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The global clean energy transition is redrawing the map of strategic resources. As the world moves away from oil, a new dependence is emerging — on critical minerals such as lithium, cobalt, graphite, and rare earths. In 2026, this shift has created a geopolitical landscape where supply chain concentration poses systemic risks comparable to the oil shocks of the 20th century. China controls over 60% of refined lithium and cobalt processing and roughly 90% of rare earth processing, while the United States, European Union, and Gulf states scramble to build domestic capacity through strategic partnerships and equity stakes. According to the WEF Global Risks Report 2026, geoeconomic confrontation is now the top near-term risk, with critical minerals at the heart of the new rivalry.
China's Dominance and the 15th Five-Year Plan
China's stranglehold on critical mineral supply chains is not accidental. Decades of deliberate state investment have built an unparalleled processing infrastructure. The 15th Five-Year Plan, unveiled in early 2026, explicitly reinforces this dominance. Beijing has tightened export controls on rare earths, tungsten, and antimony, triggering price spikes of up to sixfold and slashing European licensing approval rates below 25%, according to informedclearly.com. China now supplies over 60% of refined lithium and cobalt, roughly 80% of battery-grade graphite, and 90% of rare earth processing. The plan also targets a 17% reduction in carbon intensity and aims for non-fossil fuels to reach ~25% of energy consumption by 2030, while maintaining 200 million tonnes of annual crude oil production.
The US Response: FORGE and Project Vault
In February 2026, the United States hosted the Critical Minerals Ministerial, launching the Forum on Resource Geostrategic Engagement (FORGE) — a 54-nation coalition with over $30 billion in commitments. The event, led by Secretary of State Marco Rubio and Vice President JD Vance, also announced Project Vault, a $10-12 billion initiative to establish a domestic strategic reserve for critical minerals. The US signed 21 new bilateral critical minerals frameworks in five months, including deals with Argentina, the UAE, the UK, and Ukraine. The FORGE alliance creates a preferential trade-and-investment zone with coordinated price floors, chaired by South Korea. However, analysts warn that building independent processing capacity will take five to seven years and cost $30-50 billion, while China's dominance remains deeply entrenched.
The EU's Strategic Projects and Financing Gap
The European Union's Critical Raw Materials Act selected 60 Strategic Projects targeting lithium, graphite, cobalt, nickel, and rare earths. In 2026, the Commission announced the ReSourceEU Action Plan, allocating up to €3 billion ($3.5 billion) for critical raw materials supply, alongside regulatory fast-tracking. Yet financing volumes remain insufficient to meet diversification goals. The EU is also banning exports of waste lithium-ion batteries to non-OECD countries from September 2026 and imposing export restrictions on scrap permanent magnets. A new European Critical Raw Materials Centre, modelled on Japan's JOGMEC, will coordinate stockpiling and market intelligence. But the EU critical minerals strategy faces a credibility gap: without credible demand and pricing signals, private investment lags behind policy ambition.
Gulf States Enter the Race
Gulf states — particularly Saudi Arabia, the UAE, and Qatar — are leveraging sovereign wealth funds to secure mining assets abroad, especially in Africa, Latin America, and Central Asia. Saudi Arabia's Vision 2030 aims to unlock an estimated $1.3 trillion in untapped mineral wealth, including gold, phosphates, bauxite, and rare earth elements. The UAE has signed critical minerals partnerships with the US and invested in lithium projects in Argentina and Chile. These moves reflect a broader strategy to position Gulf economies as key players in the post-oil future, while also counterbalancing China's dominance. However, many projects remain at the planning stage, and the Gulf states critical minerals push adds another layer of competition to an already crowded field.
Supply Chain Vulnerabilities and the Risk of 'Mineral Shocks'
The concentration of processing in China creates chokepoints as strategically significant as the Strait of Hormuz for oil. An Atlantic Council stress test from 2025 simulated a Chinese export ban on three strategically vital minerals, finding that US stockpiles would be depleted within weeks, causing severe economic and defense impacts. NATO defense stockpiles currently hold only six to nine months of supply for conflict scenarios. EV production costs have already risen by up to $500 per vehicle due to rare earth price spikes. The ODI analysis warns that the gap between policy ambition and financing reality persists, and transatlantic fractures could further undermine collective resilience. As one expert put it: 'We are sleepwalking into a new era of resource dependency, but this time the weapons are not oil tankers but processing plants.'
Expert Perspectives
Olena Borodyna of the ODI notes that 2026 marks a decisive inflection point: 'China's 15th Five-Year Plan will reinforce its dominance, while the US and EU struggle to translate political will into financial commitment. The risk of transatlantic fractures reshaping alliances is real.' At the Council on Foreign Relations, analysts argue that the US cannot out-mine or out-fund China, and should instead pursue an innovation-centered strategy focused on recycling, material substitution, and waste-based recovery. The Forbes analysis similarly emphasizes that circularity could cut primary demand by up to 35% by 2035, offering a strategic pathway to resilience.
FAQ
What are critical minerals?
Critical minerals are raw materials designated by governments as essential for economic and national security, with vulnerable supply chains. They include lithium, cobalt, graphite, rare earth elements, and others needed for clean energy, defense, and technology.
Why is China dominant in critical minerals?
China has invested decades in building processing infrastructure, controlling over 60% of refined lithium and cobalt, roughly 80% of battery-grade graphite, and about 90% of rare earth processing. Its 15th Five-Year Plan reinforces this dominance through export controls and state-backed investments.
What is the FORGE alliance?
The Forum on Resource Geostrategic Engagement (FORGE) is a 54-nation coalition launched by the US in February 2026 to counter China's critical minerals dominance. It includes over $30 billion in commitments and creates a preferential trade-and-investment zone with coordinated price floors.
How are Gulf states involved in critical minerals?
Gulf states like Saudi Arabia and the UAE are using sovereign wealth funds to invest in mining assets abroad, particularly in Africa and Latin America, while also developing domestic processing capabilities. Saudi Arabia's Vision 2030 aims to unlock $1.3 trillion in mineral wealth.
What are the risks of critical mineral supply concentration?
Concentration creates chokepoints that can be weaponized, as seen with China's 2026 export controls causing sixfold price spikes. NATO defense stockpiles are sufficient for only six to nine months of conflict, and EV production costs have risen significantly.
Conclusion: A New Geopolitical Order
The scramble for critical minerals is reshaping alliances, driving new trade wars, and creating vulnerabilities as strategically significant as the 20th century's oil shocks. With China's dominance entrenched, the US and EU racing to catch up, and Gulf states emerging as new players, 2026 marks a decisive inflection point. The window for action is narrowing — analysts estimate 12 to 18 months before China's stranglehold becomes irreversible. Whether through innovation, recycling, or strategic partnerships, the world must adapt to a new energy-security order where minerals, not oil, define the balance of power.
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