Critical Minerals Race
The energy transition, defence modernisation, and AI infrastructure buildout all depend on a set of minerals — lithium, cobalt, nickel, rare earth elements, gallium, germanium, and others — that are geographically concentrated, difficult to substitute, and increasingly subject to export controls and strategic competition between the US, EU, and China. The critical minerals race is simultaneously a resource security challenge, a geopolitical flashpoint, and a multi-decade investment opportunity for mining, processing, and recycling.
Chain-Level Impact
How this trend is affecting each named supply chain — direction of pressure and strategic significance.
Battery Supply Chain
Lithium, cobalt, and nickel supply security is the defining constraint on battery production scale-up.
Battery manufacturers face a trilemma: source from geopolitically exposed suppliers (DRC cobalt, Chinese lithium processing), pay a significant premium for friend-shored supply, or redesign chemistries to reduce critical mineral content (LFP, sodium-ion). All three responses have cost or timeline implications.
Semiconductor Supply Chain
Gallium, germanium, and rare earth elements are essential inputs for compound semiconductors.
China's export restrictions on gallium and germanium (2023) directly target compound semiconductor production used in defence electronics, EV power modules, and satellite communications. No short-term substitutes exist.
Copper Supply Chain
Copper is the backbone mineral of electrification; critical minerals demand growth benefits the copper chain.
While copper is not classified as 'critical' in most frameworks, its demand is directly linked to the buildout of the critical minerals supply chain (mining equipment, EV charging, grid infrastructure for renewables).
Steel Supply Chain
Steel demand from mining capex is a tailwind; input cost pressure from energy-intensive processing is a headwind.
New mine development requires enormous quantities of structural steel for processing facilities and infrastructure. However, steel producers using electric arc furnaces face competition for the same critical minerals (manganese, vanadium) used in clean steel production.
Winners & Losers
Industries facing headwinds (cost, risk, constraint) and tailwinds (demand, opportunity, advantage) from this trend.
↓ Headwinds (3)
Manufacture of Batteries and Accumulators
Battery cell manufacturers are exposed to critical mineral cost and supply volatility. Long-term offtake agreements, vertical integration into mining, and chemistry diversification (LFP vs NMC) are the primary risk mitigation strategies.
Manufacture of Electronic Components and Boards
Gallium arsenide and gallium nitride are essential for power electronics and RF components. China's export controls on gallium create direct supply risk for component manufacturers outside China with no domestic gallium supply.
Electric Power Generation, Transmission and Distribution
Wind turbines (rare earth permanent magnets in generators) and solar panels (tellurium, indium, selenium) depend on critical minerals concentrated in China. Domestic US and EU renewable manufacturing targets require parallel mineral supply chains.
↑ Tailwinds (3)
Mining of Other Non-Ferrous Metal Ores
The primary beneficiary: lithium, cobalt, nickel, rare earth, gallium, and germanium extraction all fall under this ISIC code. Capital is flowing in at scale; permitting and community relations are the binding constraints.
Manufacture of Basic Precious and Other Non-Ferrous Metals
Smelters and refiners of non-ferrous metals are in strong demand as governments fund friend-shored processing capacity. Investment in lithium hydroxide, cobalt sulphate, and rare earth separation facilities is accelerating in Australia, Canada, and Europe.
Foreign Affairs
Bilateral mineral security agreements, strategic stockpile programmes, and export control negotiations are creating new roles for foreign affairs ministries. The Minerals Security Partnership (14 countries) is a direct product of this trend.
Which Strategic Pillars Are Activated
The GTIAS pillar attributes most activated by this trend — signalling which parts of an industry's risk profile are most likely to deteriorate.
Resource Procurement
Critical mineral supply is structurally constrained: extraction is concentrated in a handful of countries (DRC for cobalt, Chile/Australia for lithium, China for rare earths) and new mine development takes 10–16 years from discovery to production.
Supply Chain
Processing and refining is even more concentrated than mining. China controls ~70–80% of global processing capacity for rare earths, lithium, and cobalt. This creates a single-point-of-failure in the upstream supply chain for clean energy and defence applications.
Political & Macro
Export controls on gallium, germanium, and graphite imposed by China in 2023–24 signal willingness to weaponise mineral dependencies. Friend-shoring agreements (US-EU Critical Minerals Agreement, Minerals Security Partnership) are creating parallel supply chains but at higher cost.
GEO
The race for mineral rights in Africa, Latin America, and Central Asia is intensifying. Chinese state-backed entities control significant mining and processing assets that Western governments are now actively seeking to displace or parallel.
What This Means for Strategy
Battery and electronics manufacturers face a structural make-or-buy decision: vertically integrate into mining and processing (capital-intensive, slow, but long-term secure) or remain dependent on spot and contract markets (lower cost now, higher volatility risk).
Recycling and urban mining will become strategically important within 5–10 years as first-generation EV batteries reach end-of-life. Firms that build recycling infrastructure now are positioning for a domestic critical mineral supply that bypasses geopolitically exposed primary supply chains.
Governments are treating critical minerals as a national security issue, not an industrial policy issue. This means subsidies, loan guarantees, and preferential procurement are available to companies that align with friend-shoring frameworks — but come with domestic content requirements and political dependency.