China’s Role in the Global Supply Chain of Critical Minerals
Export controls and strategic dominance in materials for EVs and semiconductors.
✍️ By Dr. Alan Hughes | Telecoms & Space Policy Analyst
Critical minerals have become the backbone of modern technology, powering electric vehicles, renewable energy systems, and advanced semiconductors. China’s dominance in this supply chain gives it enormous leverage over global industries. In 2025, Beijing continues to tighten its grip through export controls, overseas mining investments, and a near-monopoly on refining capacity, making critical minerals both an economic asset and a geopolitical tool.
Control Through Refining Capacity
While China does not hold the world’s largest reserves of rare earth elements or lithium, it dominates the refining process. More than 70 percent of global rare earth processing and nearly 60 percent of lithium refining capacity are based in China. This middle link in the supply chain gives Beijing decisive influence over global markets.
Companies in the U.S., Europe, and Japan remain dependent on Chinese refined materials, even when raw minerals are sourced elsewhere.
Export Controls as Policy Leverage
In 2023 and 2024, China imposed export controls on gallium and germanium, metals critical for semiconductors and defense technologies. These moves highlighted Beijing’s willingness to weaponize its mineral dominance in response to Western restrictions on advanced chips.
By 2025, discussions in Beijing suggest further controls could target graphite, essential for EV batteries. Such policies underscore how critical minerals are increasingly seen as tools of strategic competition rather than mere trade commodities.
Overseas Mining Investments
Chinese companies have also secured upstream influence through global mining projects. In Africa, firms like China Molybdenum dominate cobalt mining in the Democratic Republic of Congo. In Latin America, Ganfeng Lithium and Tianqi Lithium have invested in brine projects in Chile and Argentina. These overseas stakes ensure a steady flow of raw materials to Chinese refiners, reinforcing supply chain security.
This global reach mirrors Beijing’s Belt and Road strategy, embedding Chinese companies deeply into resource economies worldwide.
Implications for Global Industries
For automakers and chip producers outside China, this dominance creates vulnerabilities. Western companies have launched efforts to diversify supply chains, investing in new mines in Canada, Australia, and Indonesia. The U.S. and EU have also announced subsidies to build domestic refining capacity.
However, these initiatives face long timelines. Mines can take a decade to develop, while China’s incumbency advantage allows it to maintain cost leadership in the short term. Until alternatives mature, dependence on China will remain high.
Environmental and Ethical Questions
China’s refining dominance comes at a cost. Processing critical minerals is energy-intensive and often environmentally damaging. Domestically, pollution from rare earth refining in Inner Mongolia has raised concerns. Abroad, critics accuse Chinese companies of overlooking labor rights in African and South American mines.
Addressing these issues will be key to maintaining both domestic legitimacy and global market access, especially as sustainability becomes a priority for consumers and regulators.
Outlook
China’s control of the critical minerals supply chain illustrates how resource security underpins its broader tech and economic ambitions. By combining refining dominance, export controls, and overseas investments, Beijing has built a powerful lever in global geopolitics.
The challenge for other nations is not only to secure alternative supplies but also to match the scale and integration of China’s strategy. For now, Beijing’s position remains entrenched—ensuring that any discussion of EVs, semiconductors, or renewable energy must account for China’s central role in critical minerals.
