The Geopolitics of Critical Minerals

Geopolitics of critical minerals has emerged as a central axis of 21st-century power struggles. These minerals—such as lithium, cobalt, nickel, and rare earth elements (REEs)—are indispensable to technologies ranging from smartphones and electric vehicles to precision-guided missiles and solar panels. As nations compete for influence in an increasingly multipolar world, control over the sourcing, refining, and trade of these materials has evolved into a strategic imperative.

China currently dominates the landscape. It is responsible for 70% of global production and approximately 90% of REE processing. This asymmetric control grants Beijing not only economic leverage but also geopolitical influence. The Chinese government has repeatedly demonstrated its willingness to weaponize this advantage—halting exports to Japan in 2010, restricting gallium and germanium to the U.S. in 2023, and banning REE extraction technologies in 2024. As global demand for clean energy accelerates, these minerals have become more than commodities—they are geopolitical tools.

The urgency of this issue cannot be overstated. The demand for lithium, cobalt, and rare earth elements is expected to skyrocket by up to 4,000% in the coming decades. Yet the current global supply chains remain fragile, overconcentrated, and politically vulnerable. Liberal democracies, particularly in the West, are scrambling to reduce their dependency through policies such as the U.S. Inflation Reduction Act and the EU’s Critical Raw Materials Act. But progress is slow, and domestic production still lags behind geopolitical necessity.

At the same time, many developing nations—rich in mineral deposits but weak in infrastructure and governance—are caught in the middle. Their resources are being leveraged by stronger powers, especially through initiatives like China’s Belt and Road. In countries like the Democratic Republic of the Congo, Chile, and Mongolia, the mineral sector has become both a battleground and a bargaining chip. These dynamics have heightened competition not just for access, but for control.

This article examines how critical minerals have reshaped international relations. It explores China’s strategic monopolization, evaluates Western responses, and assesses the implications for resource-rich nations. The analysis also draws on recent case studies and proposes policy recommendations for a more secure and equitable global supply chain.

China’s Strategic Dominance and Weaponization of REEs

China’s dominance in the rare earth elements (REEs) sector is not an accident of geology, but the result of a long-term, state-led strategy. Since the 1980s, Beijing has systematically invested in mining, processing, and refining capabilities, consolidating a near-monopoly over global REE supply chains. Today, China produces around 70% of REEs and processes nearly 90%, while also manufacturing the vast majority of REE-based permanent magnets—critical components in defense, energy, and electronics industries.

This control extends beyond domestic production. Through the Belt and Road Initiative (BRI), China has secured strategic mineral assets in over 19 countries, backed by an estimated $57 billion in loans, equity, and infrastructure deals. These investments target nations rich in cobalt, lithium, and graphite—minerals essential for the green energy transition. China’s involvement is often structured to ensure long-term influence: infrastructure in exchange for extraction rights, or equity stakes in local firms with Chinese state backing.

But China’s approach is not merely commercial. It has repeatedly used critical minerals as leverage in international disputes. In 2010, amid tensions over the Senkaku Islands, China abruptly halted REE exports to Japan. In 2023, it imposed restrictions on gallium and germanium—key inputs for semiconductors—following U.S. export controls on advanced chips. A year later, it banned the export of REE processing technologies, further entrenching its position at the top of the global value chain.

Beijing’s strategic posture under President Xi Jinping has grown increasingly assertive. Centralized decision-making by the Chinese Communist Party allows for rapid alignment between foreign policy and industrial policy. The result is a hybrid model where economic instruments, including minerals, serve national security and geopolitical goals. China’s partnerships with Russia, its influence in international standards bodies, and its leadership in supply chain chokepoints reflect this integrated strategy.

The consequences are significant. China’s grip on REE supply chains gives it the power to disrupt industries in rival economies with minimal effort. Defense systems, renewable energy projects, and high-tech manufacturing all rely on uninterrupted access to these materials. This creates a structural vulnerability for countries like the United States and members of the European Union, whose domestic capabilities remain underdeveloped.

Figure: China’s Share in Global REE Supply Chain (2024)

Stage	Global Share (%)
REE Mining	~70%
REE Processing	~90%
Permanent Magnet Production	~90%

In sum, China has transformed its mineral wealth and industrial capacity into a strategic weapon. Its ability to control supply, dictate terms, and withhold access makes it a central actor in the geopolitics of critical minerals. For liberal democracies, the challenge lies in breaking this dependence before it becomes irreversible.

The West’s Response: Diversification and Strategic Partnerships

As China consolidates its dominance over critical mineral supply chains, liberal democracies have begun to push back. Recognizing the strategic and economic risks of dependency, Western governments are adopting a two-pronged approach: expanding domestic production and forming trusted international partnerships. However, these efforts remain uneven and often lag behind China's state-coordinated model.

The United States has taken one of the most assertive positions. The Inflation Reduction Act (2022) earmarked billions for critical mineral development, including incentives for domestic mining, refining, and battery manufacturing. Washington has also reactivated Cold War-era provisions to stockpile key materials and limit Chinese investment in U.S. mineral assets. Further, the Minerals Security Partnership (MSP)—a multinational initiative involving allies like Canada, Australia, Japan, and the EU—aims to build resilient, transparent supply chains for minerals essential to clean energy and defense.

Canada, home to vast REE reserves, has positioned itself as a credible alternative to China. Its 2022 Critical Minerals Strategy allocated C$3.8 billion to exploration, environmental permitting, and processing facilities. The Canadian government has also ordered several Chinese firms to divest from domestic mining operations, emphasizing national security and economic independence.

Australia, already a leading producer of lithium and rare earths, has committed over A$500 million in critical mineral funding. Its strategic goal is to become a top global supplier to Western markets. Companies like Lynas Rare Earths are expanding processing capacity with government backing, including a facility in Texas supported by the U.S. Department of Defense.

In Europe, the Critical Raw Materials Act (CRMA) and the Net-Zero Industry Act form the backbone of the EU’s response. These measures aim to reduce import dependence and streamline approval processes for mining and refining projects. Brussels is also strengthening trade ties through the Global Gateway Initiative, targeting REE-rich regions in Africa and Latin America.

The United Kingdom, post-Brexit, launched its own Critical Minerals Strategy in 2022. The plan focuses on accelerating domestic capability, building international partnerships, and increasing market transparency. British officials have prioritized partnerships with Mongolia, Greenland, and key Commonwealth nations, though results remain modest so far.

Beyond individual national efforts, the Western bloc is increasingly leveraging friendshoring—the practice of relocating supply chains to politically aligned states. This strategy is supported by targeted trade policies, including steep tariffs on Chinese electric vehicles and semiconductor-related components.

Table: Key Western Initiatives on Critical Minerals

Country/Region	Policy or Initiative	Core Focus Areas
USA	Inflation Reduction Act, MSP	Domestic mining, allied supply chains, EV subsidies
EU	Critical Raw Materials Act	Permitting reform, strategic partnerships
Canada	Critical Minerals Strategy (2022)	Exploration, R&D, Chinese divestment
Australia	National Critical Minerals Strategy	Export expansion, defense partnerships
UK	Critical Minerals Strategy (2022)	Bilateral deals, industry support, regulatory clarity

Despite growing political will, these responses face structural obstacles. Environmental regulations, local opposition, and lengthy permitting processes delay mining projects across the West. Moreover, while China offers fast financing and turnkey infrastructure deals, Western aid often comes with conditionality and slower timelines. This contrast has made China more attractive to many developing nations.

Still, momentum is building. Western governments now treat critical minerals as strategic assets, not just commodities. But to match China’s reach, they will need to act with greater urgency, coordination, and investment. Time is a critical variable in this geopolitical equation—and it currently favors Beijing.

Critical Minerals in Developing Countries: Opportunity or Neo-Colonialism?

Developing countries hold the key to the global energy transition. Rich in critical minerals such as cobalt, lithium, and rare earth elements, these nations are increasingly viewed as battlegrounds in the struggle for geopolitical influence. For many of them, this abundance should present a path to sustainable development and industrialization. In reality, it often results in dependency, exploitation, and environmental degradation.

The Democratic Republic of the Congo (DRC), for example, possesses over 70% of the world’s cobalt reserves. Yet, despite this immense wealth, nearly three-quarters of its population lives on less than $2.15 a day. Cobalt mines in the DRC are plagued by corruption, child labor, and hazardous working conditions. Foreign companies, particularly Chinese state-backed firms, control most of the mining sector. Infrastructure-for-minerals agreements have delivered limited public benefit, with promised roads and hospitals often delayed or abandoned. Instead of national development, many Congolese communities face displacement, water pollution, and loss of livelihood.

In Latin America, countries like Chile, Argentina, and Bolivia—home to vast lithium reserves—face a similar dilemma. Chile’s Salar de Atacama contains one-third of the world’s lithium reserves. China’s presence in the sector is substantial, including a 23% stake in Chilean firm SQM. In response, the Chilean government launched a National Lithium Strategy in 2023, aimed at tightening public control and increasing domestic value capture. Still, concerns persist about foreign dependency, especially given China’s influence in both production and infrastructure.

Mongolia, with its enormous deposits of copper, REEs, and uranium, is another case in point. Nearly all of its REE exports are processed in China, placing the country in a subordinate role within the global supply chain. Although Mongolia has expressed interest in Western investment, the government recently introduced restrictive amendments to its minerals law, raising fears about political interference and regulatory instability.

These examples reflect a broader trend. Many mineral-rich nations in the Global South are engaging in what appears to be transactional development: trading long-term control over resources for short-term infrastructure or financing. This model, heavily promoted by China through the Belt and Road Initiative (BRI), often results in extractive agreements with limited transparency and little reinvestment in local economies. While marketed as partnerships, these deals frequently lack meaningful transfer of technology, skills, or industrial capacity.

At the heart of the problem lies the failure to move up the value chain. Most developing nations export raw materials while importing refined products at much higher prices. This keeps them locked in low-income, low-value roles in the global economy. By contrast, countries that invest in processing and manufacturing—such as Indonesia with its nickel export ban—can retain more value and stimulate domestic job creation.

Key Challenges for Developing Countries in the Critical Minerals Sector:

Challenge	Consequence
Resource exploitation by foreign firms	Loss of sovereignty and domestic economic control
Environmental degradation	Water contamination, deforestation, public health crises
Weak regulatory frameworks	Corruption, mismanagement, lack of enforcement
Lack of domestic processing	Export of raw materials, import of high-value goods
Limited technology transfer	Continued dependence on foreign expertise

To reverse this trend, developing countries need more than mineral wealth—they need governance capacity, infrastructure, and strategic vision. They also need partners willing to invest transparently and equitably, with respect for local laws, labor rights, and environmental standards.

For the West, this presents both a moral and strategic opportunity. By offering fairer deals—focused on joint ventures, skill development, and downstream processing—Western democracies can challenge China’s dominance and foster more balanced growth. Failure to do so risks deepening patterns of neo-colonial extraction, where critical minerals enrich foreign powers while leaving local populations behind.

Case Studies in Geopolitical Contestation

The global contest for critical minerals is not fought in theory, but in mines, ports, legislatures, and diplomatic halls. A closer examination of specific countries reveals the intensity and complexity of this struggle. Mongolia, Chile, the Democratic Republic of the Congo (DRC), and Greenland illustrate how national resource wealth intersects with foreign interests, regulatory battles, and geopolitical realignments.

Mongolia: Resources Amid Rising Pressures

Mongolia holds vast reserves of copper, uranium, lithium, and rare earth elements (REEs). Its economy is highly dependent on mining, which accounts for 25% of GDP and 90% of exports. However, almost all of its extracted critical minerals are exported to China, which dominates processing capacity.

Recent overtures from the United States, France, Japan, and South Korea signal a growing Western interest in loosening China's grip. In 2023, Mongolia signed a memorandum of understanding with the U.S. to enhance mineral cooperation. Despite these efforts, Beijing continues to exert overwhelming influence through infrastructure investments, trade asymmetries, and political leverage.

Domestically, Mongolia has introduced controversial legal changes. A 2024 amendment to the minerals law restricts private ownership of “strategic deposits” to 34% unless an Investment Agreement is reached. This law includes retroactive provisions, enabling state seizure of up to 51% of assets. Foreign investors have criticized the move as legally uncertain and politically risky. Simultaneously, Mongolia has deepened relations with Russia, including hosting President Putin despite an ICC arrest warrant.

The country sits at a crossroads: either strengthen ties with democratic partners or continue drifting toward authoritarian alignments that undermine investor confidence and democratic norms.

Chile: Lithium Giant Caught Between Markets and Sovereignty

Chile leads the world in copper production and holds the largest known lithium reserves—critical for battery technologies. Chinese firms have secured strategic positions in the sector. Tianqi Lithium holds a 23% stake in SQM, one of Chile’s two major lithium producers. In 2023, Chile launched its National Lithium Strategy, aiming to increase state control while maintaining private sector participation.

China is Chile’s largest trade partner, buying nearly 40% of its exports, including copper and lithium. But this close relationship has raised concerns. Local experts and analysts warn of an “asymmetrical dependency” that may erode Chile’s long-term strategic autonomy.

Chile’s government is attempting to shift the narrative by tightening environmental regulations, increasing local participation, and exploring downstream integration. Nevertheless, China’s entrenched position, combined with internal political debates over resource sovereignty, continues to shape the country’s trajectory.

Democratic Republic of the Congo: Exploited Riches, Enduring Poverty

The DRC is the world’s largest cobalt producer and also rich in copper, tantalum, and lithium. Yet its wealth has not translated into broad-based development. Instead, mining is dominated by foreign actors—chiefly Chinese firms—who operate under a minerals-for-infrastructure framework that often fails to deliver promised benefits.

Corruption, child labor, environmental degradation, and violent conflict are widespread. Amnesty International and other watchdogs have documented severe abuses in the cobalt supply chain. A 2024 U.S. Government Accountability Office report concluded that efforts to regulate conflict minerals have had limited impact on reducing violence or improving transparency.

Beijing controls between 50–70% of cobalt output through direct ownership and supply agreements. Attempts by the Congolese government to renegotiate terms or improve oversight have faced resistance. Western actors have lagged in offering viable alternatives, allowing China to solidify its position through the Belt and Road Initiative and exclusive control of downstream processing.

Greenland: Strategic Island in a Warming Arctic

Greenland has emerged as a geostrategic focal point due to its vast, untapped reserves of REEs, uranium, and other critical minerals. Estimates suggest the island holds up to 1.5 million tonnes of rare earths—potentially 20% of global reserves.

Interest from the United States has surged. In 2024, former President Donald Trump renewed calls for U.S. control of the island, citing national security. Meanwhile, the European Union has also begun courting Greenland as a potential supplier to offset Chinese imports. Despite these efforts, the mining sector remains largely undeveloped, and Greenland's government insists that any resource extraction must align with environmental and Indigenous rights.

China has already made early investments in Greenlandic mineral projects. Its companies previously sought control over uranium and REE sites but were blocked due to national security concerns and local opposition. With the Arctic becoming more accessible due to climate change, competition over Greenland’s resources is expected to intensify.

Comparative Table: Strategic Dynamics in Case Study Countries

Country	Key Minerals	Dominant Influence	Western Countermeasures	Main Challenges
Mongolia	Copper, REEs, Uranium	China	U.S. MoU, UK trade talks, Japanese investment	Legal uncertainty, Chinese dependency
Chile	Lithium, Copper	China	National Lithium Strategy, EU engagement	Environmental concerns, public distrust
DRC	Cobalt, Copper, Lithium	China	Limited U.S./EU presence, calls for transparency	Corruption, rights abuses, instability
Greenland	REEs, Uranium, Graphite	China (initial), US/EU (growing)	Strategic interest by U.S., EU investment interest	Infrastructure, environmental limits

These case studies underscore the geopolitical fragmentation of mineral supply chains. They also highlight a critical need: Western governments must not only compete with China economically, but also offer governance, environmental, and ethical standards that promote long-term resilience and mutual benefit. The next phase of the energy transition may well be decided in these contested territories.

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Strategic Recommendations and Future Outlook

The global race for control over critical minerals is far from over. As China cements its dominance through monopolistic strategies and strategic alliances, liberal democracies face a narrow window of opportunity to rebalance the geopolitical equation. Ensuring long-term access to critical minerals—while promoting transparency, sustainability, and equitable development—requires more than reactionary policies. It demands a bold, forward-looking strategy grounded in cooperation, ethics, and strategic foresight.

1. Develop Domestic Supply Chains

Western countries must accelerate domestic mining, refining, and recycling capabilities. The barriers—regulatory delays, public opposition, and permitting bottlenecks—can be addressed through reforms that maintain environmental and social protections while expediting strategic projects.

Policy Priorities:

• Streamline environmental review and permitting timelines.

• Expand public-private partnerships for mineral exploration and processing.

• Invest in research and innovation to improve sustainable extraction and recycling technologies.

2. Expand Strategic Alliances and Investment

The West must build long-term mineral partnerships based on mutual benefit, especially in developing countries. Unlike China’s transactional approach, these alliances should prioritize governance, community engagement, and local value addition.

Key Actions:

• Scale up the Minerals Security Partnership (MSP) and include more Global South countries.

• Provide competitive financing packages for infrastructure tied to ethical mining.

• Support local refining and manufacturing to help partner nations move up the value chain.

3. Strengthen Supply Chain Transparency and Standards

A major advantage for the West lies in higher environmental, labor, and governance standards. Formalizing these principles in trade agreements and supply chain audits can ensure traceability and reduce reputational risks.

Implementation Tools:

• Adopt standardized ESG (Environmental, Social, Governance) benchmarks across partner states.

• Mandate corporate due diligence on sourcing and labor practices.

• Establish a global registry for critical mineral projects and ownership transparency.

4. Incentivize Circular Economy Practices

Recycling and reuse of critical minerals remain underdeveloped yet essential for long-term sustainability. Western countries must incentivize a circular economy to reduce primary extraction dependency.

Practical Steps:

• Fund innovation in e-waste processing and urban mining.

• Mandate recycling targets for battery and electronics manufacturers.

• Promote public awareness and industry standards for second-life mineral usage.

5. Counter Disinformation and Economic Coercion

China’s dominance is supported by state-directed disinformation and economic pressure. Democracies must invest in strategic communication and policy resilience to push back against coercive tactics.

Strategic Responses:

• Build coalitions to expose and counter economic coercion in global forums.

• Support civil society and journalism in partner countries vulnerable to foreign influence.

• Coordinate export controls with allies to avoid fragmented policies.

Future Outlook

The geopolitics of critical minerals will shape the next decades of international security, economic resilience, and technological innovation. If left unchecked, China’s dominance risks institutionalizing a global imbalance where strategic resources become leverage points for coercion. However, the landscape is not static.

Liberal democracies still possess the innovation, capital, and diplomatic reach to build alternative supply chains that reflect shared values. The challenge lies not in recognition, but in execution. By combining industrial policy with inclusive diplomacy and ethical partnerships, the West can create a resilient global system for critical minerals—one that prioritizes sustainability, sovereignty, and stability.

The transition away from fossil fuels will be mineral-intensive, but the outcomes are not predetermined. Strategic alignment, international collaboration, and principled leadership will determine whether critical minerals become instruments of empowerment or tools of domination. The time to act is now.

References

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3. Zhou, W. (2024). Why China’s Critical Mineral Strategy Goes Beyond Geopolitics. World Economic Forum.https://www.weforum.org/stories/2024/11/china-critical-mineral-strategy-beyond-geopolitics/

4. Logan, S. (2024). Material World: How Europe Can Compete with China in the Race for Africa’s Critical Minerals. European Council on Foreign Relations.https://ecfr.eu/publication/material-world-how-europe-can-compete-with-china-in-the-race-for-africas-critical-minerals/

5. Ivanov, H. (2024). Decreasing Rare Earths Dependency: How the Five Eyes Alliance Can Minimise Rare Earths Trading Risk with China. Henry Jackson Society.https://henryjacksonsociety.org/publications/decreasing-rare-earths-dependency/

6. UK Government. (2022). UK Critical Minerals Strategy. Department for Business and Trade.https://www.gov.uk/government/publications/uk-critical-mineral-strategy

7. Government of Chile. (2023). National Lithium Strategy.https://www.gob.cl/litioporchile/en/

8. Amnesty International. (2016). “This Is What We Die For”: Human Rights Abuses in the DRC’s Cobalt Trade.https://www.amnesty.org/en/documents/afr62/3183/2016/en/

9. RAID. (2024). Toxic Pollution and Human Costs of DRC’s Cobalt Boom.https://raid-uk.org/report-environmental-pollution-human-costs-drc-cobalt-demand-industrial-mines-green-energy-evs-2024/