The New Oil: Why the Race for Critical Minerals Will Define the 21st Century

In December 2023, China quietly banned the export of gallium and germanium – two elements that most Western policymakers had never heard of and certainly could not have located on the periodic table. There was no emergency summit, no ticker-tape crisis coverage, no hashtag. The metals are obscure. Their applications are not. Gallium is essential for semiconductor chips, LEDs, and 5G infrastructure. Germanium is critical for fibre optics, infrared lenses, and satellite systems. Between them, China controlled roughly 80 per cent of global gallium production and 60 per cent of germanium (US Geological Survey, 2024). With a single regulatory notice, Beijing demonstrated that it could switch off a supply chain that underpins the digital economy of every Western nation – and that nobody in Washington, London, or Brussels had bothered to prepare a contingency plan.

The episode was instructive, but it should not have been surprising. The geopolitical history of the modern world can be told through the story of whoever controls the critical resource of the age. The British Empire ran on coal. The American century ran on oil. The next century will run on a basket of minerals that most people cannot name, mined in places most people cannot find on a map, and refined overwhelmingly in a single country. The Ottoman Empire ran a multinational state for six centuries on little more than geography and administrative talent, which is five centuries longer than the West has managed to maintain its supply chain independence. If the pattern holds – and it always holds – the nations that control the extraction, processing, and refining of lithium, cobalt, rare earths, copper, nickel, and graphite will shape the geopolitical order of the twenty-first century. Those that do not will discover what it feels like to be on the wrong end of an oil embargo, except this time the embargo covers everything.

The Colonial Resource Playbook

The idea that resource control confers geopolitical power is not remotely new. It is one of the oldest and most reliable patterns in history. What is remarkable is how consistently Western policymakers forget it the moment the resource in question changes.

Consider Belgium’s Congo Free State. When King Leopold II acquired the Congo basin in 1885, he did so not out of humanitarian zeal – the name notwithstanding – but because the territory contained vast quantities of rubber, ivory, and minerals. Rubber was the critical resource of the late nineteenth century. It was essential for the pneumatic tyres that powered the bicycle craze of the 1890s and, subsequently, for the motor vehicles that would reshape the twentieth century. Leopold’s regime extracted rubber through a system of forced labour so brutal that it killed an estimated ten million Congolese (Hochschild, 1998). The profits were extraordinary. The human cost was invisible to European consumers, who cared only that their bicycle tyres were affordable.

Britain operated a rather more genteel version of the same playbook in Malaya. Tin was the strategic mineral of the early twentieth century – essential for canning food, soldering electronics, and manufacturing weaponry. British companies controlled Malayan tin production from the 1870s onwards, using imported Chinese and Indian labour under the auspices of the colonial administration. By 1940, Malaya supplied roughly a third of the world’s tin (Yip, 1969). When Japan seized the Malay Peninsula in 1942, the Allies faced an immediate tin shortage that scrambled supply chains from Detroit to Sheffield. The lesson was clear: whoever controlled the mines controlled the industrial economy downstream.

Oil followed the same logic at a grander scale. The Anglo-Persian Oil Company – later the Anglo-Iranian Oil Company, later still British Petroleum – was established in 1909 after the British geologist William Knox D’Arcy struck oil in what is now southwestern Iran. The British government took a majority stake in the company in 1914, at the personal insistence of Winston Churchill, then First Lord of the Admiralty, who understood that the Royal Navy’s shift from coal to oil-fired ships made Persian crude a matter of national survival (Yergin, 1991). For the next sixty years, a cartel of Western oil companies – known as the “Seven Sisters” – controlled the vast majority of global oil production, refining, and distribution. They set prices, allocated quotas, and divided territories through a series of gentlemen’s agreements that would have impressed even the most brazen of Leopold’s rubber agents. When Iran’s Prime Minister Mossadegh attempted to nationalise Anglo-Iranian Oil in 1953, the British and Americans simply organised a coup to remove him. The message was unsubtle: the resource belonged to whoever had the power to hold it, and the legal niceties were negotiable.

What made the Seven Sisters’ control so effective was not merely that they owned the oil fields, but that they controlled the entire value chain – from wellhead to refinery to petrol station. They owned the tanker fleets, the pipelines, the refineries, and the distribution networks. A country could nationalise its oil wells, as several eventually did, but without the downstream infrastructure it was selling crude at a discount to the very companies it had just expelled. This is a pattern worth remembering when considering critical minerals today.

The pattern is consistent across five centuries. Spain’s gold and silver from the Americas funded the Habsburg Empire. Britain’s coal powered the Industrial Revolution and the Pax Britannica. American oil underwrote the post-war economic order and the projection of military power across the globe. In every case, the nation or group of nations that controlled the critical resource of the age enjoyed disproportionate wealth, influence, and strategic leverage. And in every case, the incumbents assumed their dominance would last forever – right up until it did not.

The question is whether the West is about to repeat this error with critical minerals. The evidence so far is not encouraging.

The Periodic Table of Power

The energy transition – the shift from fossil fuels to electrified transport, renewable power, and digital infrastructure – depends on a set of minerals that barely featured in geopolitical discourse a decade ago. Each one has its own supply chain fragilities, and almost all of them share a common vulnerability: extreme geographic concentration at either the mining or the processing stage, and frequently at both.

Lithium is the lightest metal on the periodic table and the foundation of rechargeable battery chemistry. It is the mineral most commonly associated with electric vehicles, but it is also essential for grid-scale energy storage, consumer electronics, and certain pharmaceutical applications. Australia is the world’s largest lithium miner, producing roughly 47 per cent of global output in 2023. Chile and Argentina – the other two corners of the so-called “lithium triangle” – account for a further 30 per cent (USGS, 2024). Global lithium demand is projected to increase by 500 per cent by 2030 under most net-zero scenarios (IEA, 2021). Yet despite the mining being geographically distributed, China processes approximately 65 per cent of the world’s lithium into battery-grade material (BloombergNEF, 2023). Australia mines it. China refines it. The West buys it.

Cobalt presents an even starker picture. Roughly 73 per cent of global cobalt is mined in the Democratic Republic of the Congo, much of it through artisanal and small-scale mining operations that involve hazardous conditions and, in some cases, child labour (Amnesty International, 2016). Cobalt is essential for the cathodes of lithium-ion batteries – it is what gives them their energy density and thermal stability. The DRC’s cobalt sector is heavily influenced by Chinese-owned mining companies. Of the fifteen largest cobalt-producing mines in the DRC, Chinese firms own or hold majority stakes in many of the most significant operations (Sanderson, 2022). The cobalt is then shipped to China for processing. The West has almost no domestic cobalt refining capacity of any scale.

Rare earth elements – a group of seventeen metallic elements including neodymium, dysprosium, and praseodymium – are critical for permanent magnets used in wind turbines, electric vehicle motors, missile guidance systems, and fighter jet engines. China mines approximately 70 per cent of the world’s rare earths and processes closer to 90 per cent (Adamas Intelligence, 2023). In 2010, China briefly restricted rare earth exports to Japan during a diplomatic dispute over the Senkaku Islands. Prices spiked by several hundred per cent overnight. The incident was a warning shot. The West treated it as a curiosity.

Copper is the workhorse mineral of electrification. Every solar panel, wind turbine, electric vehicle, and charging station requires copper wiring. A conventional car contains roughly 23 kilograms of copper. An electric vehicle contains approximately 83 kilograms – nearly four times as much (Copper Alliance, 2022). Global copper demand is forecast to double by 2035, driven almost entirely by the energy transition (S&P Global, 2022). Chile and Peru together account for roughly 38 per cent of global mine production, with the DRC a fast-growing third. Supply is already struggling to keep pace with demand: no major new copper deposits have been discovered in over a decade, and existing mines are declining in ore grade, meaning more rock must be moved for each tonne of copper extracted.

Nickel, used in stainless steel and increasingly in high-energy-density battery cathodes, is dominated by Indonesia, which accounts for roughly half of global production following a massive expansion of its nickel smelting industry – much of it financed by Chinese investment (Reuters, 2023). Graphite, essential for the anode side of every lithium-ion battery, is sourced predominantly from China, which mines 65 per cent of natural graphite and produces virtually all of the world’s synthetic graphite (Benchmark Mineral Intelligence, 2023).

The picture that emerges is not of a single bottleneck, but of an entire supply chain that routes through one country at its most critical processing stage. Even minerals that are mined in ostensibly friendly nations – Australian lithium, Chilean copper, Congolese cobalt – are shipped to China for the refining and chemical processing that transforms raw ore into the battery-grade materials that actually go into finished products.

China’s Mineral Monopoly

China’s dominance of critical mineral supply chains is not an accident of geology. It is the result of three decades of deliberate, state-directed industrial strategy – precisely the kind of long-term planning that Western democracies find structurally difficult to replicate.

Beginning in the 1990s, China invested heavily in mineral processing infrastructure. The strategy was straightforward: allow other countries to bear the environmental and social costs of mining, then capture the highest-value segment of the supply chain – refining and chemical processing – by offering state-subsidised capacity that undercut Western competitors on price. It worked. One by one, refineries in the United States, Europe, and Japan closed. They could not compete with Chinese facilities that benefited from cheap energy, lax environmental regulation, and direct government subsidy. By the time Western policymakers noticed the trend, there was little domestic capacity left to protect (IEA, 2021).

This mirrors, almost precisely, the playbook China deployed in solar panel manufacturing a decade earlier. In the 2000s, China flooded the global market with cheap photovoltaic panels, driven by massive state subsidies and overcapacity. European manufacturers – particularly in Germany, which had pioneered modern solar technology – were driven out of business. Solyndra, the American solar firm backed by the Obama administration, became a political punchline. By 2020, China controlled over 80 per cent of the global solar manufacturing supply chain (IEA, 2022). The West got cheap panels and lost an industry. The playbook is identical for critical minerals, only the stakes are higher.

China’s Belt and Road Initiative has been the vehicle for securing upstream supply. Chinese state-owned enterprises and sovereign wealth funds have invested billions across Africa, South America, and Southeast Asia, acquiring mining concessions, building processing plants, and financing infrastructure in exchange for long-term offtake agreements. In the DRC, Chinese companies have signed “minerals-for-infrastructure” deals that grant access to cobalt and copper reserves in return for roads, railways, and hospitals. In Indonesia, Chinese firms have financed the rapid expansion of nickel smelting capacity, turning the country from a raw ore exporter into a processed nickel producer – but one whose processing industry is substantially Chinese-owned (Treadgold, 2023). In Chile, Chinese companies have taken significant stakes in lithium operations. In Argentina, Chinese investment has flowed into the nascent lithium sector. In Zimbabwe, Chinese firms dominate the country’s growing lithium mining industry.

The historical parallel is OPEC in the 1970s – but more concentrated and more difficult to circumvent. When the Organisation of Arab Petroleum Exporting Countries imposed its oil embargo in 1973, oil prices quadrupled in months, triggering a global recession. But oil had substitutes (coal, nuclear, natural gas) and the cartel had internal divisions that eventually weakened its pricing power. Critical mineral processing has no such safety valve. There is no substitute for lithium in current battery chemistry. There is no substitute for rare earth permanent magnets in electric motors and wind turbines. And unlike OPEC – which was a loose coalition of sovereign states with competing interests – China’s mineral dominance is exercised by a single authoritarian state with a unified strategic vision and the political will to weaponise supply chains when it suits its interests.

Deng Xiaoping reportedly remarked in 1992 that “the Middle East has oil; China has rare earths.” It was perhaps the most prescient geopolitical observation of the late twentieth century. Thirty years later, China has not only rare earths but effective control over the processing of lithium, cobalt, nickel, and graphite as well. The West’s critical mineral supply chain runs through China in the same way that Europe’s natural gas supply ran through Russia – and the lesson of February 2022 was how quickly that dependency could be weaponised.

The Western Response

Western governments have begun to respond, but the question is whether the response is commensurate with the scale of the problem.

The European Union passed the Critical Raw Materials Act in 2023, setting targets that by 2030 the EU should mine 10 per cent of its strategic mineral needs domestically, process 40 per cent domestically, and recycle 25 per cent from waste. The legislation also caps dependency on any single third country at 65 per cent for any given mineral at any stage of the value chain (European Commission, 2023). These targets are laudable. Whether they are achievable is another matter. Permitting a new mine in Europe takes an average of twelve to sixteen years. China can build a processing plant in eighteen months.

The United States, through the Inflation Reduction Act of 2022, has committed over $369 billion in clean energy incentives, including tax credits that require critical mineral content to be sourced from the US or free-trade agreement partners. The Act has triggered a wave of investment in domestic battery manufacturing – largely by South Korean companies building gigafactories in Georgia, Tennessee, and Kentucky – but the upstream supply chain remains overwhelmingly Chinese. Building a lithium refinery or a rare earth separation plant takes years, requires specialised engineering talent that the West has largely lost, and faces fierce local opposition from communities that do not want a chemical processing facility in their constituency. Australia’s Critical Minerals Strategy, announced in 2023, aims to move the country up the value chain from raw ore exporter to processor, but progress has been modest.

The historical parallel that offers most comfort – and most warning – is the Allied resource mobilisation of the Second World War. Between 1940 and 1945, the United States and its allies undertook one of the most extraordinary industrial transformations in history. The US government directed private industry to convert automobile factories to tank production, textile mills to parachute manufacturing, and shipyards to produce Liberty ships at a rate of one every forty-two days at peak capacity (Herman, 2012). Synthetic rubber was developed at industrial scale after Japan’s capture of Southeast Asia cut off natural rubber supplies. The Manhattan Project demonstrated that a concentrated national effort could achieve results that peacetime incentive structures could not.

But this mobilisation worked because the political will matched the perceived threat. The American public understood, after Pearl Harbor, that the country faced an existential danger. Rationing, conscription, and industrial redirection were accepted because the alternative was defeat. The critical minerals challenge does not carry the same emotional urgency. No bombs are falling. No territories have been seized. The dependency is abstract – a Chinese processing plant in Jiangxi province does not trigger the same visceral response as a Japanese aircraft carrier in the Pacific.

And here lies the fundamental problem. The West’s response to China’s mineral dominance has been legislative, incremental, and hedged with caveats. It has not been strategic, urgent, or willing to impose the kinds of costs – higher consumer prices, longer permitting timelines overridden by executive authority, direct state investment in uneconomic but strategically essential processing capacity – that a genuine industrial response would require. The EU’s targets are a decade away. The IRA’s incentives rely on market forces to build supply chains that market forces dismantled in the first place. Australia still ships the overwhelming majority of its lithium to China for processing.

There is also a deeper ideological problem. For thirty years, Western economic orthodoxy held that free trade and globalised supply chains were inherently efficient and that any attempt by governments to direct industrial policy was a distortion best left to the Soviets. This was convenient when Western companies were the ones benefiting from open markets. It is rather less convenient when the open market has delivered a Chinese monopoly on the processing of every mineral required for the energy transition and modern defence. The free trade framework assumes that all participants play by the same rules. China did not. It used state subsidies, directed lending, and strategic acquisition to build a monopoly position – and the West’s own rules prevented it from responding in kind until the monopoly was already entrenched.

The uncomfortable truth is that building a domestic critical mineral supply chain is expensive, slow, environmentally messy, and politically unrewarding. It is exactly the kind of long-term, unglamorous, strategically essential project that democratic governments are structurally poor at executing – and that China’s system of state-directed capitalism is rather good at. Framing this as a trade issue or a market failure misses the point. It is an industrial sovereignty issue. Nations that cannot refine their own critical minerals are, in the most literal sense, dependent on the goodwill of those that can.

What Comes Next

The twenty-first century will not be defined by a single resource, as the nineteenth century was defined by coal or the twentieth by oil. It will be defined by a basket of minerals – lithium, cobalt, rare earths, copper, nickel, graphite, gallium, germanium, and others not yet prominent – whose combined availability determines whether a nation can build electric vehicles, deploy renewable energy, manufacture semiconductors, and field a modern military.

The nations that control these supply chains – from mine to refinery to finished product – will occupy the strategic position that coal gave Britain in the 1800s and oil gave the United States in the 1900s. Those that do not will find themselves in the position of every nation that has ever depended on a hostile or indifferent supplier for its most critical inputs: vulnerable, constrained, and ultimately subordinate.

China understood this thirty years ago. It planned accordingly. It invested in processing capacity when the minerals were obscure and the returns were marginal. It secured mining rights across three continents. It built the human capital – the chemical engineers, the metallurgists, the process specialists – that the West allowed to atrophy. This was not luck. It was strategy, executed with patience and consistency over decades.

The West’s window to respond is narrowing, but it has not closed. The minerals exist. The technology for processing them is known. The capital is available. What is lacking is the political will to treat critical mineral sovereignty as a national security priority rather than a trade policy footnote – to accept that some things are too important to outsource, even if producing them domestically costs more than buying them from China.

The British Empire learned, painfully, what happened when it depended on American cotton for its textile mills during the Civil War. The United States learned, painfully, what happened when it depended on Middle Eastern oil in 1973. Europe learned, painfully, what happened when it depended on Russian gas in 2022. In each case, the lesson was the same: strategic dependency on a single supplier for a critical resource is a vulnerability that will, sooner or later, be exploited.

The question is not whether the critical mineral supply chain will be weaponised. China has already demonstrated, with gallium and germanium, that it is willing to do so. The question is whether the West will build the domestic capacity to withstand it – or whether it will add critical minerals to the long and inglorious list of strategic dependencies it recognised too late, responded to too slowly, and paid for too dearly.