Critical (minerals) mass: Minerals security in a rapidly shifting geopolitical environment
- Gabriele Iuvinale
- 2 giorni fa
- Tempo di lettura: 6 min
In the past five years, the acceleration of the energy transition, geopolitical pressures and political volatility have brought critical minerals to the fore. Energy security now extends to the reliable and adequate supply of mineral and metal inputs used by the defense sector, batteries, tech manufacturing such as semiconductors, and a wide range of clean energy technologies. China’s dominant market position across metals markets has become a concern for other governments crafting mineral security strategies, and in response, policymakers are expanding market interventions, ranging from tariffs, policy lending, offtake and publicly backed venture capital support, and tax credits for critical minerals projects across the value chain.
But the meaning of criticality varies by country and is rapidly changing. President Trump’s March 20 executive order (EO) aiming to accelerate the development of domestic mining and refining projects classified potash, copper and gold—traditionally minerals with comparatively large, liquid markets—as critical minerals. Adjacently, expectations of future United States (US) tariffs on imports of copper and other metals have introduced price premiums between COMEX and the LME, as US importers scramble to get supplies into the country before the tariffs take effect. On March 25, the European Union (EU) unveiled a list of 47 strategic projects under the Critical Raw Materials Act (CRMA), which provides projects with access to a streamlined permitting process and additional financing sources, to ensure mineral security over strategic raw materials. The pace of change and high degree of market uncertainty at present make it essential for market participants to plan around “criticality” to ensure the broadest possible access to policy support, viable project economics and offtake.
What makes a mineral critical?
While there is no universally adopted criteria for a mineral’s criticality, there are certain common categories by which governments typically assign the importance of any given mineral or metal. The following schema maps the competing factors that determine eligibility for inclusion in national lists and policies:
Global rare earth reserves total approximately 110 million metric tons
The geological scarcity or abundance of economically recoverable deposits of a mineral or refining processes to extract a mineral or metal.
The geographic or corporate concentration of supply.
The relative importance of that mineral to clean tech or defense industrial supply chains, manufacturing or electrification.
The availability of supply from friendly or allied countries and corporate partners.
A country or region’s national and economic security strategy and industrial policy.
These categories explain the differing definitions of “critical” minerals and metals by country or region. Initial lists of critical minerals focused on rare earths and niche metals used in military systems and tech inputs because of the small size of the relevant markets and China’s dominance over refined supply. Crucially, rare earths and related elements aren’t rare per se. Rather, the refining processes to extract them are energy-intensive, dirty and highly specialized. This is not the case for newer inclusions under the critical minerals umbrella such as lithium or, more recently, copper.
Energy dominance means mineral dominance
The Trump administration’s commitment to energy dominance has reshaped the policy and institutional landscape for the implementation of policies affecting the mining sector in the US, and more broadly. Launching the National Energy Dominance Council (NEDC), a principals committee chaired by the Secretary of the Interior, the administration has centralized the power to designate minerals as critical in the NEDC as well as vesting it with the authority to coordinate an all-of-government effort to identify strategically vital projects to expedite. The Secretary of Defense has also been granted authority to invoke the Defense Production Act to facilitate projects and existing programs across the government, expanding the available pool of policy support for mining and metals firms, both domestically and beyond.
Given the US’s significant pipeline of undeveloped mining projects, Trump’s most recent EO included copper onto the critical minerals list in a bid to minimize import dependency and improve the bankability of smelting and refining projects domestically. The US approach to criticality appears to be intended to maximize production and minimize imports on security grounds, even though copper (which is at risk of import tariffs) is the most liquid traded metal needed for decarbonization, electrification and rapidly growing power demand.
Simultaneously, the current escalating trade policy has affected metals markets as firms race to move supply into the US ahead of tariff implementation. The resulting price arbitrage and premiums are temporarily rerouting trade flows. The administration’s preference to onshore mining and refining at high cost marks a significant departure from the Biden administration’s measured, multilateral approach seeking to secure supplies abroad. US definitions of criticality appear to encompass any mining or refining projects that can be built at scale domestically under the flexible umbrella of national security.
Asset poor, regulation rich
The EU faces an increasingly difficult geopolitical environment. Unsure of the strength of American security guarantees and an increasingly tense political relationship with Washington, rearmament has become a reality. The new German government’s suspension of the debt brake for all defense spending above 1 percent of GDP and the European Commission’s Rearm plan aiming to allow member states to increase defense spending by 1.5 percent of GDP and the allocation of €150 billion in common financing for defense investment will significantly increase the bloc’s demand for metals feeding military inputs. Expected increases in defense spending will eventually necessitate a new wave of offtake financings and new projects to avoid any reliance on foreign partners for mineral security.
In the EU, the CRMA prioritizes criticality on the basis of economic importance and supply risk, but also characterizes certain metals as “strategic raw materials” even if they do not meet the criticality threshold. In addition to raw materials that are critical for the green and digital transitions, such as rare earth elements and battery metals like lithium and cobalt, metals used for semiconductors, weapons systems or other defense or space applications are considered by the EU to be strategic materials. The CRMA sets 2030 targets for strategic raw materials, yet there is not a comparable unified architecture of financial resources, subsidies, state aid or other market interventions to support project development. Further, regulatory barriers are far denser and typically more onerous than in the US.
Just as the US has taken an increasingly expansive approach to defining criticality, the EU faces pressure to expand efforts to secure its own metals value chains. Initially, this will likely mean expanded efforts among national export credit agencies and development finance institutions to find and invest in strategic projects, even where there may be bankability concerns. But given the significant glut of supply for many strategic metals and China’s predominant share of refining, further policy interventions and innovations may be necessary. Europe needs more mines and is now facing the constraints imposed by a regulation-heavy approach to sector development. The advent of rearmament may provide the demand impulse needed to change national approaches and the wider bloc’s thinking.
China and the rest adapt
China produces 60 percent of the world's rare earths but processes nearly 90 percent
Source: Center for Strategic & International Studies
China continues to set the pace for critical minerals extraction, refining and demand. Unlike other jurisdictions, its critical minerals designations increasingly matter for export controls and market management. Slowly expanding restrictions on exports of beryllium, germanium, and other metals inputs needed for defense and tech applications to the US are now a pressure point in the metals trade, impacting on the project economics and bankability of projects reliant on such supply. However, US trade measures may divert more supply from China onto other markets, lowering price levels outside the US. In these conditions, establishing midstream and downstream projects to improve security of supply in developed markets will likely require additional policy intervention. By contrast, mineral exporters accepting FDI from China may benefit from Chinese sponsors’ willingness to locate more of the value chain abroad. Security is overriding all other conceptions of criticality in conditions of extreme uncertainty, creating new opportunities outside of the US market as national policies adapt.
Major mining economies with significant mineral wealth such as Canada and Australia developed their respective critical minerals designations assuming US policy would continue to support friendshoring. Given their resource wealth, criticality designations grant miners access to policy support to develop mining and refining projects for export. But the structure of export value chains to North America has been put into question by the imposition of high, long-standing tariffs. Mineral wealth is now increasingly tied to new industrial policies linking decarbonization and manufacturing competitiveness through domestically integrated value chains. There is a growing likelihood of convergence for critical minerals designations across jurisdictions, as every country or regional economic bloc has incentives to onshore manufacturing where possible, whether for decarbonization technologies, emerging national security concerns, or to protect industries from cheaper imports.
No matter the uncertainty currently permeating the global economy, critical minerals are a growth business. A world of mounting geopolitical tension and security competition requires inputs for militaries; the adoption of AI needs metals for semiconductors; and increasingly competitive clean technologies need lithium, cobalt, nickel, phosphorus and more. As a growing number of economies are willing to pay premiums for their security, criticality is becoming the key differentiator for a project’s access to policy support and viability.
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