Critical Minerals & Rare Earths: The Supply Chain Battleground

The technology cold war runs on rare earths, lithium, gallium, germanium, and a handful of other materials most people have never heard of. Control over these critical minerals has become one of the most potent instruments of geopolitical leverage available to any state — and China holds most of the cards.

Why Critical Minerals Matter

Every advanced technology at the centre of the US-China competition depends on critical minerals. AI chips require gallium and germanium. Electric vehicle motors and wind turbines rely on rare earth permanent magnets. Defence systems — from precision-guided munitions to fighter jet engines — depend on materials that are difficult to substitute and concentrated in a small number of geographies.

The term "critical minerals" is not an abstraction. It describes a concrete strategic vulnerability: the dependence of Western industrial economies on supply chains that pass through, or are controlled by, China.

China processes approximately 91 percent of the world's rare earths. It manufactures 94 percent of sintered permanent magnets. It dominates the refining of lithium, cobalt, and graphite. This concentration is not the result of natural resource endowment alone — it is the product of three decades of deliberate industrial policy, state investment, and strategic acquisition of mining assets and processing capacity worldwide.

The result is a supply chain architecture in which China occupies chokepoints comparable to those the United States holds in semiconductors. And Beijing has demonstrated a growing willingness to use them.

China's Rare Earth Leverage

China's use of critical minerals and rare earths as a geopolitical instrument has accelerated sharply. In 2023, Beijing imposed export controls on gallium and germanium — two materials essential for semiconductor manufacturing. The restrictions expanded in 2024 and again in 2025, when China announced its most stringent rare earth controls yet, requiring foreign companies to obtain licences for products containing Chinese-sourced rare earth materials or manufactured using Chinese technologies.

The scope was significant. For the first time, the controls extended to internationally manufactured products — not just those produced within China. European rare earth prices reached up to six times Chinese domestic prices. Automakers in the US and Europe warned of production disruptions. Defence supply chain analysts raised alarms about the vulnerability of weapons systems dependent on Chinese-sourced magnets.

In early 2026, following diplomatic engagement, Beijing suspended several of the most restrictive measures. The pause has been framed as a confidence-building gesture, but analysts caution it should not be mistaken for a policy reversal. China's broader objective — consolidating strategic control over global rare earth and critical mineral supply chains — remains unchanged. In a separate development, tungsten, antimony, and silver were brought under stricter export controls, with silver elevated from an ordinary commodity to a strategic material.

The pattern is clear: critical minerals and rare earths have become a permanent feature of China's economic statecraft toolkit, deployed tactically in response to Western pressure on semiconductors and other technology domains.

Europe's Critical Materials Gamble

The European Union has responded with the Critical Raw Materials Act (CRMA), adopted in 2024 and entering its implementation phase in 2025-2026. The legislation sets ambitious targets: by 2030, at least 10 percent of the EU's annual consumption of strategic raw materials should be extracted domestically, 40 percent processed within the bloc, and 25 percent recycled from waste.

The ambition is clear. The execution is more uncertain. Europe's mining capacity is limited, permitting processes are slow, and the industrial base for mineral processing is nascent. The gap between the CRMA's targets and the current state of European mineral independence remains substantial.

Read our full analysis: Europe's Critical Materials Gamble — CRMA in 2026 →

The challenge is compounded by the scale of the problem. Even under optimistic projections, demand for critical minerals and rare earths — driven by the energy transition, defence modernisation, and AI infrastructure — is projected to outpace available supply. Diversification away from Chinese dominance is not a matter of finding a single alternative source. It requires building entirely new supply chains across extraction, refining, processing, and manufacturing — a process measured in decades, not years.

The US Response: Diversification and Innovation

The United States has pursued a parallel strategy combining diplomatic engagement, supply chain diversification, and investment in substitute technologies.

On the diplomatic front, Washington has sought to secure mineral partnerships with allied nations and resource-rich states — from Australia and Canada to the Democratic Republic of Congo and Chile. The objective is to build a network of reliable, non-Chinese supply sources for the most strategically sensitive materials, rare earths in particular.

On the technology front, a more ambitious approach is emerging: bypassing China's chokepoints rather than replicating them. Research into rare-earth-free permanent magnets, alternative battery chemistries, and mineral recovery from industrial waste and mine tailings represents a potential structural solution — one that would reduce dependency on Chinese rare earth supply regardless of diplomatic conditions.

The timeline, however, is long. Moving these technologies from laboratory to commercial scale requires sustained investment, regulatory support, and the willingness to accept that strategic supply chain security carries a cost premium over the cheapest available source.

Rare Earths and the Defence Dimension

The defence implications of critical mineral and rare earth dependency are particularly acute. Rare earth permanent magnets are essential components in precision-guided munitions, satellite systems, submarine propulsion, and fighter jet engines. The US Department of Defense has identified critical mineral supply chains as a tier-one vulnerability.

The concern is not hypothetical. If China were to impose targeted restrictions on rare earth materials during a period of heightened geopolitical tension — a Taiwan contingency, for example — the impact on Western defence production could be immediate and severe. Building strategic stockpiles and qualifying alternative suppliers is underway, but the process is incomplete.

This intersection of rare earth supply chains and defence readiness connects the critical materials competition directly to the broader security architecture covered across Tech Cold War's analysis of defence technology, AUKUS, and allied industrial cooperation.

Read more: AUKUS and Beyond — The Defence Tech Alliances Reshaping the Indo-Pacific →

What We Cover

Tech Cold War tracks the critical minerals and rare earths competition across its full scope: China's export control strategy and its evolution, the EU's CRMA and its implementation challenges, US diversification and innovation efforts, the defence supply chain vulnerabilities, and the broader geopolitical dynamics of resource competition in the technology cold war.

Browse all Critical Materials articles →

This page is updated regularly as new analysis is published.

Tech Cold War publishes independent analysis of the technology competition reshaping global power. Subscribe to receive weekly briefings and deep-dive articles.