The Great Mineral Pivot: Rebuilding Domestic Supply Chains

 China dominates the global supply of critical minerals and metals, but the degree of dependency varies by country, mineral, and strategic diversification efforts.

China’s Dominance in Critical Minerals:

-Production: China leads global production for several critical minerals, controlling about 60% of rare earth elements (REEs), 80% of graphite, and significant shares of lithium (13% but growing), cobalt (mainly through African investments), and nickel. It supplies 94% of gallium and 83% of germanium globally, with few alternatives elsewhere.

-Processing and Refining: China’s grip is even stronger in processing, refining 80-90% of REEs, 65% of cobalt, 58% of lithium, and 40% of copper. Even minerals mined in countries like Australia or Chile are often sent to China for processing. China processes nearly all gallium and germanium, making it a bottleneck for semiconductor and high-tech supply chains.

-Export Controls and Geopolitical Leverage: China has imposed export restrictions on minerals like gallium, germanium, and graphite, citing national security. These actions heighten global dependency and can disrupt supply chains, especially amid geopolitical tensions.

Global Dependency Overview:

High Dependency: -Developing Nations (e.g., India, Brazil, much of Africa and Southeast Asia) rely almost entirely on China for processed minerals due to limited domestic capacity. India, for example, imports nearly all its germanium and gallium from China.

-European Union imports 98% of its REEs from China and depends on Chinese-processed lithium and cobalt for its EV industry, despite new policies aiming to reduce this reliance.

-Smaller Economies like South Korea and Japan are highly dependent, though Japan is investing in alternatives.

Partial Dependency: -United States relies on China for 80% of REE imports and significant processed lithium and cobalt, but is diversifying through domestic reserves, partnerships (Canada, Australia), and recycling. Recent Policies incentivize US production.

-Australia is a major miner of lithium, nickel, and REEs, but still relies on China for some processing. It is expanding domestic refining.

-Canada has rich reserves but sends some minerals to China for processing; it is investing widely in local processing & refining to become a North American hub.

Low Dependency: -Chile leads in lithium production and is a major copper supplier, exporting raw minerals but developing domestic processing

-Democratic Republic of Congo supplies 70% of global cobalt but depends on Chinese companies for mining and processing.

-Russia produces nickel, palladium, and titanium with domestic processing, but sanctions limit its alternative role..

Factors Driving Dependency:

-Concentration of Supply: Critical minerals are geologically scarce, and China’s decades-long investment in mining and refining has outpaced others.

-Processing Monopoly: Even resource-rich countries lack refining capacity, making China’s facilities essential.

-Cost Advantage: Lower labor and regulatory costs make Chinese processed minerals cheaper, discouraging alternative investment.

-Geopolitical Leverage: State-backed Chinese investments in Africa and Latin America extend control over global supply chains.

Efforts to Reduce Dependenc:

-US-led initiatives like the Mineral Security Partnership promote non-Chinese supply chains, funding projects in Canada, Australia, and Africa.

-Quad Alliance (US, Japan, India, Australia) collaborates to secure critical minerals, with Australia as a key supplier.

-African Partnerships see India, the EU, and Japan investing in African mining to bypass China. Canada has signed agreements with Zambia and South Africa for mineral exploration.

-The US, EU, and Canada are building new processing plants and reopening mines. India’s National Critical Mineral Mission aims to boost domestic mining and processing.

Exceptions and Nuances:

Resource-rich countries (Canada, Australia, Chile, DRC) have significant reserves, reducing dependency on Chinese mining but not always processing. No major economy is fully independent, but Russia and China have substantial domestic supply chains for certain minerals.

Dependency levels vary by mineral; for example, nickel is more diversified, while gallium and germanium are almost exclusively Chinese-controlled.

Africa and Latin America are less dependent on China for raw minerals but rely on Chinese investment and processing, creating a different form of dependency.

Conclusion: While no country is completely independent from China for critical minerals and metals, dependency levels vary. Major economies like the US, EU, and India rely heavily on China for processed minerals, while resource-rich nations have more autonomy in mining.

Global efforts to diversify supply chains, build processing capacity, and recycle minerals are underway, but China’s dominance in refining and strategic minerals is likely to persist in the near term.

SP

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Mining News: www.minestockers.com (Disclosure: the writer is a shareholder in minestockers.com)