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In February 2026, the United States launched the Forum on Resource Geostrategic Engagement (FORGE), a multilateral initiative backed by over $30 billion in financing, marking a decisive escalation in the global competition for critical minerals. This new scramble—encompassing lithium, cobalt, rare earths, and graphite—has become the defining geopolitical battleground of the decade, with demand for these minerals projected to multiply four to six times by 2040, driven by electric vehicles, AI data centers, and defense needs. As China tightens export controls and new state-backed entrants like Saudi Arabia and the UAE position themselves as neutral brokers, the world faces the risk of fragmented markets, price shocks, and a slowed energy transition.
Background: The Strategic Importance of Critical Minerals
Critical minerals are the building blocks of modern technology and clean energy. Lithium and cobalt power EV batteries; rare earth elements are essential for permanent magnets in wind turbines, drones, and missile guidance systems; graphite is crucial for battery anodes. The International Energy Agency's demand projections show that under current policies, lithium demand could grow fivefold by 2040, while graphite and nickel demand double. However, supply is dangerously concentrated: China controls 90% of global rare earth processing, 80% of tungsten, and 60% of antimony. This concentration creates acute vulnerability, as demonstrated by China's October 2025 export controls on 12 rare earth elements, which triggered sixfold price spikes and cut licensing approval rates for European firms below 25%.
The FORGE Initiative: America's $30 Billion Answer
On February 4, 2026, the U.S. Department of State hosted the inaugural Critical Minerals Ministerial in Washington D.C., with representatives from 54 countries and the European Commission. Secretary of State Marco Rubio announced FORGE as the permanent successor to the Minerals Security Partnership, chaired by the Republic of Korea. The initiative includes 11 new bilateral mineral frameworks with countries such as Argentina, Morocco, the Philippines, and the UAE.
Project Vault and Pax Silica
Central to FORGE is Project Vault, a $10 billion EXIM Bank-backed strategic reserve that allows companies to secure minerals at fixed prices, protecting against supply disruptions. An additional $250 million fund, Pax Silica, targets semiconductor supply chain resilience. Analysts estimate that full supply chain independence remains 5–7 years away, requiring $60 billion in investment over the next decade to diversify away from Chinese control. The U.S. critical minerals strategy also includes streamlined permitting for domestic mining projects and expanded partnerships with allied nations.
China's Rare Earth Leverage: Export Controls and the 15th Five-Year Plan
China's 2025–2026 export controls cover 12 rare earth elements, including neodymium, praseodymium, and dysprosium, which are vital for high-strength magnets. Beijing has also reduced mining quotas and implemented a licensing system that limits approvals for Western firms. These measures are part of China's 15th Five-Year Plan, which prioritizes self-sufficiency and strategic control over critical resources. Over 80% of European companies depend on Chinese supply chains for minerals essential to defense and clean energy. European defense contractors report critical shortages of neodymium magnets for missile systems, and analysts warn that rebuilding independent alternatives would take 20–30 years—far exceeding the current geopolitical window.
Weaponizing Control, Not Scarcity
A multi-institutional analysis published in early 2026 argues that China is weaponizing control—not scarcity—using temporary, reversible restrictions to maintain pricing power and extract concessions while preventing large-scale Western alternative investment. The study, integrating data from over 50 institutions including the European Parliament Research Service and CSIS, warns that Western nations face a narrow 12–18 month window to act decisively or accept prolonged vulnerability.
The EU's Critical Raw Materials Act: 60 Strategic Projects
The European Union's Critical Raw Materials Act (CRMA), adopted in 2024, aims to secure supply chains by designating 60 Strategic Projects for extraction, processing, and recycling. The first batch of projects was approved in March 2025, covering 14 critical materials including lithium, rare earths, cobalt, and graphite. However, financing remains a challenge. In December 2025, the European Commission announced up to €3 billion ($3.5 billion) in 2026 funding under its ReSourceEU Action Plan, including €250 million from the EIB for Vulcan Energy's lithium project in Germany. The EU also plans to establish a European Critical Raw Materials Centre modeled on Japan's JOGMEC to jointly purchase and stockpile materials. Despite these efforts, the EU Critical Raw Materials Act implementation faces hurdles: domestic extraction targets of 10% of annual consumption by 2030 remain ambitious, and permitting delays persist.
Gulf States: The New Neutral Brokers
Saudi Arabia and the UAE are emerging as decisive new forces in the critical minerals race, leveraging sovereign wealth funds and strategic geography. Saudi Arabia has upgraded its mineral wealth estimate to $2.5 trillion and aims to mobilize $100 billion in mining investments by 2035 through Vision 2030. Its Manara Minerals joint venture has acquired strategic stakes in copper, nickel, lithium, and rare earth assets globally. The UAE's sovereign funds, including ADQ and Mubadala, have committed at least $3 billion through partnerships targeting lithium and rare earths across Africa, Asia, and Latin America.
Triangulation Strategy
Gulf states are positioning themselves as neutral yet critical intermediaries, maintaining ties with both China and the West. This triangulation strategy allows them to offer Western allies alternative supply chains while continuing to engage Beijing. The Gulf sovereign wealth funds critical minerals pivot carries significant geopolitical implications, potentially reshaping global supply chains and offering a buffer against bloc fragmentation.
Impact on Global Supply Chains and Climate Goals
The intensifying resource competition risks fragmenting global markets into competing blocs—a U.S.-led Western bloc, a China-centric Eastern bloc, and a potentially neutral Gulf-led bloc. Such fragmentation could slow the energy transition by raising costs and creating supply bottlenecks. The IEA's Global Critical Minerals Outlook 2025 warns that copper faces a 30% deficit by 2035, while lithium shows a 40% deficit under current investment trends. Meeting demand requires around $500 billion in mining investment through 2040 under the Stated Policies Scenario. Price volatility and supply disruptions could delay EV adoption and renewable energy deployment, undermining climate goals.
Expert Perspectives
"The launch of FORGE represents a paradigm shift in how the U.S. approaches resource security," said Dr. Sarah Ladislaw, a senior fellow at the Center for Strategic and International Studies. "But $30 billion is a down payment, not a solution. We need sustained investment and regulatory reform to build truly resilient supply chains." Meanwhile, Chinese analysts argue that export controls are a legitimate sovereign right. "China is not weaponizing resources; it is protecting its industrial base and ensuring sustainable development," stated Professor Li Wei of the China Institute of International Studies.
FAQ
What are critical minerals?
Critical minerals are raw materials essential for modern technologies, including lithium, cobalt, rare earth elements, graphite, and copper. They are vital for EV batteries, wind turbines, defense systems, and electronics.
Why is China's dominance a problem?
China controls 90% of rare earth processing and significant shares of other mineral supply chains. This concentration creates vulnerability to supply disruptions, price manipulation, and geopolitical leverage, as seen with the 2025 export controls.
What is the FORGE initiative?
FORGE (Forum on Resource Geostrategic Engagement) is a U.S.-led multilateral framework launched in February 2026 with over $30 billion in commitments to diversify critical mineral supply chains and reduce dependence on China.
How are Gulf states involved?
Saudi Arabia and the UAE are investing billions through sovereign wealth funds to acquire mineral assets globally, positioning themselves as neutral brokers that can supply both Western and Chinese markets.
Will the energy transition be slowed?
If supply fragmentation and price volatility persist, the energy transition could face delays. However, accelerated investment and international cooperation could mitigate these risks and maintain momentum toward climate goals.
Conclusion: A Defining Moment for Resource Geopolitics
The year 2026 marks a turning point in the global competition for critical minerals. With the U.S. launching FORGE, China tightening export controls, the EU struggling to finance its strategic projects, and Gulf states emerging as power brokers, the world is witnessing the formation of new resource blocs. The outcome of this scramble will determine not only the pace of the energy transition but also the geopolitical balance of power for decades to come. Policymakers must act swiftly to build diversified, resilient supply chains while avoiding the pitfalls of fragmentation that could undermine global climate cooperation.
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