China’s dominance in critical minerals continues to escalate, significantly impacting global manufacturing, cross-border investments and geopolitical dynamics. As a leading producer of graphite, lithium, and refined copper, China’s influence over critical mineral supply chains is becoming increasingly pronounced.
The urgency of these minerals is driven by the rise of advanced technologies and renewable energy. China’s expanding control, both domestically and in regions such as Africa, raises concerns about diminishing access for Western nations and mining companies.
Jon Harrison, Managing Director for Emerging Markets Macro Strategy at TS Lombard, notes that over the past seven years, “China has gradually tightened its control” over rare earths and critical minerals. This control extends from processing to licensing and regulation, significantly limiting foreign companies’ access to mining and associated technologies.
China’s share in the critical mineral market
According to the International Energy Agency (IEA), China dominates the critical mineral market, accounting for about 80% of natural graphite and 60% of mined rare earths. This dominance is largely due to China’s extensive refining and processing capabilities. Amrita Dasgupta, an energy and mineral supply chain analyst at the IEA, highlights that China leads in the production of refined copper, lithium, cobalt, graphite and magnet rare earths. Specifically, China produces 99% of battery-grade graphite, over 60% of lithium chemicals, 40% of refined copper, more than 80% of refined magnet rare earths, and 70% of refined cobalt. The country also controls the entire graphite anode supply chain.
China’s expanding influence
China’s control extends into the copper, lithium, and nickel markets. Shobhan Dhir, IEA Critical Mineral Analyst, predicts that China will maintain its dominance in the refined copper market until 2040 and surpass Peru in global mined copper supply. Similarly, Alexandra Hegarty, IEA Critical Minerals and Methane Analyst, notes that while Indonesia produces 52% of global mined nickel, Chinese companies owned 40% of Indonesia’s nickel production in 2023.
In lithium mining, Eric Buisson from the IEA reports that China’s share has grown from 6% in 2016 to 17% in 2023. China is expected to surpass Chile as the world’s second-largest lithium producer by the mid-2020s.
Investment trends
China’s emphasis on critical minerals has led to a surge in investment in the mining sector, both domestically and internationally. According to Dhir, Chinese investment related to its Belt and Road initiative reached a decade-high $19.4 billion (138 billion yuan) in 2023, marking a 160% increase from the previous year. This investment includes significant acquisitions of overseas mines, particularly in Africa, with $10 billion invested in the first half of 2023.
Hegarty and IEA research assistant Yun Young Kim report that Chinese companies own at least 50% equity in five of the seven new lithium assets in Africa expected to start production by 2027.
Strategic implications
China’s stronghold in clean energy technology manufacturing further underpins its dominance. The country produces two-thirds of the world’s electric vehicles (EVs), 85% of battery cell production, and dominates the production of cathodes and anodes. Francesca Gregory, Senior Energy Transition Analyst at GlobalData, explains that China’s focus on renewable power and battery technology is part of its strategy to drive economic growth. The country is set to invest $6 trillion in green technologies under its 14th Five-Year Plan.
Gregory emphasizes China’s control over lithium and solar photovoltaic (PV) materials, noting that lithium’s importance in energy storage and EV markets makes it crucial. Additionally, China’s dominance in polysilicon production for solar panels, where it controls 80% of the market, highlights the risk of single-source dependence in global energy systems.
Impact on the mining industry
Tom Moerenhout, a Research Scholar at Columbia’s Centre on Global Energy Policy, points out that China’s control over critical mineral processing has allowed it to undercut prices, increasing global dependence on Chinese exports. Stewart Worthy, Partner at Dorsey & Whitney, notes that Western mining companies are exploring strategies to remain competitive, such as introducing a two-tier pricing system for sustainably produced metals.
US-China trade dynamics
China’s dominance in critical minerals also plays a significant role in the ongoing US-China trade conflict. Jon Harrison from TS Lombard explains that while China previously leveraged its position in the critical mineral supply chain minimally for geopolitical purposes, it has since imposed stricter licensing and regulatory requirements. This approach is partly in response to US efforts to limit China’s access to advanced technologies.
Moerenhout adds that China’s export restrictions, extending from semiconductors to battery supply chains and antimony, have intensified, reflecting a strategic response to trade restrictions and geopolitical tensions.
In conclusion, China’s expanding control over critical minerals presents a formidable challenge for global markets and geopolitics, highlighting the urgent need for strategic responses and alternative supply chain solutions.
