Critical minerals have climbed to the top of the global policy agenda in recent years. These minerals are essential not only for clean energy technologies, but also for high-tech industries, aerospace, defence, and advanced manufacturing. They are, in short, the invisible foundations of modern power. The global scramble to secure them is as intense as the oil race of the 1970s — and, much like that era, the world again finds itself dependent on one dominant supplier: China.
The International Energy Agency’s (IEA) Global Critical Minerals Outlook 2025 offers a sobering picture. It shows that in 19 out of 20 vital strategic minerals, China is the leading refiner, commanding an average market share of 70 per cent. This extraordinary concentration has intensified in recent years despite public pledges to diversify. As the IEA warns, the very essence of energy security — diversification — is “moving in the opposite direction.” In other words, what was once a theoretical risk has become a structural vulnerability.
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China’s critical minerals supply chain
To understand why China’s grip endures, one must distinguish between mining and refining — between where minerals are extracted and where value is created. While mining is geographically more dispersed, refining and processing remain the true chokepoints. The IEA estimates that even if China were removed from the equation, only 35–40 per cent of global demand for graphite or rare earths could be met by 2035.
The problem is not scarcity of resources but concentration of capability. China processes over 70 per cent of global rare earths and dominates midstream stages such as cathode materials for batteries and magnet manufacturing for electric motors. This control gives Beijing leverage over sectors from electric vehicles to defence and artificial intelligence. As a recent analysis put it, “China’s mineral-processing empire will be difficult for other countries to catch up with.”
Why China’s dominance persists
China’s supremacy is not accidental; it is the product of deliberate statecraft. Over four decades, Beijing built a vertically integrated industrial ecosystem — from mining and refining to advanced component manufacturing — that achieves unmatched economies of scale. Elsewhere, projects face higher costs, stricter environmental regulation, and longer lead times. According to independent assessments, producing refined critical minerals outside China can be 50 per cent costlier due to capital inefficiencies and slow permitting processes.
Technological mastery further cements China’s lead. Rare earth separation and refining are not routine chemical operations; they involve complex processes and radioactive by-products that few countries are equipped to handle safely. Establishing such facilities typically takes eight to ten years. In contrast, China’s ecosystem of specialised engineers, infrastructure, and industrial clusters allows rapid scale-up and innovation — a combination that keeps global competitors perpetually behind.
The limits of diversification
Governments across the G7, India, Australia, and Europe have vowed to diversify supply chains, but the gap between aspiration and execution remains wide. New mining projects are being announced, but mining alone is not the answer. Without large-scale midstream processing, these projects cannot translate into true resilience. The IEA notes that even under its most optimistic projections, China’s share of global refining for rare earths will fall only modestly — from about 91 per cent today to 77 per cent by 2035.
Diversification also requires financing, technology transfer, and a skilled workforce — all of which demand time. The result is that China’s dominance is not an anomaly to be quickly corrected but a structural fact of the global industrial economy. Treating it as a short-term tactical problem, solvable by signing new trade deals or funding a few mines, is dangerously simplistic. This is a strategic issue, demanding sustained policy engagement over decades rather than months.
Implications for India and allied economies
For India, the lesson is particularly important. As the country pursues its Viksit Bharat 2047 vision, critical minerals will underpin industrial growth in electric vehicles, semiconductors, defence production, and renewable energy. India possesses notable mineral deposits, especially in monazite-bearing sands along its coasts, but lacks significant refining capacity. Without midstream capability, India will remain reliant on imports — and thus vulnerable to global disruptions.
Allied economies such as the United States, Japan, and the European Union face a similar challenge. Their resilience plans cannot rely solely on “diversifying away from China.” Supply-chain resilience will come only when parallel value chains — with integrated refining, component manufacturing, and recycling — are built at scale. Until then, export controls or geopolitical tensions in Beijing will reverberate through every global factory floor. The IEA cautions that such concentration could cause “painful disruptions” across industries.
For policymakers, the message is clear: risk-mitigation measures are necessary but insufficient. What is needed is a proactive industrial strategy that aligns public investment, private participation, and international cooperation to gradually reduce dependency while ensuring domestic value addition.
Building a long-term foundation
The scale of the challenge demands an equally ambitious policy response. India, for instance, could launch a National Critical Minerals Mission — a multi-decadal initiative that blends regulatory reform with financial incentives for processing and refining. Such a mission should prioritise R&D for sustainable extraction, recycling, and substitution technologies.
Internationally, major democracies must forge an Allied Supply Chain Consortium — a cooperative platform for joint investments, technology transfer, and coordinated stockpiling. This would mirror the collaborative spirit of the International Energy Agency’s creation after the 1973 oil shock, when countries came together to prevent energy blackmail. By pooling capabilities, member economies can share risk and build collective resilience.
Equally crucial is demand-side innovation. Substitution and recycling can relieve pressure on primary supply. New magnet technologies that minimise or eliminate heavy rare earths, and large-scale recycling initiatives, could reduce dependence on fresh mining. The IEA estimates that recycled minerals could supply up to 15 per cent of global demand by 2035, a non-trivial buffer against shocks.
These steps acknowledge a simple truth: reducing dependence on China will not happen overnight. It is a marathon that requires sustained investment, institutional innovation, and trust-based international collaboration. Until then, the world must accept China’s critical-minerals dominance as a strategic reality to be managed, not a tactical problem to be wished away.