The geopolitical race for critical minerals needed for the green energy transition

The global transition toward green energy—driven by electric vehicles (EVs), wind turbines, solar panels, and grid-scale battery storage—has triggered a massive geopolitical scramble. Unlike the fossil fuel era, which was defined by oil and gas fields, the clean energy era runs on critical minerals and rare earth elements (REEs) like lithium, cobalt, nickel, graphite, and neodymium.

The core issue is that while the earth has plenty of these resources, their extraction and processing are dangerously concentrated in a handful of countries, making critical minerals a primary instrument of economic statecraft and national security.

1. The Anatomy of Vulnerability: High Concentration

The global supply chain for critical minerals is divided into two distinct phases, both presenting severe geopolitical chokepoints:

• Extraction (Mining): Raw extraction is heavily concentrated in specific regions. For example, the Democratic Republic of Congo (DRC) produces the majority of the world’s cobalt; Australia and Chile dominate lithium; and Indonesia leads in nickel production.
• Processing and Refining: This is where the vulnerability peaks. China holds a near-monopoly on processing and refining, handling over 50% to 90% of key materials like natural graphite, rare earth elements, cobalt, and lithium. Whoever controls the refinery controls the final technology.

2. Weapons of Trade: Export Controls and Resource Nationalism

As competition intensifies between major global powers (primarily the U.S., China, and the European Union), critical minerals are increasingly used as geopolitical leverage:

• Export Restrictions: China has frequently utilized export controls, licensing requirements, and temporary bans on critical tech-metals (such as gallium, germanium, and graphite) to protect its domestic manufacturing and push back against Western trade restrictions.
• Resource Nationalism: Resource-rich nations in the Global South are increasingly demanding a higher share of profits, local processing, and tighter control over their assets. Some countries have implemented restrictions or bans on raw mineral exports to force foreign companies to build domestic processing plants rather than just shipping raw ore abroad.

3. Western Responses: Industrial Policy and “Friend-Shoring”

Western economies are racing to untangle their supply chains from adversarial or unstable nations through sweeping industrial policies:

• The United States: Through legislation like the Inflation Reduction Act (IRA), the U.S. is incentivizing domestic mining and manufacturing while tying EV tax credits to sourcing materials from countries with which the U.S. has Free Trade Agreements.
• The European Union: Facing severe dependencies, the EU rolled out frameworks like the Critical Raw Materials Act (CRMA) and subsequent action plans (such as RESourceEU). These frameworks aim to dramatically ramp up domestic extraction, processing, and recycling, while setting up joint purchasing mechanisms and strategic stockpiles to protect both clean energy and defense sectors.
• Friend-shoring: Rather than relying entirely on domestic production—which is capital-intensive, environmentally contentious, and slow to permit—nations are forming minilateral partnerships with trusted resource-rich allies (e.g., Canada, Australia, and nations across Latin America and Africa).

4. The Intersection of Climate, AI, and Defense

The race for critical minerals is no longer strictly about climate change; it has converged with technological sovereignty and national security.

• Defense Systems: Modern military hardware—from advanced radar and night-vision goggles to guidance systems and fighter jets (like the F-35)—relies heavily on rare earth permanent magnets.
• The AI Boom: The rapid expansion of artificial intelligence, data centers, and advanced electronics is accelerating demand for the exact same underlying minerals and semi-conductive metals, compounding the strain on global supply chains.

Looking Ahead

The geopolitical race for critical minerals is ultimately a balancing act. On one hand, rapid acceleration is required to meet net-zero climate goals. On the other, the rush to secure supply chains risks turning into a zero-sum, protectionist game that could slow down the global energy transition, inflate costs, and strain relations with the Global South. Long-term security will likely depend not just on finding new mines, but on massive investments in recycling technology, material substitution, and diversified international cooperation.