Geopolitical Mining · Country & Region Analysis · China

For China, Minerals Were, Are and Will Always Be Strategic

Authors: Marta Rivera | Eduardo Zamanillo

How decades of deliberate policy turned China into the central hub of critical minerals and what that means for security, supply and geopolitical mining.

1. The structural question

China today sits at the centre of the global system for critical minerals, not only as a major producer, but above all as the dominant refiner and processor of the materials that underpin advanced technologies, national security and the energy transition.

This position is not the result of geology alone. It is the outcome of a long strategic trajectory. Already in 1992, Deng Xiaoping was reported as saying: “The Middle East has oil, China has rare earths.” Three decades later, that intuition has translated into an architecture of power built around rare earths, graphite, cobalt, gallium, germanium, magnesium and other key inputs.

The question now is not whether China is dominant, the numbers make that clear, but how it got there, which tools it uses to maintain that dominance, and how the rest of the system is reacting. For investors and decision makers in mining and midstream, this is not a theoretical issue, it defines the risk map for supply, timelines and geopolitical exposure.

2. The material layer: from advantages in the ground to control of the bottlenecks

China’s current position rests on a simple but powerful insight, the real leverage in mineral supply chains sits less in the mine and more in the processing bottlenecks.

Over the last 30–40 years, Beijing has systematically built capacity in:

Rare earths: around 70% of global mining and close to 90% of processing are located in China. Even rare earth concentrates mined elsewhere often end up in Chinese separation facilities.
Graphite: roughly 80% of natural graphite production and more than 90% of battery-grade graphite processing are controlled by Chinese operators.
Gallium and germanium: China supplies the overwhelming majority of global gallium and a large share of germanium, both recovered as by products in smelting industries where China is already strong.
Cobalt: extracted mainly in the Democratic Republic of Congo, but around 70–80% of global refining capacity belongs to Chinese companies, either inside China or through Chinese owned plants abroad.
Antimony and magnesium: China has long been the largest source of both, at times providing over half of global antimony and close to 80–85% of magnesium output.

From a geopolitical mining perspective, this means that China has positioned itself as the indispensable midstream hub in multiple critical mineral chains. Even when it does not control the deposit, it often controls the key transformation stages that turn raw ore into technology grade materials.

3. The institutional and political layer: how China built this position

China’s trajectory can be understood in three broad phases.

3.1. Laying the foundations (1980s–1990s)

After the reforms launched by Deng Xiaoping, China identified mining and basic materials as strategic enablers of industrialisation. Key elements of this phase include:

Subsidies and tax incentives for mining and processing industries.
Environmental and labour standards that, while often weak and costly in social and ecological terms, allowed for very low production costs and rapid scaling.
Deliberate technology transfer via joint ventures: foreign firms were allowed to build refining and manufacturing plants in China, bringing expertise that Chinese firms internalised over time.

Rare earths illustrate the pattern. China had substantial reserves but lacked efficient separation and processing technologies. Through cooperation and joint ventures with Japanese and U.S. firms, China absorbed the know how, built operational experience in its own plants, improved processes step by step, and eventually outcompeted many foreign producers on cost and scale.

By the late 1990s, China already dominated supply in several niche minerals such as antimony, tungsten and rare earths. At the time, these were not yet framed as critical by most of the world, but Beijing treated them as such.

3.2. Consolidation and vertical integration (2000–2020)

In the 2000s and 2010s, China moved from being a dominant supplier to becoming a systemic hub:

It consolidated fragmented industries into a smaller number of large state backed or state aligned companies, especially in rare earths.
It invested heavily in refining and chemical processing, often more aggressively than in mining itself.
It launched broader industrial and geoeconomic policies, including Made in China 2025, the Belt and Road Initiative (BRI) and the more recent Dual Circulation framework, that explicitly linked leadership in EVs, batteries, renewables and high tech manufacturing to secure access to critical inputs.

At the same time, Chinese firms went abroad:

Acquiring or financing mines in Africa (copper, cobalt, lithium),
Buying stakes in lithium producers in South America,
Investing in iron ore, bauxite and other bulk commodities in Brazil, Guinea and elsewhere.

The pattern is consistent, even when the ore is outside China, a large share of value-added processing and technology manufacturing is anchored inside Chinese territory or within Chinese corporate networks.

3.3. Strategic use of export controls and policy tools

Once established as the key supplier, China has not hesitated to use its position as a policy lever:

The 2010 rare earths dispute with Japan showed that export restrictions, even informal or temporary, could have major signalling power, prompting global concern about over-dependence.
In 2023, Beijing introduced new export controls on gallium and germanium, widely interpreted as a response to Western restrictions on high end chips and manufacturing equipment. These measures highlighted the asymmetry, while the West controls much of the cutting-edge chip ecosystem, China controls key material inputs.

Officially, many of these measures are framed in terms of resource conservation and environmental protection. In practice, they also serve as geoeconomic instruments, they remind trading partners that access to certain critical inputs can no longer be taken for granted.

4. The legitimacy and narrative layer: how the world perceives this dominance

For many years, global debates treated Chinese dominance in critical minerals as a technical fact, not a political vulnerability. That has changed.

The 2010 rare earths episode, the 2023 export controls, the new wave of tariffs in the U.S.–China trade confrontation, and the shift in public debate towards economic security and strategic autonomy have altered the narrative:

In the U.S. and EU, critical minerals are now widely recognised as security issues, not only trade topics.
Policy documents and strategic reviews talk about dangerous dependencies, echoing language previously applied to Russian gas.
The analogy with OPEC and oil appears frequently in public debate, with China cast as the pivotal supplier in the new resource story.

At the same time, China presents its role as the natural outcome of hard work, investment and industrial policy, not as a threat. Chinese commentators often argue that Western countries willingly offshored polluting industries and are now dissatisfied with the consequences. This narrative competition matters: it shapes how producer countries in Africa, Latin America and Asia interpret offers of partnership and pressure to derisk from China.

For mining companies caught in the middle, the legitimacy question becomes twofold:

Are we operating responsibly (ESG, communities, environment)?
And are we seen as operating within which strategic ecosystem (Chinese, Western, hybrid)?

5. Implications for capital and strategy

China’s concentration of mining and, above all, refining capacity has three major implications for investors and boards.

5.1. Supply risk is now structurally geopolitical

For Western economies, the risk is no longer simply one of price volatility; it is one of single point dependency. A sudden disruption in Chinese exports of certain rare earths, battery materials or minor metals could:

Affect defence supply chains and advanced manufacturing, including advanced electronics, sensors and guidance systems.
Disrupt critical infrastructure for advanced technologies, from data centres and telecommunications networks to high end industrial equipment.
Delay grid investments and large-scale renewable deployments.
Slow down the rollout of electric vehicles and storage solutions.

This is why the U.S., EU, Japan and others are now building strategies of diversification and resilience, reopening or supporting mines and refineries at home, investing in projects in trusted jurisdictions, and exploring substitution and recycling.

For investors, this means that jurisdiction and midstream exposure are now as important as ore grade and cash cost.

5.2. Opportunity and complexity in alternative supply chains

The effort to diversify away from over-reliance on China creates opportunities:

Projects in Australia, Canada, the U.S., the EU and selected emerging markets can position themselves as alternative suppliers in rare earths, lithium chemicals, graphite, cobalt refining and beyond.
Partnerships that combine secure geology, predictable regulation and credible ESG standards are likely to attract public and private capital aligned with diversification agendas.

Yet the path is not straightforward:

Building new refining capacity is capital intensive, heavily regulated and slow.
Social licence and permitting processes in many democracies are complex, creating their own invisible blocks .
Producer countries in Africa and Latin America increasingly want value added at home, not only extraction, which complicates purely Western reshoring scenarios.

Capital that wants to play this diversification theme must therefore be ready for long timelines, policy risk and multiactor negotiations.

5.3. New bargaining space for resource countries

China’s dominance also creates leverage for resource-rich countries:

They can auction access and partnerships between Chinese, Western and regional investors.
They can use critical minerals as a basis for demanding infrastructure, technology transfer and downstream investments.
They can explore multipartner constellations that avoid excessive dependence on any single buyer.

The risk is that intensifying competition turns into unmanageable pressure, unstable contracts or governance challenges. The opportunity is to use this moment to lock in better terms and long term development strategies.

6. Open questions for boards and decision-makers

From a Geopolitical Mining lens, China’s strategic concentration in critical minerals raises several questions that serious investors should keep on their board agendas:

How exposed is our portfolio to Chinese-controlled refining and midstream, even when our mining assets are elsewhere?
Are we building projects and partnerships that are compatible with both diversification agendas in the West and development priorities in producer countries?
What happens to our risk profile if export controls or sanctions extend into new critical minerals, beyond gallium and germanium?
How do we factor in the possibility of a more multipolar refining landscape in 10–15 years, without assuming that China’s central role will disappear?

China’s strategy shows what it looks like when a state treats critical minerals as part of the core architecture of the modern life it envisions: planned, built and lived around secure material foundations, rather than as a secondary issue.

For everyone else, the task is to understand that logic clearly, and then decide where and how to position within a system where materials, midstream and narratives now move together.