In December 2024, China’s ban on exports of gallium, germanium, and antimony to the United States sent shockwaves through the global mining industry. Prices for these critical minerals skyrocketed, underscoring China’s stranglehold on the sector. The ban highlighted China’s dominance in the graphite supply chain, 87% of rare earths refining, 70% of cobalt refining, and 60% of battery-grade lithium refining. This move was a stark reminder of China’s leverage in the global market, a leverage that was further emphasized when trade tensions escalated in February 2025, leading to expanded controls over key critical mineral exports.
The ripple effects of these actions have been profound. At least 20 countries have responded by creating critical mineral lists, outlining their investment priorities for diversifying supply or onshoring value-added processes. However, these lists have largely failed to curb China’s dominance over critical mineral refining and processing. The question remains: how can these lists be made more effective?
The answer lies in restructuring these lists to include clear fiscal and regulatory incentives. Achieving clarity in goals and support would aid private investor efforts to move critical mineral-related manufacturing out of China. But to do this, countries need to understand what makes a mineral critical. The definition of critical minerals has evolved significantly over the past two decades. While the original list created by Spain included ornamental rocks and coal, today’s critical minerals are often tied to green energy technology. However, a survey of 20 lists from developed and developing countries reveals a more complicated picture. Only six of the fourteen most commonly listed minerals see significant end-use in clean energy and climate-related sectors. Germanium, at the center of the recent US-China dispute, isn’t even on the list and isn’t primarily used for clean energy purposes.
Countries determine whether a mineral is critical using formulas that consider factors including domestic economic importance, global demand, and supply chain risk. Strategic relevance and substitutability are also considered. Yet, many critical mineral lists are recent creations, and their effects are still unclear. Early signs are not encouraging. Only seven lists are accompanied by frameworks for public investment in critical mineral mining and refineries. Despite significant incentives, low critical mineral prices have made it challenging to translate intentions into increased mineral production. Most critical mineral lists do not lean into assessing comparative advantages in mineral extraction or processing, nor are they accompanied by legal reforms that would de-risk investment. They also lack fiscal incentives to make downstream processing, refining, and manufacturing competitive with China.
This situation can be changed. If countries restructure their lists to map out how they will address their critical mineral vulnerabilities, they could play a key role in creating more balanced supply chains. Indonesia’s success in transitioning from extraction to downstream processing of nickel offers a compelling example. By banning nickel ore exports in 2020, Indonesia forced Chinese refiners to move production to the country, significantly increasing its share of global refined nickel production. Thailand’s success in localizing EV production by attracting investment from Chinese firms provides another good template.
To avoid continuing critical minerals concentration, other countries should decide if mineral extraction or onshore value-added processes are a priority. Some country lists already envision this shift, but more can be done to make this divide clearer to facilitate more targeted fiscal and policy incentives. Imagine Country A as a significant producer of copper ore which has struggled to onshore processing and refining of the raw material. Its critical minerals list might indicate a willingness to offer favorable factory sites and tax credits for investments in copper refining joint ventures and outline a plan to raise export barriers. Country B’s list may express interest in diversifying its sources of refined copper beyond China and offer concessional loans to refining ventures in third countries. Country A and Country B would have an ideal match facilitated by effective use of critical mineral lists.
The last stage for countries with restructured lists is to catalyze such matches. This could happen bilaterally, or within a forum like the Minerals Security Partnership. In the equilibrium outcome, each country would sign agreements that it prefers to any other option. Critical mineral lists are not tools of the energy transition. They are tools of geopolitical competition with the potential to rectify imbalances in global development and industrial supply chains. To fulfill that potential, countries need to reconsider the kinds of information they provide in their critical mineral lists and how they use them to communicate preferences and objectives.