China now sits at the centre of the global critical minerals supply chain – an abstract idea that, upon closer examination, looks like this: China now is at the front of the queue, though, thanks to technological advances, renewable energy ambitions, and national security needs, among others. Critical minerals underpin various industries, from your iPhone to aerospace and defence applications. These minerals drive innovation, underpin green technologies, and contribute to strategic defence capabilities. Each of them has distinct characteristics for their respective use in advancing industrial processes and innovation. For instance, rare earth elements compose a magnet that is highly powerful and used for electric vehicles and wind turbines. At the same time, lithium is a significant portion used in energy storage in portable electronic devices and electric cars.

China has emerged as a superpower in the area of critical minerals by dominating the value chain of production, processing, and distribution. Though China has an abundance of natural resources, it also fortified its position by strategic investments in the upstream mining infrastructure. As a result, now China harbors many strategic risks for the West. China has been ahead of most others with its rich mineral reserves, strategic foresight, and proactive government policies, leaving Western counterparts behind in setting up the supply chain by the leader in critical minerals. This underwrites an issue that the west is only starting to action.

The effects of this domination by China are clear enough worldwide, much more today, with the growing tensions in geopolitics. The dependency of the West on China for critical minerals poses enormous risks, therefore restructuring the considerations of strategic imperatives for stakeholders and new options for diversification. The key concerns are the associated risk of supply disruption and price volatility from China’s dominance. Recent events, such as the imposition of export restrictions on graphite by China in 2023, have shown that market turbulence and supply risks may arise when vital minerals are used for geopolitical purposes.

Additionally, oversupply and fluctuating prices also demonstrate the vulnerability of nations that rely on a single source for such critical minerals. This emphasizes the importance of taking actions to mitigate risks and increase the capacity for resilience against such issues.

Lately, China’s environmental record in such critical mineral extraction and processing has come under increased scrutiny, with issues around sustainability, human rights abuses, and degradation of the ecology gaining prominence. Concerns such as these raise the level of scrutiny for responsible sourcing practices and ethical supply chain management that accounts for sustainability and accountability.

Global efforts are now in place with the motive to avoid further dependence on China in the sector of critical minerals, which has reached the point of dominance. This topic is even more prominent now, having been a matter of debate in government circles, policy announcements, and even presidential races in some countries. Nations and companies are, therefore, actively seeking avenues to mitigate risks and build on resilience with strategic partnerships, resource exploration initiatives, and investment in mining and processing capability at home. Also being pursued are efforts to develop alternative sources of critical minerals through exploration and extraction projects in regions other than China. This will see countries rich in mineral resources, for example, Australia, Canada, and the United States, making infrastructure and regulatory framework interventions to kickstart investment and enhance domestic production of their critical minerals.

The future of the supply chain of critical minerals can be uncertain. There is a need to be proactive in the uncertainties that lie large with the changing dynamics of the global landscape. While the dominance of China in the global supply chain is unlikely to erode in the near term, some emerging trends, such as a growing demand for clean energy technologies and changing geopolitical realignments upon the critical minerals sector, can possibly change this balance of power. Additionally, these geopolitical dynamics with the rise in competition between China and the US are likely to influence the strategic calculus of nations and shape the trajectory of supply chains for other critical minerals. Countries will want to assert their sovereignty and diminish dependencies on geopolitical rivals. It will result in increased investments in domestic production and forging new alliances to secure critical mineral supplies.

This shows that the global critical minerals supply chain is at a crossroads, where China’s dominance sets a very long shadow. It will also be essential, as the path ahead is shaped, to recognise the various dimensions of China’s influence and weave a course forward toward resilience and innovation against evolving challenges.