A New Phase in Western Strategy

For the first time in decades, both Europe and Britain are treating critical minerals as strategic assets rather than background commodities. That shift alone is significant. It represents a profound evolution in Western thinking.

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The era of assuming that global markets will operate smoothly is ending. Both Brussels and London are beginning to build systems designed for a more contested multipolar world, releasing critical mineral strategy plans within weeks of each other.

For decades, both sides of the Channel believed in the stabilising power of globalisation. They assumed authoritarian suppliers would behave predictably. They underinvested in extraction, outsourced refining and neglected the geopolitical implications of mineral concentration. It was a belief system that worked in a benign world, but the world changed and the policy philosophy did not.

The positive news is that both Europe and Britain are now moving past that worldview. The less positive news is that China spent decades building competitive advantage while the West was asleep. Catching up will be hard, but these plans represent the beginning of that effort.

Yet recognising the problem and solving it are very different things. Europe is moving in the right direction with new institutional muscle. Britain has identified smart niches where it can lead. But neither side has yet matched ambition with the level of commitment required to come anywhere close to significant supply chain security. Still, there is real progress, and it matters.

The EU’s RESourceEU Plan: A Strong Foundation That Needs Scaling

European Commission RESourceEU Action Plan cover (2025).

We will begin with Europe, since it is the larger and more significant player. The EU’s plan stands out because it finally embeds geopolitical logic into resource policy. It blends intelligence, investment steering, joint purchasing, stockpiling and regulatory reform into a single framework. It is clearer, more coherent and more actionable than any EU minerals package in the past.

To its credit, Brussels is not starting small, at least not as small as in prior supply chain proposals. Over the next 12 months, the EU intends to mobilise €3 billion to accelerate strategic mining, refining and recycling projects - investments it believes could reduce key mineral dependencies by up to 50% by 2029. Fast-track permitting and regulatory simplification accompany these funds, indicating a shift in political culture as much as in policy.

A particularly encouraging element is the establishment of a European Critical Raw Materials Centre in early 2026. This institution will provide real-time market intelligence – coordinate joint purchasing, steer and co-finance strategic projects, manage supply portfolios, and support EU-wide stockpiling

Alongside it, a Raw Materials Platform will consolidate industrial demand, support offtake agreements, and structure joint procurement - again beginning in 2026. Work is already underway on an EU-coordinated stockpiling framework, with a pilot expected the same year.

These steps indicate that Europe, at least on paper, is building permanent capacity rather than improvising responses during crises.

By early 2026, the EU will also introduce export restrictions on permanent magnet scrap and waste, with targeted measures for aluminium scrap, and potential action on copper scrap. New product labelling rules will require transparency around recycled content, while incentives will support recycling of manufacturing waste such as trimmings and defective components.

A complementary plan due mid-2026 is slated to address Europe’s reliance on fertilisers made with critical minerals and expand the use of recycled nutrients.

The real potential: Europe can lead in diversified alliances

The EU is already leveraging its political weight to build ‘friend-shoring’ partnerships with South Africa, Brazil, Canada and the Western Balkans. It has signed 15 Strategic Partnerships with resource-rich countries and other partners, with Brazil now entering negotiations. It is also developing dedicated investment frameworks with Ukraine, the Western Balkans and its Southern Neighbourhood, while coordinating with G7 and G20 efforts on standards and diversification. Figure 1 showcases project locations chosen by the European Commission as of June 2025.

Figure 1. 13 Strategic Projects in ‘third’ countries for the EU (European Commission 2025).

This is one domain where Europe’s multilateral nature becomes an advantage: it can create demand pools, coordinate offtake and use regulatory power to shape mining abroad. The downside is that they are reliant upon countries like South Africa, that are, of late, more aligned to the East than West.

The Greenland Opportunity

Greenland remains Europe’s best long-term opportunity to stabilise supply. Its deposits of molybdenum, rare earths and nickel could give the EU a secure, non-authoritarian source base. The RESourceEU plan recognises the importance of Greenlandic projects - Brussels has already supported the Malmbjerg molybdenum project - but Europe still struggles to treat Greenland as a strategic anchor rather than an interesting possibility.

The positive sign is that the EU is now willing to co-finance Arctic extraction, something unthinkable a few years ago. The geopolitical challenge, of course, is that the United States and Russia also have deep interests in Greenland. Europe will need to move decisively and stave off threats (unlikely given current US appeasements) if they are to secure this supply chain de-risking opportunity.

Realistic Outcome

If implemented robustly, RESourceEU will improve Europe’s resilience, expand its extraction base, accelerate diversification and dampen volatility. It will build genuine strategic capacity.

But to finish the job, it needs more money, faster permitting culture change, and a clearer Arctic strategy. Europe has moved from denial to action. €3 billion in funding is a good start, but Europe now needs to move from action to scale, and a lot more funding will be needed to achieve this.

The UK’s Critical Minerals Strategy: Right Direction, Little Substance

UK Critical Mineral Strategy cover (GOV.uk 2025).

Britain’s strategy is conceptually strong, not overpromising complete independence. It has a clear-eyed understanding of its structural position. It recognises that the UK cannot match the EU or the United States in raw extraction but can excel in midstream processing, recycling technology and high-value expertise. This honesty and focus make the UK’s approach more intellectually disciplined than many larger players.

The innovative advantage

Britain has advantages in some areas. Their strategy reflects these strengths, explicitly positioning the UK to harness its advantages in research, mineral processing and capital markets. The government projects that by 2035, domestic recycling should meet 20% of annual UK industrial demand for critical minerals. This is a notable shift toward circularity. Domestic production (including processing and refining) should meet 10% of national demand.

A particularly ambitious target is the goal of producing 50,000 tonnes of lithium or lithium carbonate equivalent domestically by 2035. For a country with limited geological deposits, this is a meaningful sign of intent.

Shift in Tone

The strategy identifies defence-sector vulnerabilities and considers targeted resilience tools, including potential stockpiling through procurement mechanisms. It also introduces a Demand Aggregation Platform, which will map national industrial demand across sectors to help shape coordinated supply-chain investments, something the UK has never had before.

Internationally, Britain will work through the G7, G20, NATO, the Minerals Security Partnership, and the Global Clean Power Alliance, emphasising transparency and sustainability in supply chains. These engagements reflect a maturity absent in earlier strategies.

But Britain still suffers from chronic under commitment

The most striking issue remains scale. Britain’s public financing commitments, such as up to £50 million for domestic critical-mineral projects after the 2025 Spending Review, are insufficient against the global competition. A new British Industrial Competitiveness Scheme (BICS) will help energy-intensive companies, and UK Export Finance continues to play a role, but the overall quantum of investment is modest.

The real-world cost of this modesty is exemplified by a major strategic failure in Tanzania. Back in 2010, an Australian mining company, Peak Rare Earths discovered one of the world’s best rare-earth deposits in Tanzania and planned to refine the ore in the UK – not China. Appian Capital Advisory, a UK private-equity firm and cornerstone investor in Peak, repeatedly sought UK government funding to get the critical project off the ground, but there was no support. This lack of backing allowed the project, which would have provided a large part of the UK’s and Europe’s rare earths, to fall into Beijing’s hands, when in 2025 Peak was fully acquired by Chinese firm Shenghe Resources.

A strategic opportunity was lost not because Britain misread the world, but because it failed to act with the necessary scale and speed.

Peak Rare Earths logo showcasing the Tanzania Programme (Sandell-Hay 2022).

UK Plan Prospects

The UK will strengthen its midstream capabilities, expand partnerships, and vastly improve its understanding of industrial mineral demand. Despite ambiguous wording in the strategy document, its goal to ensure that no more than 60% of supply for any critical mineral comes from a single foreign country by 2035 is sensible and achievable.

Unfortunately for their plan, autonomy requires capital, coordination and national-level authority. Without a larger commitment, Britain will remain a contributor to allied supply chains – but nowhere close to an autonomous one.

The Better Approach

The EU’s RESourceEU is clearly the stronger and more geopolitically aligned plan, leveraging Greenland’s vast resource deposits, in tandem with European refining and mining opportunities. It has institutional power, financial scale, diplomatic reach and a more coherent long-term architecture. Britain’s strategy reflects its like of geological heft, relying on friend-shoring more than Europe, and accepting more risks in foreign suppliers.

Encouragingly, both plans represent a meaningful step forward from where Europe and Britain stood even five years ago. Both recognise minerals as strategic assets, both introduce new tools and institutions, and both lay the groundwork for future autonomy.

The problem is scale.

To reach autonomy, the EU must multiply its investment levels and elevate Greenland from opportunity to strategic anchor. The UK must centralise authority, commit real capital and treat critical minerals as national security assets, and that would involve a lot more capital than is currently being discussed, and might be why the Tanzania opportunity slipped them by in the first place.

If they do so, Europe and Britain could still build resilient futures in an age of scarcity and competition. If they do not, they will remain partially reformed but fundamentally dependent on adversaries like China, who have already demonstrated willingness to use minerals as leverage against US tariffs.

We have said before, critical minerals are the new oil and must be tackled as such. Europe and Britain have finally woken up to how vulnerable they are to supply shocks. Yet, like defence pledges in 2022, these plans feel more like wishful thinking than determined strategic objectives.

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References

European Commission. (2025, December 3). Commission adopts RESourceEU to secure raw materials, reduce dependencies and boost competitiveness. https://ec.europa.eu/commission/presscorner/detail/en/ip_25_2891

European Commission. (2025, June 4). Commission selects 13 Strategic Projects in third countries to secure access to raw materials and to support local value creation.https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1419

Sandell-Hay, C. (n.d.). Peak Rare Earths programme underway in Tanzania. The Assay. https://theassay.com/news/peak-rare-earths-programme-underway-in-tanzania/

UK Government, Department for Business and Trade. (2025, November 22). UK Critical Minerals Strategy.

Spruce Pine Mining District. Source: Sibelco (2025).

Set across a wide stretch of the North Toe River valley in the Blue Ridge Mountains, the unassuming Spruce Pine Mining District belies its vital importance to the world economy.

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This little known mine in North Carolina has a monopoly on high-purity quartz (HPQ) – a vital component in the semiconductor and solar manufacturing process. Nearly everything with a computer chip, from smartphones and servers to medical devices and aircraft, indirectly relies on the HPQ mined at Spruce Pine. As Ed Conway highlights in his book Material Word “there are few such cases where we are so utterly reliant on a single place.”

While China may monopolise many critical minerals crucial to the global economy, US-imported HPQ remains one of its key dependencies. So far, the US has not looked to exploit this strategic vulnerability, but China are nonetheless acutely aware of it. Amid President Trump’s escalating reciprocal tariff declarations in April, Beijing made an announcement potentially laying the foundations for China to lessen this vulnerability. They declared HPQ a strategic mineral and announced the discoveries of significant HPQ deposits in China.

It’s important to remember during the critical mineral’s standoff between the US and China that the West does currently hold some important “cards”. In a complex and interconnected world economy, control of crucial chokepoints confers strategic leverage. The number of chokepoints controlled is important, but more so is the impact of the chokepoint. If a single point of failure could topple a supply chain, it doesn’t matter if you had 1 or 7 vulnerabilities, it’s still enough to spark a crisis. The West’s monopoly on HPQ through Spruce Pine is one such means of leverage, with the power to cause mutually assured chaos. Efforts are underway to find new sources of HPQ and to find substitutes or new methods, but for now the West continues to monopolise HPQ.

What is High-Purity Quartz and Why is it Important

You might be thinking, what’s the big deal, we have all heard of quartz - a hard, crystalline mineral composed of silicon dioxide, or silica, (SiO2), and the second most abundant mineral in the Earth’s crust. High-purity quartz (HPQ) is however a different beast entirely.

HPQ is a refined natural quartz material with extremely low impurity levels, typically defined by a silica content greater than 99.995%, and impurity levels of less than 50 parts per million (ppm). Economically viable deposits of HPQ are very rare in nature.

Figure 1. Czochralski Process. Image Source: Shutterstock (2025).

HPQ plays an essential role in the semiconductor manufacturing process and solar photovoltaics (PV) industry by enabling the production of ultra-pure silicon. It is used to create fused quartz crucibles that hold molten silicon during the Czochralski process (Figure 1) – the standard method for growing monocrystalline silicon ingots as seen in Figure 2. The crucibles used during this process are of vital importance and must be ultra-pure to avoid contamination and are estimated to make up 30% of the manufacturing cost of monocrystalline silicon ingots. These ingots are then sliced into wafers (silicon wafers) and form the base of nearly all computer chips and solar cells.

Figure 2. Monocrystalline Silicon Ingot. Image Source: Shutterstock (2025).

There is currently no commercially viable alternative to the fused quartz crucibles derived from HPQ for this process. Synthetic quartz exists, but it is significantly more expensive than natural quartz – estimated to be a staggering 5-10x more expensive. Alternative methods are being developed, and some are in commerical use for niche applications, such as the float zone process. However, the Czochralski process retains certain advantages that ensures it remains the standard in the industry for bulk single-crystal silicon.

Nearly the entire semiconductor and solar photovoltaic industries thus indirectly depend on HPQ to produce the chips and solar cells that power the modern world. Without economically viable HPQ the modern world would be severely disrupted. Solar panels in particular have only seen rapid update because China has been able to dramatically reduce the cost of manufacturing solar cells – with the cost of solar cells falling by roughly 90% over the past decade. China, which manufacturers 80-90% of the world’s solar PV modules, is particularly vulnerable to shocks in HPQ prices and supply, with the sector critical to its export-driven economy and global supply chains.

Therefore, access to and control of HPQ is of high geostrategic importance, and by a unique geological twist of fate there is currently only one mine where HPQ is vast and economically viable to mine in large quantities – Spruce Pine.

Spruce Pine and it’s High-Purity Quartz Monopoly

And this is how we arrive at a mine with the power to shape geopolitics, that most people have never heard of. It’s estimated that 70-90% of all HPQ produced annually comes from the Spruce Pine mining district. That Spruce Pine has come to have some of the most naturally abundant and high-purity quartz anywhere in the world is due to a series of unique geological circumstances that began roughly 380 million years ago when Africa collided with North America. There are other operating HPQ mines globally, such as in Russia, China, Norway, but nowhere else on earth is there currently HPQ as vast, minable, and pure as that found at Spruce Pine.

Interestingly, Spruce Pine is owned and operated by two non-American companies – Sibelco and The Quartz Corp. Belgium firm Sibelco monopolises the international market for HPQ with an estimated 70-90% global market share, primarily built upon its operations at Spruce Pine – which it entered into in the 1970’s with the purchase of Unimin. While The Quartz Corp, formed in 2011 when the French firm Imerys and the Norwegian firm Norsk Mineral merged, began operations at Spruce Pine in 2007, and accounts for roughly 5% of the output.

Through an American quartz mine, primarily owned and operated by a Belgium company, the West holds a monopoly over a key chokepoint in the global economy. China may control key industries, such as rare earth element mining and refining, EV batteries, and the solar supply chain, conferring much strategic leverage in the new green industries. But it would be thrown into chaos should the Spruce Pine HPQ tap be turned off. Like rare earth elements and other critical minerals, the HPQ market is relatively small - estimated to be $1.4 billion in 2025 - but is essential to industries worth trillions.

Chinese Efforts to Break its US Dependence

HPQ remains one of China’s few remaining import dependencies and has historically existed due to a lack of discovered domestic reserves. For China, which dominates global manufacturing in the solar industry and the mature-node semiconductor industry, it’s ongoing reliance on the US for HPQ represents a key strategic vulnerability. While the US has so far not used this leverage during the critical mineral’s standoff between the US and China – China has been pre-emptively making moves to prepare.

On April 10^th 2025, China’s Ministry of Natural Resources announced the listing of HPQ ore as China’s 174^th mineral resource type – a strategic designation recognising the importance of HPQ and prioritising projects to accelerate domestic production. This move came during President Trump’s escalating reciprocal tariff declarations in April 2025, demonstrating that China recognises the importance of this strategic vulnerability. As much as a country may wish to lessen its dependence on other resources though, as the US wishes to do with Brazilian Niobium, it must play the geological cards it was dealt.

So crucially, also during the April 10^th announcement, the Chinese ministry reported the discovery of multiple HPQ ore deposits in Xinjiang’s Altay region in October 2021, and in the Qinling Mountains of the Henan province in December 2020. Chinese geologists claim these deposits (conveniently) have more than 35 million tons of HPQ – rivalling Spruce Pine. Should these deposits be confirmed and be of sufficient purity it could upend the global HPQ supply chain and have important geopolitical consequences.

Decoupling

Both the West and China are moving to lessen dependences and secure their supply chains, in a continuation of the decline to free trade and globalisation. Much has been written about the West’s dependence on China for critical minerals, an exposure that has only grown as geopolitical tensions rise. Far less examined, however, is China’s own strategic vulnerability: its reliance on the West for HPQ, and Beijing’s increasingly urgent campaign to close that gap.

Information on the recent HPQ discoveries remains tightly controlled, and no independent confirmation exists to their claims. Regardless of veracity, it reflects a deeper trend: a deliberate effort on both sides to peel apart the interlocking systems that have quietly moderated their rivalry. Should that decoupling succeed, the subtle dependencies that once acted as stabilisers will erode, freeing each side to compete with fewer brakes - and far higher stakes.

References

Chavan, S. (2024). High Purity Quartz Market Size, Share, and Growth Forecast for 2025 - 2032. [online] Persistence Market Research. Available at: https://www.persistencemarketresearch.com/market-research/high-purity-quartz-market.asp.

Chou, A. (2024). Top 3 high purity quartz manufacturers in the world. [online] MAXTON. Available at: https://maxtonco.com/top-3-high-purity-quartz-manufacturers-in-the-world/ [Accessed 17 Nov. 2025].

Collins, S. (2018). The cost of solar power: how low can we go? [online] Cam.ac.uk. Available at: https://www.cam.ac.uk/stories/low-cost-solar.

Conway, E. (2023). Material World. W H Allen.

Hendawi, R., Arnberg, L. and Di Sabatino, M. (2024). Crucibles and coatings for silicon melting and crystallization: An in-depth review of key considerations. Progress in Materials Science, [online] 144, p.101280. doi:https://doi.org/10.1016/j.pmatsci.2024.101280.

Indian Defence Review. (2025). China Moves to Break Free from Its Last U.S. Dependencies with a €1.4 Billion High-Purity Quartz Discovery. [online] Available at: https://indiandefencereview.com/china-moves-to-break-free-from-its-last-u-s-dependencies-with-a-e1-4-billion-high-purity-quartz-discovery/.

Jennings, A., Senior, A., Guerin, K., Main, P. and Walsh, J. (2024). A review of high-purity quartz for silicon production in Australia. Australian Journal of Earth Sciences, pp.1–13. doi:https://doi.org/10.1080/08120099.2024.2362296.

Projectblue.com. (2025). China strategically lists HPQ ore as 174th mineral resource type. [online] Available at: https://projectblue.com/blue/news-analysis/1187/china-strategically-lists-hpq-ore-as-174th-mineral-resource-type-- [Accessed 17 Nov. 2025].

Sibelco.com. (2023). Nestling amongst the peaks of the Blue Ridge Mountains, Spruce Pine has a rich history as the source of the world’s highest quality quartz. [online] Available at: https://www.sibelco.com/en/150-years/spruce-pine.

SunSave (2024). Where are solar panels made? [Top 9 countries, 2024]. [online] Sunsave.energy. Available at: https://www.sunsave.energy/solar-panels-advice/solar-energy/where-are-solar-panels-made.

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Aerial Earth image of the Barreiro carbonatite complex showing the Araxa Project (red outline) as well as the adjacent CBMM niobium mine and the Mosaic phosphate mine. Image credit: STGeorge Mining Limited (2025).

When President Trump imposed a 50% tariff on Brazilian imports in July 2025, ostensibly in response to the prosecution of former president Jair Bolsonaro, headlines fixated on coffee prices and Bolsonaro’s fate. Yet something far more consequential slipped beneath the radar: an executive order threatening to leave the United States strategically vulnerable in a critical mineral where it has no domestic alternatives.

Brazil controls approximately 90% of the world’s niobium supply. Not a third. Not a half. Nine-tenths of an obscure metal deemed critical by the U.S. Department of Defense since 2018. For months, the Trump administration has threatened to shut American access to it over a criminal trial it views as a “witch hunt.”

This is not a story about trade policy. It is a story about how geopolitical spite can hollow out national security. The United States became dependent on a single country for a material indispensable to hypersonic missiles, jet engine turbines, and intercontinental ballistic missiles. The irony would be delicious if the stakes were not so serious.

Diplomatic negotiations continue but remain fragile. If they fail, the United States faces being held hostage to a single supplier for a metal that literally keeps American defence systems operational.

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What Niobium Actually Is, and Why It Matters

Niobium may not be a rare Earth metal, but it is nonetheless critical for defence industries, presenting a potential strategic flashpoint. On paper, it is an unassuming transition metal with a melting point of 2,468 °C - difficult to extract, costly to refine, and of little use in pure form. Its magic appears only in combination: when fractions of a percent - sometimes as little as 0.03% - are added to steel or superalloys. That tiny addition transforms ordinary steel into high-strength, low-alloy (HSLA) steel, boosting tensile strength, fatigue resistance, and corrosion performance while cutting weight. The result is lighter bridges and vehicles, stronger pipelines, and wind-turbine towers that stand taller for longer. A few grams of niobium can change the economics of megaton projects (see Figure 1 for industry uses).

The real strategic gravity of niobium lies beyond construction - in aerospace, defense, and advanced energy systems. Niobium superalloys power jet engines and rocket nozzles; its superconducting compounds enable MRI scanners, particle accelerators, and experimental fusion reactors.

Figure 1. Niobium market share by end-user industry in 2024 (Mordor Intelligence 2025).

Niobium’s true calling emerges when combined with hafnium and titanium to create C103, a refractory alloy withstanding temperatures exceeding 3,300 degrees Fahrenheit. At such extremes, nearly all other materials fail. Nickel-based superalloys lose integrity. Titanium becomes brittle. C103 holds.

This is why niobium C103 flows through rocket engine fuel injectors. Why it forms nozzles of intercontinental ballistic missiles. Why it appears in hypersonic vehicle engine throat sections, fighter jet afterburner liners, and advanced gas turbine blades. The metal has been part of every major American aerospace programme since Gemini and Apollo. SpaceX depends on it. Hermeus, racing to commercialise hypersonic flight, depends on it. The U.S. military depends on it.

And 90-92% of it comes from Brazil. Such extreme concentration turns a metallurgical niche into geopolitical vulnerability.

The Brazilian Monopoly

Brazil holds approximately 97% of the world’s known, economically exploitable niobium reserves, and between 90-92% of production. Remaining deposits in Canada, Nigeria, and Australia are either marginally economical, geologically unviable, or located in politically unstable regions. For practical purposes, niobium is a Brazilian resource.

Most lies in a single location: the Araxá mine in Minas Gerais, operated by Companhia Brasileira de Metalurgia e Mineração (CBMM). This one mine produces roughly 95% of Brazil’s total output - approximately 85% of the entire world’s supply (official figures vary and so this is an approximation). There is no backup. There is no Plan B. There is only Brazil.

In 2023 alone, Brazil exported 86,300 tonnes of niobium, generating over $2.25 billion in revenues. The United States imported approximately 8,400 tonnes in niobium content. Of American consumption between 2019 and 2024, around 68% came directly from Brazil, with Canada and other nations supplying 32%. The reliance is starker for Europe and China (Figure 2). When Americans discuss niobium imports, they are discussing Brazilian niobium.

Figure 2. Niobium dependency on Brazil in the US, EU and China.

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𝗖𝗿𝗶𝘁𝗶𝗰𝗮𝗹 𝗺𝗶𝗻𝗲𝗿𝗮𝗹𝘀 𝗮𝗿𝗲 𝘁𝗵𝗲 𝗻𝗲𝘄 𝗼𝗶𝗹 - 𝘁𝗵𝗲 𝗰𝗼𝗿𝗻𝗲𝗿𝘀𝘁𝗼𝗻𝗲 𝗼𝗳 𝗽𝗼𝘄𝗲𝗿, 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆, 𝗮𝗻𝗱 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆 𝗶𝗻 𝘁𝗵𝗲 𝟮𝟭𝘀𝘁 𝗰𝗲𝗻𝘁𝘂𝗿𝘆.

Our latest strategic review, Critical Minerals: The Scramble for Oil 2.0, explores how critical minerals & rare earths, essential to most technology, have become the new oil - reshaping everything from industrial policy and investment flows to defence and diplomacy.

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This report is for investors, companies and other stakeholders seeking to understand the rapidly shifting sector, including:
⚙️ China’s dominance across refining and midstream processing
🏛️ Western reindustrialisation through the IRA and CRMA
💰 Capital bifurcation between ESG-aligned and grey-market supply
🌍 Geopolitical competition across new “connector economies”
💎 Analysis of the key critical minerals and their strategic importance.
🚀 Space sector case study to illustrate supply chain challenges

𝗜𝗻 𝘁𝗵𝗶𝘀 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀, 𝘁𝗵𝗲 𝗻𝗲𝘄 𝗯𝗮𝘁𝘁𝗹𝗲𝗳𝗶𝗲𝗹𝗱 𝗶𝘀 𝗺𝗶𝗱𝘀𝘁𝗿𝗲𝗮𝗺 𝗰𝗼𝗻𝘁𝗿𝗼𝗹.

Read the full review: https://www.challengerresearchgroup.com/category/all-products

Executive Summary:

The Unravelling of Free Trade

In the decades after the Cold War, globalisation was framed as a guarantee of peace. Trade and investment, it was argued, wove states into a web of mutual dependence. The greater the commerce, the higher the cost of conflict. Supply chains were described as insurance policies; McDonald’s became shorthand for consumerist peace; and the offshoring of “dirty” industries was justified as rational efficiency.

But political framing is a powerful tool. Within a generation, the same supply chains once hailed as stabilisers were reimagined as vulnerabilities, chokepoints ripe for coercion. Few resources illustrate this reversal more starkly than rare earth elements (REEs) - a group of 17 metals critical to electronics, defence systems, electric vehicles, and renewable energy. Once obscure industrial inputs, rare earths have been recast as strategic assets, even weapons. Their ubiquity in everything from semiconductors to satellites, coupled with China’s dominance in processing, has elevated them from technical necessity to geopolitical flashpoint.

The consequences have been profound. Markets have hardened into battle lines, and resource leverage has become a substitute for diplomacy. Russia and China alike have wielded their reserves to advance political aims, signalling that supply chains can now serve as instruments of pressure and punishment. Even allies are not immune: Washington’s dependence has blurred the line between partnership and extraction, with mineral access leveraged against continued support for embattled states. The Trump administration’s global trade war amplified this narrative, as governments from India to Russia seized on US threats to justify tighter control and greater leverage over commodities. Rare earths are no longer just commodities - they are catalysts of mistrust, instability, and global tension.

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How Rare Earths Became Strategic

The idea that trade tempers rivalry has a long pedigree. Montesquieu claimed that “peace is the natural effect of trade”. Norman Angell argued in 1909 that war was futile in a world of global finance and commerce. That optimism proved gravely misplaced in 1914, but the notion resurfaced after 1989 with new force.

In the 1990s, liberal policymakers framed interdependence as a strategic asset. Thomas Friedman’s Golden Arches theory of conflict prevention popularised the claim that consumer markets dulled the appetite for war. Bill Clinton translated it into policy, insisting that China’s WTO entry would “move China in the right direction.” Interdependence was framed as both prosperity-enhancing and peace-promoting.

That frame also shaped how rare earths were treated. Western governments accepted the offshoring of processing to China because it fitted the prevailing logic of specialisation. China’s growing concentration of capacity was not regarded as a threat but as a mark of efficiency. “What is now criticised as the erosion of strategic autonomy was, at the time, celebrated as proof that global integration was working as intended. The so-called ‘China miracle’ - lifting hundreds of millions out of poverty within a few decades - was hailed as a triumph of globalisation, a feat made possible by unprecedented openness in trade, investment, and technology transfer.”

Framing - shaping how issues are understood and interpreted by emphasising certain aspects over others, thereby influencing perception – has been a key tool in the kit of all governments. Yet, the ongoing REE resource nationalism framing has greater consequences than most, because, while geologically widespread, REEs are both geopolitically uneven in geography and processing capability. If nations had reasonable access to the commodity, or at least a global body (think OPEC) to ensure fair trade, then framing at a national level is not as serious. This is far from the case of rare earths. Though the mining stage exists on several continents, the bottleneck lies in the midstream: chemically separating mixed ores into pure oxides and metals. This requires complex infrastructure, hazardous chemicals and large volumes of water. The nation with the greatest reserves has also taken it upon themselves to forge a monopoly in processing. This nation is of course China. China controls 60–70% of rare earth mining yet this figure jumps to a staggering 85–90% of processing/refining capacity worldwide.

Through the 1980s and 1990s, China framed rare earths as a strategic sector and invested across the value chain. By pairing subsidies with environmental tolerance and downstream demand from electronics, it created an integrated ecosystem. By 2022, it controlled around 90 per cent of global separation capacity. The EU relied on it for 98 per cent of imports. The United States, once a producer, allowed its Mountain Pass facility to close in 2002 and only revived it under emergency conditions after 2010.

What this shows is that framing choices shaped industrial trajectories. In China, rare earths were framed as strategic industries deserving of state support. In the West, they were framed as marginal commodities to be left to market forces. The outcome was an increasing global imbalance that only came to be seen as threatening once the liberal globalisation frame began to fracture.

The Senkaku Collision

The 2010 Senkaku collision crisis marked the moment when rare earths stopped being mere commodities and became political symbols. That September, a Chinese trawler collided with a Japanese Coast Guard vessel near disputed islands, and Tokyo detained the captain. As tensions rose, Japanese importers reported a 43% drop in REEs shipments, and Western headlines declared an embargo. Beijing denied coercion. Premier Wen Jiabao insisted quotas were about conservation and anti-smuggling, and later audits confirmed shipments quickly rebounded. Yet, the message had been sent. What had once been understood as resource management was now narrated as coercion.

The framing carried lasting consequences. The WTO ruled against China’s quotas, US lawmakers cited the case to justify defence spending on mineral supply chains, and the EU advanced its Critical Raw Materials Act. Inside China, the same episode was recast as pride: state media called rare earths “strategic treasures,” proof of sovereignty and a break with the past when China exported raw materials cheaply while others captured the profits. Nationalism made compromise costly. In the West, identity dynamics worked in reverse. As China was reclassified from partner to rival, the coercion story fit the new “us versus them” lens. Psychology reinforced the divide: vivid maritime clashes and price spikes lodged in memory, while confirmation bias kept the coercion frame alive. On both sides, rare earths were no longer just minerals - they had become emblems of identity.

Sovereignty in the Ground

The identity frame spread to other critical minerals. In Bolivia, leaders narrated lithium – essential for lithium-ion batteries - as the people’s inheritance, bound to centuries of exploitation of silver, tin, and gas. Evo Morales cast foreign demands as neo-colonialism, turning lithium into a test of national dignity. This nationalist framing mobilised protests and legitimised state control but repelled investment. By 2023, despite the world’s largest reserves, Bolivia produced only 0.04 per cent of global lithium supply. National symbolism replaced output.

Cobalt in the Democratic Republic of Congo, nickel in Indonesia, and other minerals vital to modern technology have all seen greater restrictions and nationalist rhetoric. Each was narrated less as a commodity challenge than a sovereignty struggle, wrapped in national pride and grievance. Policy followed. IMF data show global trade restrictions rising nearly tenfold between 2011 and 2022. Governments embraced “de-risking,” invested in “resilience,” and pledged to reshore supply chains. The IMF now warns of “geoeconomic fragmentation,” with potential losses of 2 per cent of global GDP if blocs harden. These shifts were not dictated by geology but by stories: once minerals were narrated as weapons and identity symbols, division became policy.

Figure 1. IMF (2023) data showing the number of trade restrictions imposed worldwide per year from 2009–2022, highlighting an approximate tenfold increase from 2011 (~250) to 2022 (~2,800).

The Fallout: The Thucydides Trap & Ukraine

What has been the policy framing fallout from all of this?

Both China and the West describe rare earths as critical minerals, but with very different framings. In the West, they appear on “critical mineral” lists as markers of supply risk and strategic dependence, highlighting vulnerability to China’s dominance. In China, by contrast, rare earths are framed as “important strategic resources” and national treasures, to be leveraged as a source of power. Where Western rhetoric stresses scarcity and risk, China’s emphasises sovereignty and control - two sides of the same narrative that place rare earths at the heart of global tension.

Framing commodities as national inheritance is not unique to rare earth metals or other critical minerals. Since the 1970s, especially after the 1973 oil embargo and the creation of Saudi Aramco, oil has been narrated not merely as fuel but as a “gift of God” to the Saudi people. Yet given the extreme concentration of rare earth processing, REE framing is far more existential for the West. Between 2023 and 2025, China produced roughly 69–70% of global rare earth mining output and around 90% of refined supply. This dominance helps explain why China controls 80–90% of the global drone market and is rapidly gaining ground in electric vehicles and smartphones, industries heavily dependent on rare earths. Chips, AI, space technologies, and advanced weapons systems all rely on these critical resources as well. Fundamentally, China has the elements essential to continued technological growth and prosperity as both a source of national pride and a tool of leverage. This mantle was effectively handed to Beijing (and to Russia to a lesser extent) by the West, whose faith in free markets as inherently stabilising has left it cornered, a position that risks escalating future conflict.

China’s actions have arguably triggered a resource panic among US China hawks, who, caught in a Thucydides Trap and fixated on Beijing’s grip over critical minerals and associated technologies, have made flawed strategic choices. Ukraine is a case in point. Western aid was initially framed as solidarity in defence of democracy, but under the Trump administration a new philosophy took hold. Advisers such as Elbridge Colby cast China and its resource chokehold as the only serious threat to the US. In that framing, Ukraine, rich in lanthanum, cerium, and potentially capable of supplying 10–15% of global dysprosium (used in high-performance magnets), shifted from being a strategic (and moral) ally to a strategic resource. By 2025, a US–Ukraine mineral fund had been launched on terms heavily favouring Washington. Minerals reframed the war itself: what began as a moral alliance in defence of liberal democratic values came to resemble extraction and extortion, eroding the symbolic identity of solidarity and tarnishing the West’s moral high ground in the conflict.

The framing of rare earths as weapons - sustained by China’s strategic rhetoric and mirrored by Western anxieties - has already reshaped markets, hardened/fractured alliances, and turned supply chains into tools of statecraft. The danger is not only economic but systemic: if this narrative becomes self-fulfilling, the world may enter an era of entrenched resource securitisation where minerals are treated less as enablers of shared prosperity than as instruments of rivalry. In that future, free trade, international cooperation, and even the prospect of peace risk being sacrificed to the politics of scarcity and leverage.

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