critical minerals Archives

The Expanding Toolkit

China has built a set of interwoven economic pressure tools over the past several years. The April 2025 licensing controls on seven medium and heavy rare earth elements (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium) established Beijing's capacity to restrict access to materials where it controls over 80 percent of global processing capacity. While some extraterritorial features of later 2025 measures were suspended until November 2026, the core licensing framework remains active. The April 2026 supply chain security regulations extend this framework. The Provisions on Security of Industrial and Supply Chains permit Chinese authorities to designate foreign entities as threats to industrial security and impose escalating responses including trade restrictions, investment blocks, and visa limitations. The criteria for designation are extensive and include acts as routine as complying with foreign export controls or sanctions.

The counter-extraterritorial provisions operationalise this trap. The Provisions on Countering Improper Extraterritorial Jurisdiction give Chinese authorities broad discretion to penalise companies that comply with foreign controls, without requiring proof of intent. Complying with European Union (EU) or United States (US) rules is sufficient grounds for designation. The practical consequences are hesitation, delayed investment decisions, and in some cases withdrawal from market positions that would otherwise support allied supply chain goals. The legal framework does not require companies to choose China. It requires them to avoid choosing against it.

Strategic Patterns and Objectives

This approach follows patterns established in earlier measures where Beijing arranged economic instruments in response to actions it opposed, whether on Taiwan, technology security, or alliance coordination. The consistent objective has been to encourage restraint among governments and self-censorship among firms without crossing into armed conflict. The G7 trade ministers addressed this in their May 2026 statement from Paris, expressing concern about economic coercion through export restrictions that risk supply chain disruptions, particularly for critical minerals, and undermine economic security and resilience. That G7 trade ministers felt compelled to address this directly in a formal communiqué reflects how far the issue has moved from technical trade policy into the domain of security strategy. Western policy frameworks have yet to fully institutionalise that shift. The strategic logic is to slow or complicate moves toward supply-chain independence in sectors including defence, electric vehicles, renewables, and advanced manufacturing. By concentrating leverage at processing chokepoints rather than raw material extraction alone, the approach creates costs that are asymmetric and difficult for individual states to absorb unilaterally.

Implications for Europe and Allied Partners

European states, including Italy, face direct exposure. Many industries remain dependent on Chinese processing capacity for critical minerals used in batteries, defence systems, and green technology. European defence procurement in particular relies on rare earth elements for guidance systems, radar, and propulsion technologies where alternative processing capacity outside China remains limited. The April 2026 regulations mean companies with exposure in both markets now face that compliance trap directly. The compliance trap does not affect companies in isolation. When one state faces economic pressure, others frequently hesitate to act in solidarity, which deepens instead of eases vulnerability. This fragmentation is what the regulatory framework exploits. But fragmentation is not inevitable. It reflects political incentives that individual states have so far been unwilling to override. Understanding why collective hesitation persists matters as much as documenting it.

North America illustrates both the exposure and the gap. American companies operating in China that comply with US forced labour due diligence or technology transfer requirements now risk designation under the new regulations. What a compliance officer treats as routine legal obligation, Chinese authorities may treat as a qualifying act. Canada's experiencefollowing the Meng Wanzhou arrest demonstrated how targeted pressure can leave a middle power with limited unilateral options, and the broader pattern holds: collective resistance breaks down as individual states calculate that bilateral accommodation is less costly than holding a common line. For middle powers, the compliance trap is easier to navigate collectively than alone. Canada's positioning on critical minerals compounds this. The advantage cited in recent policy discussions rests on extraction capacity, not processing capacity. Canada extracts. Others process. That is the specific gap the current regulatory leverage exploits.

Policy Considerations

Addressing this challenge requires treating economic coercion as structural, not periodic trade friction. Generic diversification language understates what that requires. Public investment should target processing capacity in allied jurisdictions directly, since extraction diversification alone does not address the chokepoint through which current leverage operates. For the G7 and EU, this means jointly funding processing infrastructure rather than leaving it to market incentives that have so far failed to close the gap. Within NATO, early warning and coordinated response mechanisms for economic coercion deserve the same institutional attention currently given to cyber threats. For companies, resilience planning should map exposure at the processing stage specifically, not just at the extraction or finished goods level, since that is where the compliance trap bites hardest. Due diligence frameworks and open market arrangements among allied and partner states would reduce the dilemmas companies currently face, but only if governments provide clarity on which compliance obligations take precedence and under what conditions. The compliance trap is a legal design. Dismantling it requires a legal and institutional response, not only a supply chain one.

Concluding Assessment

The April 2026 regulations add legal precision and institutional reach to a framework that has been developing for several years. The compliance trap they formalise is not a byproduct of competing regulatory systems. It is a structural feature designed to raise the cost of coordinated responses while remaining below the threshold of direct confrontation. The chokepoint is processing, not extraction, and current Western policy responses have not consistently targeted it. Treating these instruments with the same analytical seriousness as military or cyber threats is warranted, not because the risks are equivalent, but because the effects on industrial capacity, alliance cohesion, and strategic autonomy are consequential and harder to reverse. The vulnerabilities are understood. The processing gap is specific enough to act on. The question is whether policy follows analysis.

Authors: Dan Ziebarth, Ingrid Heggstad, Miguel Jiménez Admetlla, Michele Mignogna - Political Economy, development & Energy Security Team

Introduction

The need for critical minerals to achieve the energy transition cannot be stressed enough. According to the International Energy Agency, demand for these minerals will increase by a factor of four to sixfold. Just as with many other trends that begin to unfold, Africa holds the key since it sits on a vast supply of these resources. Yet, the way the continent approaches this matter could determine whether its history is rewritten or if there is a perpetuation of an uneven distribution of resource gains.

Several key indicators highlight Africa's importance in this context. More than half of African countries possess green minerals essential for the energy transition. Notably, the Democratic Republic of Congo boasts half of the world's cobalt reserves, crucial for batteries and electric vehicles. To fully leverage these resources, Africa must integrate its supply chain processes, capitalizing on value addition at every stage, from extraction to transportation.

Balancing a Just Transition for Africa: Challenges and Imperatives

Mineral supply chains typically involve four stages, which can broadly be divided into extraction, refining, production, and recycling. Currently, the vast majority of African countries export critical minerals in their primary form, trapping the continent in a cycle known as the primary commodity trap.

Accordingly, Africa perceives a tiny percentage of the overall benefits, with forecasts suggesting that this situation is unlikely to improve shortly. Out of the projected $8.8 trillion market value of global batteries and the supply chain of EVs, only $55 billion is expected to flow to Africa. Thus, there is an urgent need for substantial reforms. However, this goal conflicts with the interests of countries aspiring to lead in renewable energy transitions. Indeed, to maintain sustainable growth without compromising inputs, these nations are eyeing the continent’s supply of rare earths.

While ensuring that necessary minerals reach global markets is crucial for meeting climate agreements, the pioneers in energy transition such as the EU, the US and China ought to design climate policies which hold high standards. At the same time, even though some sort of protectionism has been put in place in the continent, this may be rather ineffective if ownership along the supply chain remains foreign. If the opposite occurs, it could turn out to be a Berlin Conference of the 21st century.

Co-opetition for Resources in Africa: The EU & China

Thus far, the EU has adopted the Critical Raw Materials Act (CRM Act) which sets ambitious targets for mineral processing, emphasizing reduced reliance on third countries. Precisely, it establishes targets for critical raw materials of meeting 10% of annual needs mined materials, 15% recycled materials, and 40% of materials processed in Europe by 2030 for minerals, while simultaneously not relying on a single third country for more than 65% for any material. Remarkably, two major roadblocks should be noted for the EU to achieve these targets.

The first involves intensifying global competition for resources in Africa, particularly about China. As the green transition progresses, states are increasingly reliant on critical minerals from Africa, fueling competition for influence over these strategic resources. Aware of the risks associated with overreliance on a single supply chain, African countries have strategically prioritised diversifying their mineral partnerships. This strategic recalibration has added another layer of complexity to the geopolitical landscape, as access to the supply chains of critical minerals becomes yet another arena for the intricate dynamics of great power rivalry to unfold.

International competition for access to critical minerals navigates through alliances and rivalry alike. Geopolitical manoeuvring by influential players such as the US, China, and the EU is intricately tied to securing and managing critical minerals' supply chains. China possesses a dominant position in producing and refining African critical minerals, giving it significant influence over supply chain dynamics and sparking concern among other key stakeholders such as the EU and the US. This influence is evident in regions like the Horn of Africa, where the evolving engagement of China and the EU reveals intersecting interests and potential for both competition and collaboration.

While China's growing economic presence in the region, driven by access to critical minerals and infrastructural projects, contrasts with the EU's emphasis on security initiatives and governance reforms, Chinese involvement has nonetheless produced benefits for infrastructural and economic development. Additionally, their security operations, including peacekeeping and anti-piracy efforts, have contributed to increased regional stability. These positive outcomes challenge prevalent negative narratives in the West regarding China's involvement in the region, offering the potential for cooperative influence and increased opportunity for strengthened stability in the region. Although it would require thorough preparation and collaborative endeavours, Chinese and European involvement in the Horn of Africa holds the potential for a mutually beneficial outcome.

Additionally, a second major consideration regarding the CRM Act is ensuring that local communities in Africa are safeguarded, while also supplying enough critical minerals to achieve targets. A common concern locally is that extractive industries, such as mining, will place several negative consequences on the environmental and social conditions in mining communities in Africa. To ensure a just transition, the mineral supply chain process must provide sufficient protection for mining communities in Africa to not harm or exploit them over the long term. Within this geopolitical context, African countries emerge not solely as suppliers of the critical minerals for the green transition but also as significant influencers in shaping global power dynamics.

As these countries strive to break free from the primary commodity trap, their choices concerning trade agreements, alliances, policies for resource extraction, and infrastructure expansion resonate throughout the entire supply chain. African countries’ involvement introduces a new dimension to international competition, where countries and blocs vie not only for access to critical minerals but also for influence over their strategic decisions.

Africa's mineral wealth forms an essential bedrock for industries worldwide, as the supply chain of strategic minerals extends across multiple facets in the development towards sustainable solutions. Therefore, countries depend on a consistent and unbroken supply of these minerals, wherein the evolution and dynamics of this supply chain can send shockwaves throughout the global economy and geopolitical landscape.

Conclusion

In conclusion, the continent, and the whole world, stands at a crossroads. The approach to African resource management will determine whether it can break free from historical patterns of exploitation. The goal, as stated in the African Green Minerals Development Strategy Approach Paper, is to guide Africa to strategically exploit the continent’s green mineral resources for industrialisation and to assert control over its destiny to create an African presence in emerging green technologies. A shift towards integrated supply chain management, sustainable extraction practices, and prioritisation of local community welfare is imperative to harness the full benefits of Africa's mineral wealth while mitigating adverse consequences.

In this context, international cooperation and strategic partnerships are essential to navigate the complexities of the evolving geopolitical landscape surrounding critical minerals and to ensure that the global shift to clean technologies does not come to the detriment of African communities.

Long story short, Africa's pivotal role in the global supply chain of critical minerals underscores the continent's potential to shape the trajectory of the energy transition and influence global power dynamics. By making informed choices and fostering cooperation, African countries can not only unlock economic opportunities but also play a significant role in shaping a more equitable and sustainable global future.

However, this potential comes with significant challenges and considerations.

The Strategic Logic of China’s April 2026 Supply Chain Regulations

The Expanding Toolkit

Strategic Patterns and Objectives

Implications for Europe and Allied Partners

Policy Considerations

Concluding Assessment

Africa’s Critical Minerals: Shaping the Future of the Energy Transition