Despite growing talk of securing alternative supply chains, China has entrenched itself as the world’s undisputed leader in critical minerals, widening a lead that few anticipated would stretch so far, so fast.
From lithium to nickel to rare earths, China’s dominance across the critical minerals value chain has not only held firm in recent years but has, in fact, expanded. While Western governments call for resilience, diversification, and responsible sourcing, China has consolidated its position at nearly every stage of production, processing, and refining.
Chinese companies are breaking ground, scaling production, and moving quickly on mineral flows that underpin the energy transition, according to the International Energy Agency (IEA)’s Global Critical Minerals Outlook 2025, released in June.
In 2024 alone, China, together with Indonesia, accounted for 90% of global additions to nickel refining capacity, up from 83% in 2020. China also controls over 90% of refining capacity for both graphite and rare earth elements, and processes around 60% of global lithium and cobalt. Simply put.
This means if the world is transitioning to clean energy, it is doing so through supply chains that Beijing commands.
U.S. and European Alternatives Are Falling Short
Not only does China dominate capacity, but nearly all new investment in refining and processing over the past four years has been concentrated within its borders, as well as in other countries, such as Namibia.
By contrast, mineral-rich countries in Africa and Latin America, key targets for U.S. and European efforts to diversify supply chains, have made limited progress, mainly due to financing
“If the world is transitioning to clean energy, it is doing so through supply chains that Beijing commands.”
This growing concentration of power is reshaping international trade and diplomacy. As Beijing imposes tighter export controls on critical materials such as gallium and heavy rare earths, importing countries are under increasing pressure to reassess their strategies for clean energy, defense, and technology, all of which depend on these resources.
The Illusion of Diversification
Meanwhile, companies in emerging markets seeking to invest in critical minerals face collapsing margins and uncertain offtakes, a byproduct of China’s massive, state-backed supply expansion that has flooded the market and suppressed prices. For instance, lithium prices have plummeted over 80% from their 2022 peak. Nickel, cobalt, and graphite also fell between 10% and 20% last year.
Price volatility, rather than spurring competition, is deterring investment in new supply. In 2024, global investment growth in critical minerals slowed to 5%, down from 14% the previous year.
Behind the headlines, a more sobering reality is taking shape. Diversification in supply chains is not happening at the pace the world needs.
According to the IEA’s report, new projects outside of China are 50% more expensive to build on average due to Chinese government subsidies, slower to permit, and often lack buyers willing to sign long-term contracts. Even when exploration is successful, supply chain and processing infrastructure are rarely in place.
In fact, these trends, and their consequences, are at the center of the IEA’s Report.The report issues an urgent warning that, without coordinated action, China’s dominance could perpetuate global vulnerabilities for decades to come.
New Chemistries, Same Dependence
Even promising alternatives come with new dependencies. Sodium-ion and lithium iron phosphate (LFP) batteries may reduce reliance on nickel and cobalt, but they introduce other chokepoints.
China controls 75% of the global market for purified phosphoric acid, used in LFP batteries, and 95% of high-purity manganese sulfate, a critical component for sodium-ion battery chemistries.
The report also underscores that market forces alone won’t deliver diversification. It proposes a toolbox of solutions, including:
- Public financing and risk-sharing to catalyze private investment.
- Price stabilization mechanisms to reduce investor hesitation.
- International cooperation agreements focused on shared infrastructure, processing capacity, and long-term supply contracts.
What’s Next: Copper and Beyond
Looking ahead, copper presents another growing concern.
The IEA forecasts a 30% supply gap by 2035 due to declining ore grades, aging mines, and delayed project approvals. Lithium appears adequately supplied in the short term, but is likely to fall into deficit in the 2030s without sustained new investment.
China is not only ahead—it is widening its lead across all fronts. For countries aiming to build secure, resilient, and sustainable supply chains, moving forward will take more than just rhetoric. It will require capital, coordination, and the political will to break the cycle of dependence.
As the clean energy transition accelerates and competition intensifies for minerals critical to defense and technology, the future of the global economy may depend less on how much lithium or cobalt is produced and more on who controls the ability to refine, process, and market these critical resources.
