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The contest for critical minerals—lithium, cobalt, rare earths, and copper—has escalated into the defining geopolitical struggle of 2026. With the United States, China, and the European Union each deploying aggressive industrial and diplomatic strategies, the global supply chains that power the energy transition are fragmenting into rival blocs. Recent reports from ODI, S&P Global, and UNCTAD confirm that critical minerals supply chains are now the primary arena of US-China-EU strategic competition, with concrete policy moves and financing decisions being made in real time.
The Strategic Stakes: Why Critical Minerals Matter in 2026
Critical minerals are the building blocks of modern technology—from electric vehicle batteries and wind turbines to defense systems and artificial intelligence hardware. According to the International Energy Agency, global demand for lithium, cobalt, and rare earth elements has nearly tripled since 2020, and is projected to quadruple by 2050. The energy transition supply chains are now inseparable from national security considerations.
China currently dominates the midstream processing stage, controlling over 60% of refined lithium and nearly 80% of battery-grade rare earths. This structural advantage gives Beijing enormous leverage over global clean-tech manufacturing. The US and EU, recognizing this vulnerability, are racing to build alternative supply networks through bilateral deals, strategic reserves, and domestic processing incentives.
China's 15th Five-Year Plan: Cementing Dominance
Approved in March 2026, China's 15th Five-Year Plan (2026–2030) places energy and resource security at the center of national strategy. Premier Li Qiang's 2026 Government Work Report emphasized enhancing supply security capabilities, targeting 5.8 billion tons of standard coal in comprehensive energy production capacity. The plan aims to cement China's dominance by supplying over 60% of refined lithium and 80% of battery-grade rare earths by 2035.
China's strategy goes beyond extraction. It focuses on upgrading traditional industries, strengthening industrial chain autonomy, and advancing high-value-added processing of strategic minerals. Resource-rich provinces like Guangxi, Jiangxi, Guizhou, and Yunnan are aligning with this national vision, creating opportunities for global partners in technology and investment while maintaining Beijing's grip on critical processing nodes. The China rare earths export controls remain a potent geopolitical tool.
The US Response: Bilateral Deals and a Strategic Reserve
Under the second Trump administration, the United States has pursued an aggressive bilateral strategy. On February 4, 2026, the US hosted the 2026 Critical Minerals Ministerial, led by Secretary of State Marco Rubio and Vice President JD Vance, bringing together representatives from 54 countries and the European Commission.
Key outcomes included signing 11 new bilateral critical minerals frameworks or MOUs with countries including Argentina, Morocco, the Philippines, and the UAE. The US also launched FORGE (Forum on Resource Geostrategic Engagement) as the successor to the Minerals Security Partnership, and mobilized over $30 billion in US government financing for strategic minerals projects.
Notable among these is Project Vault, a $10 billion Export-Import Bank initiative establishing a US Strategic Critical Minerals Reserve to protect domestic manufacturers from supply shocks. The US also deepened cooperation with Australia and Japan, with combined support of $1.4 billion (Australia) and $2.2 billion (US) to diversify supply chains. A new Critical Minerals Supply Security Response Group has been established to coordinate efforts on priority minerals.
US-Ukraine Critical Minerals Deal
In April 2025, the US and Ukraine signed an agreement on the Establishment of a United States-Ukraine Reconstruction Investment Fund. The Dobra lithium project was the first announced, highlighting how the Ukraine critical minerals investment is becoming a strategic front in the broader geopolitical contest.
The EU's Critical Raw Materials Act: 60 Strategic Projects
The European Union is scrambling to catch up. The Critical Raw Materials Act (CRMA), which came into effect in May 2024, aims to secure the EU's supply of 34 critical raw materials, including 17 considered strategic. In the first call for strategic projects, the European Commission selected 60 projects from nearly 170 proposals—47 within the EU and 13 in third countries.
Most approved projects focus on extraction and processing, while only ten fall into the recycling category. The second call, which closed in early 2026, received over 160 applications, with 75 projects focusing on the battery value chain, 21 on rare earths for permanent magnets, and several on defense applications. The EU is also pursuing bilateral partnerships, notably with resource-rich countries in Africa and Latin America.
However, the EU remains heavily dependent on imports: 100% of its heavy rare earths come from China, 99% of its boron from Turkey, and 71% of its platinum from South Africa. The EU critical raw materials strategy faces an uphill battle against China's entrenched processing infrastructure.
Fragmentation of Global Supply Chains
The competing strategies of the three powers are fragmenting global supply chains. According to UNCTAD's Trade and Development Foresights 2026 report, world merchandise trade growth is projected to fall from 4.7% in 2025 to between 1.5% and 2.5%, partly due to geopolitical tensions over critical resources. Developing economies are especially vulnerable due to dependence on imported fuels and food.
The 'Green Paradox' is also emerging: the environmental cost of extraction is rising, with UNEP warning of serious risks including greenhouse gas emissions, biodiversity loss, and human rights abuses. The UN's Panel on Critical Energy Transition Minerals, launched in April 2024, released a 'how-to guide' for a just and sustainable transition, built on principles of human rights, environmental integrity, and equity.
Expert Perspectives
The critical minerals race is reshaping industrial policy and resource diplomacy, with the Global South playing a pivotal role in determining where and how value is created in the energy transition, write Hany Besada and Nancy Abdelhadi in a March 2026 analysis for the London School of Economics. They argue that true power comes not from mining but from controlling midstream processing and refining, where China holds significant structural advantages.
UNCTAD sees this as a major development opportunity for resource-rich developing countries, noting that local cobalt processing in the DRC nearly tripled export value from $167 million to $6 billion in 2022. However, the Global South critical minerals bargaining power remains constrained by infrastructure and financing gaps.
Frequently Asked Questions
What are critical minerals?
Critical minerals are non-fuel materials essential to modern economies—especially for energy, defense, and technology—whose supply is at risk due to limited availability or geopolitical factors. They include lithium, cobalt, rare earths, nickel, graphite, and copper.
Why is China dominant in critical minerals processing?
China invested early and heavily in refining and processing infrastructure, building a structural advantage that now sees it control over 60% of lithium refining and nearly 80% of rare earth processing. Its 15th Five-Year Plan aims to maintain this dominance through 2035.
What is the US doing to reduce dependence on China?
The US is signing bilateral critical minerals agreements with allies, launching FORGE as a successor to the Minerals Security Partnership, and establishing a $10 billion Strategic Critical Minerals Reserve under Project Vault. Over $30 billion in government financing has been mobilized.
How is the EU responding?
The EU's Critical Raw Materials Act (CRMA) has selected 60 Strategic Projects to boost domestic extraction, processing, and recycling. A second call for projects closed in early 2026 with over 160 applications. However, the EU remains heavily import-dependent for most critical minerals.
What are the risks for developing countries?
While critical minerals offer development opportunities, risks include environmental degradation, human rights abuses, and dependency on foreign processing. The UN has called for fair governance frameworks to ensure resource-rich countries benefit equitably.
Conclusion: A New Geopolitical Landscape
The critical minerals arms race is redrawing global power lines in 2026. With China entrenched in processing, the US building an alliance-based alternative, and the EU struggling to catch up, the world is witnessing the emergence of parallel supply chains. The outcome will determine not only the pace of the energy transition but also the balance of economic and military power for decades to come. As ODI, S&P Global, and UNCTAD reports confirm, the decisions made today on lithium, cobalt, and rare earths will shape the geopolitical architecture of the 21st century.
Sources
- US State Department: 2026 Critical Minerals Ministerial
- Australian Government: US-Australia Critical Minerals Cooperation
- UNCTAD Trade and Development Foresights 2026
- China's 15th Five-Year Plan: Critical Minerals Sector
- LSE Business Review: The New Critical Minerals Race
- EU Second Call for Strategic CRM Projects
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