The Global Critical Mineral Race — US, EU, and China Strategies for Energy Transition Supremacy

The Race That Will Define the Century

The global competition for critical minerals has become the defining industrial and geopolitical contest of the early twenty-first century. The energy transition, the shift from fossil fuels to renewable energy sources and electric vehicles, requires a massive expansion in the production and processing of minerals including lithium, cobalt, copper, nickel, manganese, graphite, and rare earth elements. The International Energy Agency has estimated that meeting global climate targets will require a quadrupling of mineral inputs by 2040 compared to 2020 levels. For some minerals, the required increase is even more dramatic: lithium demand could grow by over forty times, cobalt by more than twenty times, and graphite by more than twenty-five times.

This demand surge collides with a supply landscape defined by extreme geographic concentration and Chinese dominance. China controls 60-90% of global processing capacity for most critical minerals, regardless of where those minerals are mined. The Democratic Republic of Congo produces approximately 70% of the world's cobalt. Indonesia dominates nickel production. Chile and Australia lead in lithium. This concentration creates supply chain vulnerabilities that governments in Washington, Brussels, and Tokyo have identified as existential threats to their economic competitiveness and national security.

The result is a three-way race among the United States, the European Union, and China, each pursuing strategies to secure mineral access, build processing capacity, and create supply chains that serve their own industrial bases. This race is reshaping trade policy, diplomatic relationships, industrial strategy, and investment flows across the globe. Africa, as the continent with the largest untapped mineral endowment on Earth, sits at the centre of this competition.

US Strategy: IRA and Beyond

The United States has deployed a battery of policy tools to address its critical mineral vulnerabilities, with the Inflation Reduction Act of 2022 serving as the centrepiece of a broader strategy that encompasses trade policy, diplomatic engagement, and development finance.

The IRA's critical mineral provisions are designed to reshape global mineral supply chains by creating powerful financial incentives for sourcing minerals from the United States and its allies rather than from China. The Act's electric vehicle tax credit, worth up to $7,500 per vehicle, is conditioned on the sourcing of battery minerals: a minimum percentage of critical minerals must be extracted or processed in the United States or a country with which the US has a free trade agreement (FTA), and battery components must be manufactured or assembled in North America. These percentages ratchet upward annually, reaching 80% for critical minerals by 2027.

Critically, the IRA includes "Foreign Entity of Concern" (FEOC) restrictions that effectively exclude minerals processed by Chinese companies from qualifying for tax credits, regardless of where those minerals are mined. Starting in 2025, vehicles containing battery components manufactured or assembled by a FEOC are ineligible for the clean vehicle credit. Starting in 2024, vehicles containing critical minerals extracted, processed, or recycled by a FEOC are similarly excluded. These provisions create a powerful incentive for automakers and battery manufacturers to build supply chains that bypass Chinese processing entirely.

Beyond the IRA, the US strategy encompasses the Mineral Security Partnership (MSP), launched in 2022 to coordinate allied investment in mineral supply chains. The MSP brings together the United States, Australia, Canada, the EU, Finland, France, Germany, India, Italy, Japan, Norway, the Republic of Korea, Sweden, and the United Kingdom. The partnership's objective is to accelerate the development of diverse, sustainable critical mineral supply chains through coordinated investment in mining, processing, and recycling projects. The MSP has identified priority projects across multiple continents, including several in Africa that align with Lobito Corridor development objectives.

The Defense Production Act (DPA) has been invoked to support domestic critical mineral production, authorising federal investment in mining and processing facilities. Executive orders on supply chain resilience have directed agencies to identify vulnerabilities and develop mitigation strategies. The Department of Energy's Critical Materials Institute conducts research on mineral processing technologies and recycling methods. Collectively, these instruments create a comprehensive policy architecture for critical mineral security.

EU Strategy: The Critical Raw Materials Act

The European Union's Critical Raw Materials Act (CRMA), adopted in 2024 after two years of development, establishes the most comprehensive regulatory framework for mineral supply chain security of any jurisdiction. The CRMA sets binding targets, creates institutional mechanisms, and defines strategic objectives that will shape European mineral policy for decades.

The CRMA establishes four benchmark targets for 2030. First, at least 10% of the EU's annual consumption of strategic raw materials should be met by domestic extraction. Second, at least 40% should be met by domestic processing. Third, at least 25% should come from recycling. Fourth, no more than 65% of the EU's consumption of any strategic raw material should come from a single third country. This fourth target is the most strategically significant, as it directly addresses the concentration risk created by Chinese processing dominance and DRC cobalt production dominance.

The CRMA creates a list of strategic and critical raw materials, establishes permitting timelines (24 months for processing, 27 months for mining), requires member states to develop national mineral exploration programmes, and mandates risk preparedness including strategic stockpiling. The Act also creates a framework for "strategic partnerships" with resource-rich third countries, providing a diplomatic tool for securing mineral access through bilateral agreements linked to trade, investment, and development assistance.

The CRMA's relationship to the EU Global Gateway initiative is direct. Global Gateway provides the investment vehicle for the infrastructure that makes CRMA compliance possible. The Lobito Corridor, financed through Global Gateway, creates the transport infrastructure that enables DRC and Zambian minerals to reach European markets through non-Chinese channels. Without the physical infrastructure to move minerals from mine to market, the CRMA's diversification targets remain aspirational. This infrastructure-regulation nexus is the strategic core of the EU's approach.

China's Dominance and Defence

China approaches the critical mineral race from a position of overwhelming strength, but also increasing vulnerability. Beijing's dominance over mineral processing, built over two decades of strategic investment, gives China unparalleled leverage over global supply chains. But the very fact that the US, EU, and allied nations are now mobilising to diversify away from Chinese processing threatens to erode the market share and strategic influence that China has built.

China's critical mineral strategy rests on four pillars. The first is upstream asset acquisition, primarily in Africa and Latin America, securing physical ownership of mineral deposits. The second is midstream processing dominance, maintaining China's position as the world's dominant refiner of cobalt, lithium, rare earths, and other minerals. The third is downstream integration, connecting mineral supply chains to Chinese manufacturing of batteries, electric vehicles, solar panels, and other green technology products. The fourth is strategic stockpiling, maintaining government reserves of critical minerals that provide a buffer against supply disruptions and a tool for market influence.

Beijing has responded to Western diversification efforts with both defensive and offensive measures. On the defensive side, China has imposed export restrictions on gallium, germanium, and graphite, signalling its willingness to use mineral supply as a geopolitical weapon. These restrictions, announced in response to US semiconductor export controls, demonstrate that China views mineral dominance as strategic leverage to be deployed in broader geopolitical negotiations. On the offensive side, Chinese companies have accelerated acquisitions of mineral assets globally, seeking to lock up supply before Western diversification efforts reduce Chinese market access.

China's mineral strategy is also adapting to the changing competitive landscape. Chinese companies are increasingly investing in local processing facilities in African host countries, responding both to resource nationalism demands for in-country value addition and to the recognition that Western FEOC restrictions reduce the value of minerals processed in China for export to Western markets. By establishing processing capacity in Africa, Chinese companies can potentially circumvent FEOC restrictions while maintaining control over mineral supply chains. This strategic adaptation creates new complexities for Western policymakers seeking to use trade rules to redirect mineral flows.

Mineral Alliances and Friend-Shoring

The concept of friend-shoring, building supply chains through allied and like-minded nations rather than adversarial ones, has become a central organising principle of Western critical mineral strategy. Multiple alliance structures have emerged to operationalise this concept.

The Mineral Security Partnership (MSP), involving 14 nations and the EU, is the broadest multilateral framework. The MSP coordinates investment in mining, processing, and recycling projects that diversify supply away from China. The partnership has identified priority projects across Africa, Latin America, Southeast Asia, and other regions, and member states have committed to co-finance projects that serve collective supply chain security objectives.

The US-EU Trade and Technology Council (TTC) includes a critical minerals working group that coordinates transatlantic approaches to mineral security. The TTC has facilitated negotiations toward a US-EU critical minerals agreement that would allow EU-sourced minerals to qualify for IRA tax credits, addressing one of the most significant transatlantic trade frictions created by the IRA's FTA-based sourcing requirements.

Bilateral mineral agreements between the US and individual allied nations create additional layers of supply chain coordination. The US has concluded or is negotiating critical mineral agreements with Japan, Australia, the UK, and several other allies. These agreements establish frameworks for mineral trade, investment protection, and supply chain information sharing that support the friend-shoring objective.

The friend-shoring concept faces a fundamental tension: the minerals that Western nations need are often located in countries that are not natural allies of the West. The DRC, which holds 70% of global cobalt reserves, is not a liberal democracy with a robust rule of law. Zambia, while more democratic, faces governance challenges. The friend-shoring framework must accommodate the reality that critical mineral geography does not align neatly with geopolitical alliances, requiring pragmatic engagement with resource-rich countries regardless of their governance profiles.

IRA Mineral Sourcing Provisions

The Inflation Reduction Act's mineral sourcing provisions deserve detailed examination because they represent the most consequential policy intervention in global mineral markets in decades. The Act's clean vehicle credit creates a financial incentive structure that is reshaping investment decisions, supply chain architecture, and diplomatic relationships across the mineral industry.

The clean vehicle credit of up to $7,500 is divided into two components of $3,750 each: a critical minerals component and a battery components component. To qualify for the minerals component, a minimum percentage of the value of critical minerals contained in the battery must have been extracted or processed in the United States or a country with which the US has a free trade agreement, or recycled in North America. This percentage began at 40% in 2023 and increases annually to reach 80% by 2027.

The FEOC restrictions add a binary exclusion on top of the percentage requirements. From 2024 onward, a vehicle is entirely ineligible for the critical minerals component if any of the critical minerals were extracted, processed, or recycled by a FEOC. From 2025, the same exclusion applies to battery components manufactured or assembled by a FEOC. The definition of FEOC encompasses entities owned by, controlled by, or subject to the jurisdiction of China, Russia, North Korea, and Iran. This means that any mineral that passes through a Chinese processing facility at any stage of the supply chain disqualifies the entire vehicle from the relevant tax credit component.

The practical implications are enormous. Most of the world's cobalt is currently refined in China. Most lithium hydroxide is processed in China. Most graphite is purified in China. The FEOC restrictions mean that automakers seeking the full $7,500 credit must build entirely new supply chains that bypass Chinese processing at every stage. This requirement is driving massive investment in alternative processing capacity in the US, Europe, Australia, Canada, and Africa, creating the diversification that the IRA is designed to achieve.

For African mineral producers, the IRA creates both opportunity and complexity. Minerals mined in the DRC or Zambia can qualify for IRA credits if they are processed outside of China and outside of Chinese-owned facilities. This creates incentives for Western companies to invest in African processing facilities, potentially accelerating the in-country value addition that African governments have long demanded. The Lobito Corridor benefits directly: minerals transported through Western-backed infrastructure to non-Chinese processing are more likely to qualify for IRA credits than minerals shipped through Chinese-controlled supply chains.

Africa's Pivotal Role

Africa's role in the global critical mineral race is defined by a simple geological reality: the continent holds vast reserves of the minerals that the energy transition requires, and those reserves are less developed than mineral deposits elsewhere, offering significant expansion potential. The DRC's cobalt and copper deposits, Zambia's copper reserves, Zimbabwe's lithium, Tanzania and Mozambique's graphite, Madagascar's nickel, South Africa's manganese and platinum group metals, and emerging rare earth deposits in Angola and other countries collectively position Africa as the indispensable continent for the energy transition.

This geological centrality gives African governments unprecedented leverage in the mineral race. Both China and the Western alliance need African minerals, and the competition between them creates bargaining power that African leaders are increasingly willing to exercise. The DRC's strategic mineral reserve board, Zambia's mining code revisions, and Zimbabwe's lithium export ban all reflect the growing confidence of African governments in asserting control over their mineral wealth.

However, Africa's leverage is constrained by several factors. The continent's infrastructure deficit limits the rate at which mineral production can expand. Processing capacity remains minimal, meaning that most African minerals are exported as raw concentrates regardless of who extracts them. Political instability in key mineral-producing regions creates investment risk that favours incumbent operators over new entrants. And the sheer scale of Chinese incumbency in African mining means that diversification is a generational project, not a quick fix.

The mineral race also creates risks for Africa. The intense competition for mineral access could fuel corruption, as external powers bid for concessions from governments with limited institutional capacity to manage competing offers transparently. The focus on extractive industries could reinforce the commodity dependence that has historically limited African economic diversification. And the environmental and social costs of expanded mining, from community displacement to water pollution to artisanal mining hazards, will be borne by African communities regardless of which external power finances the extraction.

The Shape of the Race Ahead

The global critical mineral race is accelerating. Demand growth, driven by EV adoption and renewable energy deployment, is outpacing supply expansion for several key minerals. Processing bottlenecks are tightening as Chinese export restrictions and Western FEOC rules create parallel supply chains that reduce overall system efficiency. Investment is flowing at unprecedented volumes into mineral exploration, mine development, and processing facility construction, but the lead times for new mining and processing projects, typically five to fifteen years, mean that the supply-demand balance will remain tight through at least the early 2030s.

Three scenarios define the range of possible outcomes. In the successful diversification scenario, Western investment in alternative mining and processing capacity matures, creating viable supply chains independent of Chinese control. The Lobito Corridor functions effectively, African processing capacity expands, and the IRA and CRMA achieve their objectives. Chinese dominance erodes gradually, and a multipolar mineral supply system emerges. In the persistent Chinese dominance scenario, Western diversification efforts prove insufficient, Chinese incumbency advantages compound, and Beijing maintains controlling influence over mineral supply chains despite Western policy interventions. In the fragmented system scenario, the mineral market splits into parallel blocs, with Chinese-processed minerals serving Chinese and non-aligned markets while Western-processed minerals serve US and European markets at higher cost and lower efficiency.

The most likely outcome is a hybrid of these scenarios, varying by mineral and geography. For some minerals, such as lithium, where multiple non-Chinese sources exist and processing technology is more accessible, diversification will proceed relatively smoothly. For others, such as rare earths and graphite, where Chinese dominance is most entrenched, the path to diversification is longer and more uncertain. The Lobito Corridor's strategic significance lies in its potential to shift the balance for cobalt and copper, two of the minerals most central to the energy transition and most concentrated in the DRC-Zambia Copperbelt that the corridor serves.