Critical Raw Materials Supply Chains and Geopolitical Risks
By İpek Kara | 23 September 2025
Summary
China controls over 60% of the global refining capacity for critical raw materials and dominates the supply chains for cobalt, lithium, and graphite.
The EU and US remain highly dependent on Chinese exports due to their limited domestic production systems. Both aim to pursue diversification through partnerships, legislation, and recycling technologies and innovation investments.
Export restrictions in China, combined with the rise of resource nationalism in Africa and Latin America, may lead to supply chain disruptions, drive price volatility, and trigger geopolitical realignment in the global market.
Critical raw materials (CRMs), such as lithium, cobalt, and boron, are essential for renewable energy, defence systems, and semiconductors, making them central to sustainability efforts, Artificial Intelligence, and quantum technologies. Between 2023 and 2025, China’s export restrictions on 7 CRMs-including gallium, germanium, and graphite, highlight their strategic use in diplomacy through control of the market supply. In August 2025, the United States (US) shared plans to reallocate USD 2b from the CHIPS Act to boost domestic CRM mining and processing, which was originally a fund to support semiconductor R&D and factory construction. The Ukraine-US Minerals Deal signed in April 2025 seeks to reduce reliance on China and strengthen the supply to be more “domestically-controlled”. The agreement obliges both sides to co-manage new projects and share revenues equally, making Ukraine a close ally of the US in the Chinese-dominated market.
In March 2024, the European Commission launched 47 strategic projects under the Critical Raw Materials Act (CRMA) as a part of the Green Deal Industrial Plan, mobilising EUR 22.5b (USD 26.25b) in investments in order to mine at least 10% of CRMs domestically by 2030. The European Parliament's resolution of 10 July 2025 condemned China’s restrictions, highlighted the union’s vulnerabilities, and urged member states to stockpile and diversify their procurement. The Ukraine-US Minerals Act leaves the European Union (EU) facing challenges in developing alternatives. Ukraine holds 22 of the EU’s list of 34 CRMs, including continental Europe’s largest titanium and lithium reserves, which are critical for energy transition, EVs, aerospace, and defence. As a result, the Act leaves the EU reliant on China and the US for supply chain and their innovation capabilities in response to a lack of sufficient materials.
While the US benefits through domestic production and exports, China may seek closer ties with the EU. The joint EU-China Summit, held 24-25 July, was framed as a potential venue for exploring structural solutions to sanctions and trade limits. This shows the EU’s willingness for collaboration to diversify their trade agreements and not be heavily reliant solely on the US while trying to achieve their 2030 goals in the case where the US controls Europe’s most significant domestic resource through the Minerals Act.
In Africa and Latin America, nationalisation trends pose further risks to market volatility. In June 2024, Niger revoked Orano’s uranium licence, aiming for full state control. In Latin America, Chile requires state participation in lithium ventures through Codelco, while Bolivia’s presidential candidate Jorge Quiroga pledged to end the USD 2b joint lithium mining project of Russia and China if he wins the office in the upcoming elections. Declining external investments in these states creates uncertainties for future supply and may complicate US and EU diversification strategies, while China’s potential setback from Bolivia may open a negotiation chance for the US to get involved in different terms.
MiningWatch Portugal/Unsplash
Forecast
Short-term (Now - 3 months)
The CRM market is likely to experience price volatility as US-EU agreements and nationalisation trends shape investor sentiment.
Medium-term (3-12 months)
The EU and China are likely to reach limited accommodations on sanctions and restrictions to stabilise supply chains, while the African and Latin American nationalisation processes are likely to continue.
Long-term (>1 year)
The US is highly likely to consolidate CRM supply chains through alliances.
The EU is likely to remain dependent on imports, making CRMA goals highly unlikely to be reached.
