THE CHINESE DOMINANCE IN GLOBAL CRITICAL MINERALS SUPPLY CHAIN: IMPLICATIONS AND STRATEGIC RESPONSES

The 21st century, characterized by astounding technological progression, has intrinsically linked global industries from renewable energy to advanced manufacturing to critical minerals.

China, the global epicenter in the refining and processing of these essential resources, exercises unrivalled influence, illustrated aptly by its dominance over core supply chains. According to 2024 data, China processed a staggering 94% of Graphite, 90% of REEs (Rare Earth Elements) and 60% of Cobalt worldwide, ascertaining its paramount role in this sector.

 Beyond these minerals, China also commands significant influence in the production and refining of vital elements such as Lithium, Nickel, and Copper. With capacities that account for 59% and 68% of global Lithium and Nickel refining, respectively,

China is a vital cogwheel in the global push towards greener energy solutions. This standing has been sustained and enhanced through years of deliberate investments in mining operations, global partnerships, and sophisticated processing infrastructure.

 Further entrenching this control, China has implemented export restrictions on key minerals like Gallium and Germanium, making foreign firms’ acquisition of these resources increasingly complex. China's strategies involve aiming to control supply chains, support exploration of rare minerals, regulate traditionally advantaged minerals, and secure raw material supplies for strategic industries.

 Respected bodies such as the United States Geological Survey (USGS) and the International Energy Agency (IEA) affirm China’s control over approximately 85-90% of global capacity of the rare earth refining market.

 Countries like Canada, seeking to lessen reliance on China, have launched initiatives such as the Critical Minerals Strategy, enabling them to establish a stronger presence in the critical mineral sector. This includes supporting mining projects and strengthening North American critical mineral supply chains through agreements with the U.S.

 The Minerals Security Partnership (MSP) is a U.S.-led initiative aimed at securing and diversifying critical mineral supply chains. Established in 2022, the MSP includes 14 countries and the European Union, with members such as Australia, Canada, Japan, South Korea, and India. The partnership seeks to reduce dependency on China by promoting responsible mining, processing, and recycling of critical minerals while adhering to high environmental, social, and governance (ESG) standards.) and developing novel financing networks to support critical mineral projects. For instance, Australia has established billion-dollar-backed facilities to provide loans and guarantees for nationally significant projects.

 However, the Trump administration’s tariff policies have impinged on critical mineral supply chains, causing a ripple effect in industries reliant on these resources. These include drastic cost escalations in the clean energy sector, due to tariffs on Chinese imports of refined critical minerals and the imposition of export restrictions by China on crucial elements required for clean energy technologies and electronics.

 In our complex interconnected global economy, the repercussions of these policies extend beyond the U.S., causing perturbations in economies across Europe and Asia, which are heavily reliant on these materials. To mitigate these effects, the Trump administration has negotiated mineral deals with mineral-rich countries, streamlined domestic mining project processes, and exempted certain critical minerals from tariffs.

 Despite these efforts, it appears unlikely that the gap in critical mineral processing between China and the U.S. will narrow in the foreseeable future, leaving the U.S. and consequently, the global industries vulnerably poised against supply chain disruptions and rising costs.

 

 

 "This information is for general knowledge and informational purposes only and does not constitute financial advice."

 

Mining News: www.minestockers.com

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