions, reputational risks, and increased instances of resource nationalism in mineral-rich countries around the globe. Driven by strategic anxieties over China’s near-monopoly on key minerals, ideology and hubristic ego, the Trump administration’s policies ignored traditional alliances and diplomatic conventions, fueling backlash and strained relationships.

One of the most visible examples of this new strategy emerged when Trump suggested acquiring Greenland from Denmark due to its extensive critical mineral deposits. Greenland’s government immediately denounced this suggestion as neo-colonial and strongly reaffirmed its autonomous status. Danish authorities similarly opposed any territorial negotiations, viewing them as interference with national sovereignty and self-governance.

Further complicating matters, the Trump administration implemented tariffs targeting critical mineral imports from allies such as Canada, ostensibly to encourage domestic production. Canadian officials and industry representatives condemned these measures, arguing they disrupted carefully integrated North American supply chains and undermined economic cooperation. 

Trump went a lot further than mere tariffs with Canada, threatening to annex it, referring to it regularly as the 51st State and referring to the country’s Prime Minister as governor. Trump being a real estate mogul, at least in his mind, this was part and parcel of his musings about taking over the Panama Canal and developing the Gaza Strip as a tawdry and gaudy pleasure resort.

Ukraine also found itself in the crosshairs of U.S. strategic interest under Trump’s aggressive minerals policy. The administration is finalizing a bilateral agreement promising joint investment into Ukraine’s significant but largely untapped critical mineral deposits, including lithium, cobalt, and rare earth elements. This was initiated explicitly as being tied to assistance in ending the war started by the illegal invasion of Ukraine by Russia, although Trump’s language blames Ukraine, of course. While this agreement was framed publicly as mutually beneficial, analysts quickly pointed out that it offered Ukraine minimal tangible security assurances or significant guarantees of ongoing military and economic aid, despite Ukraine’s precarious geopolitical situation. 

The Washington Post highlighted substantial uncertainty around the valuation of Ukraine’s mineral resources, partly due to outdated Soviet-era geological surveys and because approximately 40% of the nation’s identified mineral wealth remains within Russian-occupied territories. This uncertainty complicated investment decisions and weakened Ukraine’s bargaining position, raising concerns that the partnership was unbalanced, favoring U.S. strategic objectives more than Ukraine’s long-term security or economic stability.

Internationally, the trend toward resource colonialism strategies prompted resource-rich nations to adopt defensive postures and accelerate trends toward resource nationalism. Burkina Faso provided a clear example when its government moved aggressively to nationalize industrial gold mines previously controlled by foreign companies, including Canada’s Endeavour Mining, in 2024. This decision was explicitly motivated by a desire to assert national sovereignty and to capture greater revenue from resource exploitation, underscoring local frustration with what was perceived as exploitative foreign investment practices. Similarly, Mexico’s recent nationalization of its lithium industry emerged as a direct reaction against perceived over-reliance on foreign companies and U.S.-led market interventions, although analysts warned that chronic issues such as corruption and insufficient domestic capital might severely limit the initiative’s effectiveness.

Collectively, these moves reflected an accelerating global shift, with resource-rich developing nations increasingly wary of becoming mere Rare Earth Republics, modern analogs to the Banana Republics of the previous century — economies dominated by external powers seeking strategic commodities. Such nationalizations and intensified local control reflected both a defensive reaction against perceived foreign economic dominance and a broader push toward economic sovereignty, which is increasingly viewed by national governments as essential to protecting their own long-term interests in a geopolitically tense and competitive world.

Of course, Trump’s tariffs on every country in the world, including penguin-filled islands, but notably excluding Russia, have seriously impacted friendshoring strategies, just part of the strategic incoherence of the Administration around critical minerals, and for that matter every other file excepting tax cuts for the rich.

The European Union’s approach to securing its critical mineral supply chains has undergone a decisive shift, marked prominently by the enactment of the Critical Raw Materials Act (CRMA) in May 2024. This legislation set ambitious targets to bolster the EU’s strategic autonomy by 2030, explicitly mandating that member states collectively extract at least 10% of their annual critical minerals consumption domestically. Moreover, it established a target for processing 40% of these minerals within EU borders and committed to recycling at least 25% of annual consumption from recovered materials. A key element of the CRMA aimed to mitigate geopolitical vulnerabilities by limiting EU dependence on any single external supplier to no more than 65% for each strategic raw material, directly addressing long-standing concerns over China’s near-monopoly on critical minerals markets.

To achieve these ambitious targets, the EU selected 47 strategic projects distributed across 13 member states, concentrating heavily on crucial metals and minerals such as aluminium, cobalt, lithium, and rare earth elements. According to Reuters, these projects are carefully designed to enhance Europe’s domestic capacity, from mining operations to sophisticated processing facilities and robust recycling infrastructure. This strategy represents a systematic response to the vulnerabilities highlighted by both the COVID-19 pandemic and growing geopolitical tensions, particularly related to China’s strategic control over global mineral supplies. The projects encompass investments in innovative technologies and infrastructure upgrades, which are vital for creating a sustainable and resilient mineral supply chain within Europe.

Recognizing that even aggressive domestic investment cannot eliminate the need for international sources, the EU is developing a €9 million joint purchasing platform. This initiative aims to consolidate the collective bargaining power of member states in critical mineral markets, which have historically been opaque and dominated by a limited number of influential suppliers, primarily China. According to analyses by Reuters, this collective procurement approach offers the potential to significantly enhance Europe’s negotiating position, stabilizing prices and ensuring more predictable access to essential minerals. Such market stabilization is crucial, given the historically volatile pricing and strategic uncertainties associated with critical mineral supplies.

In parallel, the European Union has actively expanded its diplomatic and economic outreach under its Global Gateway initiative. This program represents the EU’s strategic effort to build robust international partnerships and infrastructure investments, targeting resource-rich regions to secure sustainable and ethically sourced critical minerals. The EU’s approach prioritizes long-term partnerships, emphasizing fair labor practices, environmental stewardship, and local economic benefits—factors often neglected by more aggressive geopolitical actors. According to reports from The Guardian, this approach is designed to differentiate the EU from China’s Belt and Road Initiative by positioning Europe as a reliable partner committed to sustainable development, human rights, and transparent governance.

To further diversify supply chains beyond traditional economic blocs, the EU has intensified efforts toward “friendshoring,” strengthening economic and diplomatic ties specifically with countries considered stable and politically aligned, particularly in the Global South. According to the European Council on Foreign Relations (ECFR), these initiatives prioritize collaborations on critical raw materials, sustainable agriculture, and renewable technologies. The EU’s goal is not merely economic self-interest but also to foster stable, mutually beneficial relationships that support broader green-transition objectives globally. Such strategies aim to reduce Europe’s reliance on adversarial or geopolitically risky suppliers, enhancing both strategic security and economic resilience.

Collectively, these policy initiatives highlight Europe’s comprehensive and strategic approach toward securing critical mineral supplies. Unlike past policies characterized by market-driven complacency, the EU now explicitly recognizes the profound strategic importance of mineral security in achieving broader climate, economic, and geopolitical objectives. By investing significantly in domestic capacity, enhancing international cooperation through ethical and sustainable frameworks, and developing mechanisms for collective bargaining power, Europe is positioning itself proactively in an increasingly complex and competitive global landscape. The success of these efforts will depend not just on sustained political and financial commitment but also on navigating the intricate balance between aggressive industrial policy and adherence to rigorous environmental, ethical, and social standards. The outcomes, as these initiatives mature, will profoundly shape Europe’s future resilience and global competitiveness in critical technological and industrial sectors.

When advising institutional investors navigating the increasingly complex critical minerals landscape, I typically suggest tailored portfolio strategies that reflect their unique risk tolerances, investment horizons, and strategic objectives. For pension funds and endowments, which generally adopt conservative, long-horizon investment approaches, the priority should be investing in stable jurisdictions that align closely with established friendshoring strategies in Europe and North America. These regions offer lower geopolitical risks, robust regulatory environments, and explicit policy support such as Europe’s Critical Raw Materials Act (CRMA). Joint venture-backed European initiatives, particularly those focused on processing and recycling, provide an especially compelling opportunity. Diversification across minerals such as lithium, graphite, and rare earths helps mitigate risks associated with single-resource dependence and further buffers portfolios against China’s dominant market influence.

For sovereign wealth funds, which inherently have strategic and often multi-generational investment perspectives, the emphasis shifts toward direct, strategically aligned investments in resource-rich but politically stable nations like Canada, Australia, and Chile, although that last country has recently been seeing turmoil around minerals. Such jurisdictions not only align with friendshoring principles but also present fewer vulnerabilities to resource nationalism. I suggest these investors consider significant stakes or strategic partnerships in critical European raw material projects that benefit from explicit governmental backing. Additionally, sovereign funds can meaningfully allocate capital to innovative refining and recycling technologies with proven technical viability and clear government endorsements, thereby aligning financial returns with broader strategic and policy objectives.

Private equity investors, operating with medium-term horizons and opportunistic mindsets, should identify undervalued mining and processing projects currently stalled or delayed by regulatory uncertainty yet likely to advance. Projects such as Resolution Copper in Arizona or Lithium Americas’ developments represent prime opportunities for such targeted, risk-informed capital deployment. Concurrently, private equity should invest selectively in midstream processing technologies and facilities, particularly those leveraged to Europe’s robust CRMA-driven demand and policy incentives. Investing in proven startups with demonstrated processing capabilities, rather than speculative hype, is essential given the rapidly evolving technological landscape.

Venture capital investors typically manage shorter-term, high-risk portfolios with the potential for outsized returns. In advising these investors, I highlight the importance of backing technology startups with robust intellectual property portfolios focused on breakthrough mineral extraction or recycling innovations. European startups benefiting directly from CRMA alignment are particularly attractive due to strong policy support and clear commercial demand. Conversely, heightened caution is necessary when evaluating hyped U.S.-based mineral startups; rigorous due diligence is critical due to persistent policy uncertainty and the legacy of fluctuating support from different administrations. That’s technical due diligence, not team or financial projections due diligence. Get resources like Lyle Tritten, the Nickel Nerd, or chemical process engineer Paul Martin of Spitfire Research to look closely at the technology. This is a space where betting on the team doesn’t work, it’s deep tech, not an app.

Infrastructure funds, which generally seek stable, long-term cash flows, should prioritize investments in critical logistics infrastructure essential to mineral supply chains. Investments in refining hubs, ports, and transport infrastructure located in politically stable jurisdictions within Europe and allied nations are particularly compelling. These infrastructure projects align naturally with initiatives such as the EU’s Joint Purchasing Platform and broader U.S. friendshoring efforts. At the same time, infrastructure investors should rigorously avoid assets vulnerable to resource nationalism or sudden nationalization, particularly in politically volatile regions where recent developments signal growing risks.

Overall, a balanced approach emphasizing geographic diversification, careful alignment with EU and U.S. friendshoring strategies, and prudent selection of assets across all stages of the mineral supply chain provides the most resilient and strategically sound path forward. This approach helps mitigate exposure to China’s restrictive export policies, reduces risks associated with aggressive U.S. resource-colonial strategies, and leverages growing governmental support in Western nations to deliver sustainable, strategically robust returns.

Institutional investors today find themselves navigating a dramatically transformed landscape, one that has rapidly shifted from decades of laissez-faire market orthodoxy toward active government intervention and explicit industrial policies. After nearly half a century during which critical minerals rarely entered the lexicon of strategic planning, they have once again become central to economic and national security strategies across Western nations. Investors must now carefully assess how this renewed prioritization of industrial policy, driven by geopolitical rivalries and strategic competition, reshapes markets and introduces entirely new layers of risk and opportunity.

This revival of industrial policy is being driven largely by intensifying geopolitical tensions between Western nations, especially the United States, and China. The increasingly competitive, sometimes confrontational relationship with China, particularly regarding the control and supply of critical minerals essential for emerging technologies, has forced Western governments to reconsider their strategic vulnerabilities. China’s dominance of the global supply and refining capacity for critical minerals such as lithium, graphite, cobalt, and rare earth elements has become an acute concern, prompting Western nations to urgently pursue measures aimed at diversifying sources, reshoring production, and building resilience.

In response to these vulnerabilities, Western governments have introduced significant policy interventions, ranging from direct financial subsidies and targeted trade protections to the outright nationalization of critical resources in certain cases. Policies like the U.S. Inflation Reduction Act and Europe’s Critical Raw Materials Act represent substantial commitments by governments to support domestic supply chains and processing infrastructure. Such moves signal clearly to investors that traditional market-driven mechanisms alone will no longer determine strategic outcomes in these sectors. Investors now need to understand and integrate these new political and regulatory frameworks into their portfolio strategies, recognizing that government actions can dramatically influence both the profitability and risk profiles of their investments.

Simultaneously, the rapid technological advances in renewables, battery technologies, and electric vehicles—often dubbed “computers on wheels”—continue to drive exponential growth in demand for critical minerals. This accelerating technology transition has intensified pressures on supply chains already under strain from geopolitical competition. The result is an increasingly competitive global scramble for resources essential to the green transition, with demand forecasts vastly exceeding existing production and refining capacity in the near term.

This confluence of industrial policy resurgence, geopolitical friction, and rapid technological advancement represents an unprecedented transformation in the investment landscape. Investors must adjust their strategies accordingly, weighing carefully the risks of geopolitical disruptions, nationalization, and regulatory interventions against the immense opportunities arising from surging demand driven by global decarbonization goals. As critical minerals become embedded in national security doctrines and economic strategies once again, investment decisions in this space can no longer be based solely on market fundamentals. Instead, investors must adopt a nuanced, integrated approach, incorporating geopolitical intelligence, strategic government initiatives, and long-term technological forecasting into their analyses.

The return of industrial policy and the renewed strategic importance of critical minerals are not temporary phenomena. They reflect a profound, structural shift in global economics and international relations that investors must actively navigate to secure sustainable and strategically aligned returns in an era defined by complexity, competition, and transformation.

Question: Is it worth onshoring / decoupling?

Decoupling from China or aggressively onshoring critical mineral supply chains sounds appealing, particularly in a geopolitical climate increasingly defined by strategic competition and supply-chain vulnerabilities. However, pursuing this strategy demands sober realism about China’s entrenched dominance, a clear-eyed assessment of the risks involved, and disciplined strategic logic reminiscent of Richard Rumelt’s approach. The answer isn’t a simplistic yes-or-no binary; rather, it requires carefully prioritizing critical elements of the supply chain, building genuine resilience, and avoiding unnecessary escalation with China — an approach that favors thoughtful diversification over aggressive decoupling.

China’s dominance in critical minerals is a reality that cannot be overlooked. Attempting to fully replicate this infrastructure domestically would be financially exorbitant, technically challenging, and extremely time-consuming. Antagonizing China, for example with massive tariffs, will simply lead to no supplies of some critical minerals, limited supplies of most and all mineral costs going up.

Instead, applying Rumelt’s strategic thinking suggests prioritizing criticality. The strategic goal isn’t wholesale decoupling, but targeted resilience. Onshoring makes sense primarily in areas of the highest vulnerability and highest strategic value, such as rare earth magnets essential for advanced military applications, precision electronics, and high-efficiency electric motors. In other less strategically sensitive segments, nearshoring and friendshoring — collaborating closely with trusted allies and stable resource-rich nations — should take precedence. Such nuanced diversification, combined with investments in recycling, efficiency, and technological substitutes, provides greater long-term strategic resilience without provoking unnecessary confrontation with China.

Moreover, any effective onshoring or diversification strategy should aim explicitly at complementing, rather than fully displacing, China’s existing capabilities. Rumelt’s strategic principles caution strongly against unnecessary antagonism. Diplomatically framing supply-chain diversification as an economic and environmental necessity rather than geopolitical opposition would help maintain stability and avoids escalating tension unnecessarily. China itself remains significantly reliant on Western technologies, markets, and financial systems, creating substantial leverage and opportunities for constructive engagement. Recognizing and strategically managing these interdependencies can mitigate China’s motivation to use its dominance in minerals as leverage.

Ultimately, the path forward requires measured realism: Western nations must systematically build resilience and reduce strategic vulnerabilities while acknowledging the economic interdependence with China. Rather than pursuing a rigid, ideological decoupling that exacerbates tensions, the optimal approach strategically balances domestic capability building, cooperative international alliances, and technological innovation. This strategy provides genuine security and economic resilience without sacrificing diplomatic stability or unnecessarily inflaming geopolitical rivalries.

Europe is getting it much closer to right than the United States is right now.

Question: What are rare earths?

Rare earth elements are neither particularly rare nor are they earths, at least, not in the sense most people might assume. The term “rare earths” is a historical misnomer dating back to the 18th and 19th centuries, referring originally to minerals that were then believed to be scarce because they were difficult to isolate and refine with technologies available at the time. Today, we understand that many rare earth elements are actually more abundant in the Earth’s crust than precious metals like gold or platinum, but their dispersed distribution makes them economically challenging to extract and process.

Scientifically speaking, rare earth elements (REEs) consist of a set of seventeen chemically similar metallic elements, specifically the fifteen lanthanides on the periodic table, along with scandium and yttrium, which share chemical characteristics. Rather than rarity, their value lies in the remarkable properties they exhibit, including powerful magnetism, luminescence, and catalytic capabilities. These unique qualities have made them indispensable in a wide array of modern technologies, from smartphones and electric vehicles to advanced defense systems, wind turbines, and sophisticated medical imaging equipment.

What genuinely makes rare earths “rare” from a practical standpoint isn’t their scarcity in nature, but rather the economic and environmental complexities involved in their extraction and refining. The ores containing these elements, such as bastnaesite, monazite, and xenotime, tend to have low concentrations of REEs, requiring extensive and often environmentally impactful processes to separate and refine them.

Question: Is it worth investing in recycling in Europe?

Investing in critical mineral recycling in Europe holds considerable promise, but the answer isn’t as straightforward as many might assume. While the economic and geopolitical logic is compelling, especially given Europe’s strong industrial policy under the Critical Raw Materials Act, there are nuanced technical and market considerations that investors must rigorously evaluate. Recycling critical minerals from end-use products like smartphones and EV batteries seems intuitively sensible, but practical challenges around varying compositions, trace-element impurities, and processing complexities introduce significant hurdles.

Take consumer electronics like iPhones, for instance. They contain numerous rare and strategically important metals, but typically only in trace quantities. These small concentrations are often dispersed within complex mixtures of alloys, glass, ceramics, and plastics, complicating efficient separation and refinement. The varied mineral compositions, which change substantially between product generations due to rapid technological evolution, add further complexity. Each variant may require significantly different metallurgical processes, chemical treatments, or thermal procedures. Without highly adaptive and technologically sophisticated processing plants, recycling efficiency drops rapidly, severely impacting economic viability. This underscores the need for investors to carefully assess technology readiness and the actual adaptability of proposed recycling solutions, ideally involving due diligence from experienced metallurgical experts like Lyle Tritten or Paul Martin.

Battery recycling offers an even clearer illustration of these complexities. Lithium-ion battery chemistries have evolved rapidly, incorporating shifting proportions of lithium, cobalt, nickel, manganese, iron, and aluminum. Different manufacturers deploy unique cathode chemistries optimized for performance, safety, cost, and durability. The continual innovation in battery technology, from high-cobalt NMC cathodes to low-cobalt and cobalt-free LFP chemistries, means recycling operations must flexibly adjust their processing steps. A fixed recycling process tuned exclusively for a single chemistry quickly becomes economically and technically obsolete. This demands continual R&D investments and flexible processing infrastructures, adding significantly to capital intensity and operational complexity.

Yet there are encouraging signs from firms successfully navigating these technical hurdles by extracting and enriching high-value components selectively, rather than pursuing low-yield bulk recycling approaches. Redwood Materials in the U.S., for example, has successfully commercialized a targeted strategy, extracting, refining, and enriching battery cathodes specifically to recapture their highest-value metals. This highly selective, technology-driven strategy, backed by extensive technical diligence and process optimization, can be economically advantageous compared to less focused, traditional recycling methods.

In Europe, the policy environment under the Critical Raw Materials Act and the strategic emphasis on supply-chain resilience offer clear tailwinds for targeted, high-value recycling investments. European markets also provide steady streams of high-quality end-of-life materials, enhanced by well-developed regulatory frameworks and strong consumer electronics penetration. But investors must understand these favorable market conditions don’t eliminate the need for robust technical diligence, realistic process flexibility, and careful management of operational complexities. Blindly investing in recycling facilities without deep understanding of metallurgical and chemical challenges can lead to costly failures.