China is a dominant force in critical mineral refining but faces its own supply challenges, underscoring the complexities of global dependencies on these resources. As geopolitical tensions rise, China’s position at the center of global supply chains is leading many countries to reassess their reliance on the nation. However, the narrative surrounding China’s involvement in critical mineral supply chains is not one-dimensional and requires a deeper, more nuanced understanding.
China’s role in the global critical minerals market
While China does not hold a monopoly on global mineral resources, it has become the largest importer and refiner of critical minerals, processing them for distribution to the global market. As the world’s top manufacturing hub and a major source of green technologies, China has firmly established itself as a key player in the critical minerals sector. The United States, India, and Germany are among the top importers, while countries like Chile, Switzerland and Australia have seen increasing exports of raw and processed minerals.
Despite its dominance, China is not immune to supply vulnerabilities. Its refining industry faces challenges such as dependency on foreign sources, disruptions, and price volatility. This is compounded by China’s broader economic pressures and the global push for green technologies, which are highly dependent on critical minerals like lithium, cobalt and nickel.
Global strategies for securing critical mineral supply chains
To secure access to these crucial resources, governments worldwide have implemented policies aimed at reducing dependency on a single nation, especially China. For instance, the European Union’s strategy includes boosting domestic production and recycling of critical minerals while strengthening international trade partnerships. Similarly, the United States has developed a multi-faceted approach to reduce reliance on China, including efforts to reshore supply chains, engage with “trusted partners,” and form alliances such as the Minerals Security Partnership and the Indo-Pacific Economic Framework (IPEF).
However, resource-rich countries like Indonesia, Chile, Mexico, and Zimbabwe are also taking steps to protect their mineral resources through export restrictions or nationalization policies, often with the goal of building up domestic processing capacity. While these measures may benefit individual nations, they also carry the risk of disrupting global mineral supply chains.
China’s strategic response to mineral supply challenges
China’s strategies for securing critical minerals are rooted in its industrial needs, dating back to the 1970s with its focus on rare earths. Over the years, China has built an unparalleled scale in mineral refining, but this has also led to challenges, including illegal mining, overproduction, smuggling, and environmental degradation. To address these issues, China’s strategy has evolved to incorporate both domestic reforms and international cooperation.
China’s National Plan for Mineral Resources (2016-2020) identified 24 strategic minerals and set out a plan to balance domestic development with international partnerships. Domestically, China is focused on improving the efficiency and sustainability of its mineral industry through innovation, advancing a circular economy, and promoting “green development.” Externally, China is keen on fostering international cooperation in mining and processing, recognizing the importance of a global network to meet its long-term mineral needs.
A balanced approach to geopolitical narratives
It is essential to view China’s role in critical mineral supply chains through a balanced lens, avoiding a simplistic geopolitical narrative that positions China solely as a problem. The push for “de-risking” from China, as outlined in the G7 Hiroshima Leaders’ Communiqué of 2023, may appear moderate compared to the more drastic “decoupling” approach, but it still promotes a separation that could undermine broader global cooperation.
China’s mineral strategies are primarily driven by its own economic needs, not necessarily by a desire for global dominance. While geopolitical tensions, such as trade restrictions on rare earths or more recent export controls on germanium and gallium, have contributed to perceptions of China using minerals as leverage, these actions often stem from reciprocal measures in response to actions by other countries, like the U.S. restrictions on advanced technologies. Both sides have invoked national security to justify these actions, and they reflect broader geopolitical dynamics rather than a one-sided effort by China to dominate the market.
Moving forward: Collaboration over confrontation
Given China’s central role in the global economy, the future of critical mineral supply chains requires collaboration rather than exclusion. Multilateral frameworks like the IPEF Supply Chain Agreement could achieve more sustainable outcomes by involving China in the development of cooperative mechanisms that address supply chain risks, market inefficiencies, and trade restrictions.
Similarly, global institutions such as the World Trade Organization (WTO) provide a platform for discussing critical mineral supply issues in an inclusive manner. A geopolitical approach that positions China solely as a risk could lead to unnecessary disruptions and missed opportunities for cooperative solutions.
Conclusion
To ensure stable and sustainable critical mineral supply chains, a balanced approach is needed. While China’s dominance in the sector presents challenges, its role should be integrated into global policy frameworks that promote cooperation, reduce supply chain vulnerabilities, and address market inefficiencies. A more nuanced narrative will help create a more resilient global critical minerals market, benefiting all nations and reducing geopolitical tensions in the process.
