‘Mineral corridor’: new geopolitics of critical minerals—II

This is Part II of a multi-part “The Mineral Corridor” series, examining how critical minerals are reshaping global economic power and diplomacy.

The global economy is entering a new era of resource competition. For much of the twentieth century, oil and gas shaped international economic and strategic calculations. In the twenty-first century, critical minerals are emerging as the foundation of a new industrial order. Copper, lithium, nickel, cobalt, graphite and rare earth elements (REEs) are becoming essential not only for clean energy technologies but also for electric vehicles, artificial intelligence, semiconductors, defence systems and advanced manufacturing.

The strategic importance of these minerals is not determined only by geological availability. It is increasingly shaped by supply-chain concentration, processing capacity and technological control. A country may possess mineral deposits, but the ability to refine, manufacture and integrate those resources into industrial products determines where economic and geopolitical value is captured. The global mineral race is therefore not simply a race for mines; it is a competition to build complete ecosystems connecting resources, processing, technology, finance and markets.

China provides the clearest example of how mineral power is created. Its advantage does not come solely from resource ownership; it comes from decades of investment in processing and manufacturing capabilities. China accounts for approximately 60% of global rare earth mining, around 90% of rare earth separation and refining capacity, and more than 90% of permanent magnet manufacturing. These capabilities give China a central role in industries ranging from electric vehicles and renewable energy to defence technologies.

Also read: ‘Mineral Corridor’: from mines to manufacturing—I

China’s position is particularly significant because mineral resources are geographically distributed, while processing capacity remains highly concentrated. For example, China dominates graphite processing, a key component of electric vehicle batteries, and remains a leading player across multiple battery-material supply chains. This demonstrates an important lesson: strategic advantage in the mineral economy comes not only from controlling resources but from controlling the industrial systems built around them.

China’s experience has prompted other economies to develop different models of mineral security. While some focus on diversification, others emphasise technology partnerships, industrial policy or downstream processing.

The United States has increasingly integrated critical minerals into its economic and national security agenda. Through initiatives such as the Minerals Security Partnership (MSP), launched in 2022 with allies including Australia, Japan, Canada and European economies, Washington is seeking to diversify mineral supply chains and support investment in mining, processing and recycling. The US strategy therefore focuses not only on finding new mineral sources but on developing alternative supply-chain networks.

The European Union has adopted a similar approach through the Critical Raw Materials Act (CRMA). The Act aims to strengthen EU mineral security by 2030 through targets of 10% domestic extraction, 40% processing and 25% recycling of strategic raw materials, while limiting dependence on any single external supplier to 65% of annual consumption for individual strategic materials. The EU is also building partnerships with resource-rich countries such as Canada, Australia, Kazakhstan, Namibia, Rwanda and Chile to secure minerals needed for clean energy, digital technologies and advanced manufacturing.

Japan represents a different model. With limited domestic mineral resources, Japan has focused on overseas partnerships, technological capability and recycling to secure critical mineral supplies. Through institutions such as the Japan Organization for Metals and Energy Security (JOGMEC), Japan has supported overseas exploration, investment and resource partnerships. Its cooperation with Australia in lithium and rare earth supply chains highlights how resource-rich countries can provide mineral security while technology-driven economies contribute investment, processing expertise and industrial capabilities.

Australia demonstrates how resource advantages can translate into strategic influence. As one of the world’s leading producers of lithium and a significant supplier of critical minerals, Australia has combined mining expertise with institutional capacity and international partnerships. However, its experience also highlights a wider challenge: resource abundance alone is insufficient without investment in processing and value addition.

The emerging mineral order is also reshaping the position of developing economies in the Global South.

Indonesia provides one of the most prominent examples of using mineral policy as an instrument of industrial strategy. By restricting exports of unprocessed nickel ore and promoting domestic processing, Indonesia transformed itself into the world’s largest nickel producer, accounting for more than half of global nickel output. This approach helped attract significant investment in smelting and battery-related industries. However, Indonesia’s experience also highlights a broader challenge: foreign investment can accelerate industrial development, but long-term economic gains depend on technology transfer, domestic capabilities and greater participation in higher-value segments of the supply chain.

Africa faces a similar challenge. The Democratic Republic of Congo produces around 70% of the world’s cobalt, while several African countries possess significant deposits of copper, manganese and other strategic minerals. Yet much of the processing and manufacturing associated with these resources occurs elsewhere. The central policy question for resource-rich countries is therefore not only how to attract investment, but how to ensure that mineral development contributes to industrial transformation.

India is emerging as an important player in critical mineral diplomacy. With rising demand from renewable energy, electric vehicles and advanced manufacturing, India is expanding overseas partnerships through initiatives such as Khanij Bidesh India Limited (KABIL), established to acquire and develop strategic mineral assets overseas, and cooperation with resource-rich countries. Its engagement with Indonesia’s nickel sector reflects this strategy, as both countries explore opportunities linked to battery materials and clean energy supply chains. India’s approach highlights the challenge facing emerging economies: securing mineral access while building technology partnerships and greater participation in global value chains.

The changing mineral landscape has created a new form of economic diplomacy. Countries are no longer negotiating only for access to raw materials; they are building partnerships around processing facilities, technology, investment and industrial capacity. These partnerships increasingly combine resource security with industrial policy, technology cooperation and economic diplomacy.

Recent developments show that mineral diplomacy is becoming increasingly institutionalised through initiatives such as the Minerals Security Partnership, G7 cooperation frameworks and bilateral critical mineral agreements. These efforts reflect a broader shift in global economic strategy: supply-chain resilience is becoming as important as cost efficiency.

The future mineral economy will be shaped by countries that combine geological resources with industrial capability, technology and strategic partnerships. Possessing minerals creates an opportunity, but transforming them into economic influence requires institutions, investment and long-term planning. The new geopolitics of critical minerals is therefore not a competition for deposits alone; it is a competition to build secure, diversified and sustainable supply chains that will define the next phase of global economic power.

Copyright Business Recorder, 2026