Western Nations Mobilize Billions to Counter China's 70% Critical Mineral Processing Dominance

Global powers are accelerating efforts to diversify critical mineral supply chains, committing billions in investments to reduce reliance on China's extensive processing capabilities. This strategic shift comes amidst escalating concerns over geopolitical leverage and supply security, highlighted by recent export controls from Beijing.

Branislav Slantchev, a commentator on geopolitical affairs, articulated the core issue, stating, "Spoiler: the minerals are not in China. Beijing has a chokehold on processing because of shortsighted policies in the West that permitted itself to be bamboozled by panda diplomacy." This sentiment underscores a growing consensus among Western nations to build independent capacity.

China currently holds an average market share of 70% in refining 19 out of 20 important strategic minerals, according to the International Energy Agency (IEA). This dominance is particularly pronounced in rare earths, where China controls approximately 91% of separation and refining, and in lithium and cobalt processing, with market shares of 65% and 72% respectively. For natural graphite, essential for batteries, China controls nearly 100% of global processing.

The urgency for diversification intensified following China's imposition of export controls. In April 2025, Beijing restricted seven heavy rare earth elements, followed by expanded controls in October 2025 on additional rare earths, battery materials, and related technologies. These measures have caused significant disruptions, with some carmakers struggling to obtain permanent magnets and European rare earth prices soaring up to six times those in China.

In response, Western nations are channeling substantial resources into building alternative supply chains. On October 20, 2025, the United States and Australia announced a framework to secure critical mineral supplies, including a commitment of at least $3 billion in investments for projects in both countries. This initiative aims to bolster mining, separation, and processing capabilities, including a $200 million investment in Australia's Alcoa-Sojitz Gallium Recovery Project.

The US strategy, outlined by the Carnegie Endowment, emphasizes both domestic production and "friendshoring" with allies to diversify away from Chinese dominance. However, experts caution that challenging China's entrenched position, which benefits from decades of state investment and technological expertise, will be a long and capital-intensive endeavor. Slantchev warned, "If you attempt to blackmail your wealthiest customers, they will simply take their business elsewhere. Yes, it will be painful in the short term and costly in the medium term but in the longer term, you will lose them."