Critical minerals are mined all over the world but the majority of the supply ends up passing through China. For a broad range of key metals and minerals, China is either the largest miner, the dominant refiner, or both. This is true for rare earths, lithium, cobalt, graphite, nickel, and many other metals and minerals that are essential to defense, energy and high-tech applications. It is less about where ores are dug out of the ground and more about where they are turned into usable components. In other words, Chinese processing plants are essentially the gatekeepers of global supply.
Australia and South America host much of the world’s lithium, while Congo supplies the lion’s share of cobalt and copper. But the rocks themselves can’t become a battery or magnet without intensive downstream processing and refining. China built those downstream industries at scale over decades through state support and investment. The result is clear — China has effectively monopolized refining for most critical minerals while the rest of the world depends on it for much-needed supply. China is listed as the dominant refiner for 19 of 20 minerals analyzed by the IEA in their Global Critical Minerals Outlook for 2025, making up roughly 70% of the global processing capacity overall.
How dominant is dominant? The numbers illustrate the scale and variety of China’s concentration. Data from 2024 shows China as the leading producer or processor for roughly 99% of gallium, 95% of magnesium, 83% of tungsten, 79% of graphite and over 69% of all rare earths. For battery materials, Chinese firms account for an overwhelming share of manufacturing capacity, giving China control over the upper and middle parts of the battery supply chain, even though much of the raw materials are sourced elsewhere.
Put simply: control of smelters and refineries is the chokepoint. Analysis from the United States Geological Survey shows how China’s share rises dramatically from mining to processing. Many minerals that are mined in other countries are still processed into a refined product within China. That clear advantage lets Chinese policy shifts ripple quickly through global supply and pricing — a growing threat for the West.
In fact, China has already weaponized its stronghold on the industry in ways that have triggered both concern and action from the United States government. Over the past couple of years, Beijing has imposed a series of export restrictions on critical minerals that have sounded alarms in Washington. These controls immediately tightened global supply for various essential materials, including gallium, germanium, silver, graphite, and certain rare-earth processing technologies. This caused semiconductor and defense firms to scramble for alternatives while exposing how dangerously dependent manufacturers are on Chinese supply.
These actions have shaped how Western governments view critical minerals. What were once perceived as simply commodities are now seen as strategic assets crucial to national defense. U.S. officials have become increasingly vocal about reliance on China for critical minerals and the associated risks, prompting government action to reduce exposure. These maneuvers include billions of dollars of investment into domestic production, executive orders empowering the Defense Production Act to boost U.S. mining and refining, and coordinated international initiatives to strengthen supply chains outside of China.
Meanwhile, while Western governments work to diversify away from dependence on Beijing, it’s the private sector that is moving most of the world’s critical minerals. The raw materials that feed Chinese smelters often move through the world’s major commodity trading houses. These traders, including commodity giants like Mercuria and IXM, source raw ores from Africa, South America, and Australia and then sell them into markets structured around Chinese processing. As long as that remains an industrial norm, the West will face clear obstacles.
Many of these firms are deeply embedded in China. Mercuria, for example, has carved out a business operation in China that is legally separate to their main Geneva-based entity. The company has set up a number of Chinese-based subsidiaries to directly engage with China’s valuable energy sector and has secured long-term energy and gas deals with notable state-owned enterprises. This allows Mercuria to integrate massive China-based operations with its international trading network. Beijing, also, may have given its vote of confidence to the firm when ChemChina, one of the country’s largest state-owned companies, purchased a 12% stake in Mercuria back in 2016. The benefits of being heavily involved within China’s dominant industrial and energy environment are clear, but the unpredictable geopolitical risks associated with it are less so.
IXM, too, has been notable player for the Chinese side of the industry. The trading arm of China Molybdenum, IXM is directly controlled by a major Chinese mining conglomerate and plays a central role in supplying cobalt, copper, and other critical minerals into Chinese processing chains. The firm has built a global network of offices and logistics infrastructure to move resources from Africa and South America into Chinese industrial markets, making it a key conduit between foreign resource extraction and China’s downstream dominance.
Such arrangements make these international trading houses both suppliers to, and partners with, Chinese processing. With the U.S. and its allies now seeing the concentration of mineral refining capacity in a single country as a vulnerability, traders deeply entrenched in China are now seen as bringing more risk rather than security. If the United States is serious about diversifying away from Chinese dependence and to protect its defense industrial base that sits on top of critical mineral supply chains, it must be cautious about doing business with Chinese traders deeply entrenched in Chinese state-owned enterprises and political influence.
For the West, securing critical mineral supply without reliance on China requires more than just sourcing mines in friendly countries. It requires alternative processing capacity, substantial long-term supply agreements, and coordination between policymakers and private traders who still move much of the world’s ore. Until those pieces are in place, Chinese smelters and refineries will remain the world’s primary mechanism of transforming raw materials into products used for defense and high-tech applications. And while that remains the case, the rest of the world will have to navigate through the geopolitical risks that are brought on by Beijing’s mineral dominance.
Kyle McCollum is a freelance geopolitical analyst based in Ohio. His main areas of focus include energy, commodities, and the Middle East.
This article was originally published by RealClearDefense and made available via RealClearWire.
