Different Minerals, Different Strategies

Batteries, semiconductors, motors, and the energy systems that power them underpin the modern economy — from consumer electronics and vehicles to the electric grid and defense systems. The minerals that enable these technologies are therefore increasingly viewed through an economic and national security lens, particularly as refining and processing remain highly concentrated geographically. Countries across the globe, including the United States, are seeking to diversify supply and expand domestic processing. However, diversification cannot follow a one-size-fits-all strategy: critical minerals differ sharply in market size, growth potential, supply concentration, processing technology, and market dynamics.

The chart below compares projected global demand and refining concentration for select critical minerals used across energy systems. Bubble size represents global demand, illustrating the wide variation in market scale, while the vertical axis shows the degree of geographic concentration in refining. Together, these dimensions provide a framework for grouping minerals into three archetypes with distinct investment challenges: strategic minor minerals, fast-growing commodities, and heavily traded commodities.

Strategic minor minerals

Though relatively small markets, minerals like gallium and rare earths are critical inputs to semiconductors, permanent magnets, defense systems, and other advanced technologies. Disruptions in these small mineral markets can have outsized consequences for much larger downstream industries. For instance, the global rare earths market is valued at less than $10 billion, yet disruptions in this market could pose a risk to an estimated $6.5 trillion per year of downstream production across automotive, energy, defense and other advanced technologies.

Despite their strategic importance, their small market size, high concentration, and exposure to supply-demand imbalances can make investments into these markets unattractive. Diversifying these supply chains may therefore require targeted interventions that create demand certainty, including strategic offtake, stockpiling, and partnerships with allied producing countries. Given their relatively small volumes, price support mechanisms could provide an efficient way to share investment risk.

Heavily traded commodities

Copper, aluminum, and nickel are some of the high-volume, globally traded minerals that have historically attracted substantial private investment while being less geographically concentrated. Today, investing and operating facilities that refine these minerals is increasingly difficult due to intense global competition and thin margins. For example, capital costs for nickel and copper refining projects in Indonesia and China, respectively, are roughly 70% higher outside the dominant producing regions. Further, regional subsidies or state-backed financing can further exacerbate these structural cost disadvantages and distort markets. Trade measures such as anti-dumping and countervailing duties or Section 232 tariffs could help domestic producers for certain commodities like copper and nickel by countering market distortions. 

Fast-growing commodities

Demand for lithium, cobalt, graphite, and silicon is growing quickly due to their use in batteries, semiconductors, power electronics, and other advanced technologies. That growth creates significant opportunities for new refining capacity. Yet new producers face challenges such as higher costs while buyers face disruption risks due to export controls and concentrated supply chains. At the same time, rapidly growing markets create space for new technologies and entrants to challenge incumbent processes. Emerging refining technologies could narrow cost disadvantages and compete with established production pathways, but doing so requires overcoming commercialization and scale-up risks. These markets therefore offer significant opportunities for commercially driven diversification that can improve the competitiveness of new supply and strengthen resilience without imposing costs that undermine the competitiveness of downstream products.

Matching interventions to each market

Building resilient mineral supply chains ultimately requires matching interventions to the economics of each market. Small strategic markets may require stronger public intervention; large commodity markets require competitive economics; and fast-growing markets offer greater scope for innovation and market-led approaches with tailored risk sharing support.

Across all three archetypes, however, the objective remains the same: create a repeatable market model in which competitive technology, credible demand, fit-for-purpose financing, and targeted public support work together to make diversified supply investable.