CRITICAL MINERALSChina’s Critical Mineral Strategy Goes Beyond Geopolitics
China dominates critical mineral refining but faces its own supply vulnerabilities, highlighting the complexity of global dependencies. A national strategy seeks to balance a focus of robust industrial policy on critical minerals while fostering international cooperation. A balanced approach involving China in global frameworks can reduce geopolitical tensions and foster sustainable supply chain solutions.
China’s position at the centre of global supply chains and current geopolitical tensions have led major economies to start “de-risking” from China. However, the supply of critical minerals is of mounting concern, while China’s foreign policy stance of weaponizing trade has ruffled some feathers in the West.
But to what extent is China “the problem” regarding critical mineral supply chains? This question should not be addressed through a one-sided, geopolitical lens; it requires a more nuanced understanding of China’s multifaceted critical mineral strategies.
The China Challenge
While China may not organically hold the lion’s share of global mineral resources, it has dominated the refining process as the world’s largest importer of critical minerals, which it processes and supplies to the rest of the world.
The United States, India and Germany follow China as huge importers; the United States, Chile, Switzerland and Australia have also recorded big increases in exports of raw, semi-processed or processed critical minerals.
China faces the familiar challenges of dependency, supply disruption and price fluctuation. Given its role as the world’s largest manufacturing hub and the source of numerous green technologies, the country expects to continue to experience shortages and supply challenges across a broad spectrum of critical minerals.
Critical Mineral Strategies Worldwide
Governments have rolled out various policy responses to secure access to critical minerals. For example, the European Union’s toolkit has called for increasing the production and recycling of critical minerals at home and building partnerships to facilitate trade and investment in the critical minerals sector abroad.
Similarly, the United States has developed a multi-pronged strategy to strengthen critical mineral supply chains and diversify away from China, including re-shoring supply chains among “trusted partners,” bilateral arrangements with allies and broader partnerships under the United States-led Minerals Security Partnership and Indo-Pacific Economic Framework (IPEF).
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“As China remains a key player in the global economy, measures that seek to reform critical mineral supply chains should not exclude the country.”
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At the same time, resource-rich economies, such as Indonesia, Chile, Mexico, and Zimbabwe, have used export restrictions, nationalization, and other tools designed to foster domestic processing facilities. The most prominent examples are nickel refining and electric vehicle batteries in Indonesia.
While all backed by legitimate concerns and strategic goals, these responses are predominantly inward-looking and could be a potential source of significant disruption to critical mineral supply chains.
