Geostrategic Critical Minerals Concentration and the Energy Exposure

There is a recurring argument in energy policy circles that the transition away from fossil fuels will reduce geopolitical risk. The logic appears sound on the surface: solar panels and wind turbines do not require continuous deliveries from politically unstable exporters, and electricity cannot be embargoed the way oil can. What the argument omits is that the manufacturing base for solar panels, wind turbines, electric vehicles, and grid-scale batteries depends on a set of mineral inputs whose processing is concentrated in a single country to a degree that dwarfs anything the oil market has produced.

The International Energy Agency's Global Critical Minerals Outlook 2025 provides the clearest quantification of this concentration available in the public domain. China refines approximately 91 percent of the world's rare earth elements, produces 94 percent of permanent magnets, and processes more than 90 percent of battery-grade graphite. For lithium and cobalt, the two minerals most directly linked to electric vehicle and grid storage expansion, China accounts for roughly 60 percent of global refining capacity.¹ These numbers do not describe a dependency that is years from materialising. They describe the condition that exists today, at the point when energy transition investment is accelerating fastest.

What the geostrategic map of mineral processing actually looks like

The standard framing of critical minerals risk focuses on where minerals are extracted. That framing is partially useful. The Democratic Republic of Congo produces roughly 70 percent of the world's mined cobalt; Australia and Chile account for the majority of lithium extraction; and deposits of rare earth elements exist across multiple continents. This geographic spread of extraction has led some analysts to characterise the critical minerals supply chain as diverse.

The extraction map, however, is not the risk map. The relevant question for corporate geopolitical risk assessment is not where minerals come out of the ground but where they are converted into usable materials. A cobalt deposit in the DRC, a lithium brine field in Chile, and a rare earth ore body in Australia all route through Chinese processing infrastructure before they enter the supply chains of battery manufacturers, motor producers, and electronics assemblers. The IEA projects that on current trajectories, China will supply more than 60 percent of refined lithium and cobalt through at least 2035, and close to 80 percent of battery-grade graphite and refined rare earth elements.² The transition from ore to usable material is where China's structural position becomes decisive.

For energy companies building out renewable generation assets, this processing concentration sits three to four steps back in their supply chains. It is distant enough to be invisible in standard supplier concentration assessments, which typically stop at tier-one and tier-two suppliers. It is close enough to create material exposure when a processing restriction, export control, or trade policy shift changes the availability or price of refined materials.

Export controls as early evidence of the risk

In August 2023, China's Ministry of Commerce announced export restrictions on gallium and germanium, two metals used in semiconductor manufacturing, solar cell production, and high-frequency electronics. Licence requirements took effect immediately. By the end of 2023, global gallium prices had risen approximately 68 percent from their pre-restriction level.³ The same month, China extended export control requirements to graphite, the primary anode material in lithium-ion batteries, citing national security grounds.⁴

Neither gallium nor germanium is a mineral of mass consumption. Their relevance as an indicator lies not in their volume but in what their restriction demonstrated: that China's government was prepared to use export controls on mineral processing outputs as a policy instrument in response to technology competition with the United States. The December 2024 announcement went further. China banned the export of gallium, germanium, and antimony to the United States entirely, removing the licence pathway and establishing a categorical restriction.⁵

The pattern these decisions trace is legible. Where the United States has used export controls on advanced semiconductors and manufacturing equipment to limit China's technological development, China has used export controls on mineral processing outputs to signal its capacity to constrain US and allied industrial supply chains. Each step has raised the cost of the bilateral technology competition for companies operating on both sides of the divide.

For CROs and supply chain risk functions, the relevant observation is not which country acted first. It is that the tool is now in active use, the escalation sequence is documented, and the minerals at the centre of the energy transition are directly implicated.

The 2035 exposure window

The IEA's 2025 projections describe a world in which global demand for critical minerals roughly doubles by 2030 and reaches three to four times current levels by 2040, driven by electric vehicle penetration, grid storage deployment, and offshore wind expansion.⁶ That demand trajectory is also a concentration risk trajectory, because the processing infrastructure required to meet it is not being built at anything close to the rate needed outside China.

Western governments have recognised this problem and begun responding to it. The United States' Inflation Reduction Act included provisions designed to build domestic battery supply chains, and the European Union's Critical Raw Materials Act established targets for domestic processing capacity by 2030. Japan has expanded its strategic mineral reserve and entered bilateral agreements with resource-holding countries. None of these initiatives, even if fully executed on their announced timelines, will materially change the processing concentration picture before 2030. The IEA's own analysis of announced projects and government commitments supports this conclusion: the gap between projected demand and non-Chinese processing capacity remains substantial through the mid-2030s.⁷

This creates a defined exposure window for companies in energy, technology, automotive, and defence sectors. Over the next decade, the supply of refined critical minerals will run substantially through Chinese processing infrastructure. The geopolitical risk that sits inside that fact is not hypothetical. It is a structural feature of the transition, priced into the investment landscape for anyone who looks carefully at what the IEA data actually says.

What this means for enterprise risk functions

A geopolitical risk register that lists "China" as a country risk entry, rated high and reviewed quarterly, will not capture the specific exposure described here. The exposure is not to China as a geography in a general sense. It is to a set of specific materials, in a specific processing configuration, subject to a specific regulatory and trade policy environment, affecting specific supply chain nodes at specific lead times from final production.

Translating that specificity into enterprise risk language requires mapping the mineral content of key inputs back through processing stages to identify concentration points. It requires knowing which refined materials carry Chinese processing exposure above a threshold that would constitute material supply disruption if controlled. It requires understanding the lead time between a mineral export control announcement and the point at which a company's production or project pipeline is affected, so that the risk review cadence matches the actual decision window.

The energy transition is a real structural shift with genuine long-term implications for geopolitical risk in the energy sector. The analysis that treats it as an uncomplicated reduction in exposure, however, stops too early. Oil dependency concentrated vulnerability in a set of geographically diverse but economically connected exporters. Mineral processing dependency concentrates vulnerability in a single state that has now demonstrated it will use that concentration as a policy instrument. The shape of the risk has changed. The scale of it has not reduced.

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Meridian Intell note: Meridian Intell tracks critical mineral export control developments, processing concentration shifts, and supply chain exposure mapping as part of its geostrategic supply chain risk intelligence service. Analysis reflects publicly available IEA, government, and trade source data.

Methodology: Meridian Intell field notes draw on primary research, peer-reviewed scholarship, and practitioner analysis. Sources are cited for verifiability. Where analysis goes beyond available evidence, it is identified as such.

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Footnotes

¹ International Energy Agency, Global Critical Minerals Outlook 2025, IEA, Paris, May 2025. China's share of global refining capacity: rare earth elements 91%; permanent magnets 94%; graphite (battery-grade) approximately 90%; lithium refining approximately 60%; cobalt refining approximately 60%. Available at https://www.iea.org/reports/global-critical-minerals-outlook-2025.

² Ibid. IEA 2035 trajectory projections under Stated Policies Scenario and Announced Pledges Scenario. The report notes that without significant new processing capacity outside China, these shares are unlikely to decline materially before 2035 even under accelerated transition assumptions.

³ Argus Media, "Gallium prices climb on China export controls," Argus Metal Pages, September 2023. The 68 percent price increase is calculated from the pre-restriction price in July 2023 to the post-restriction peak in late 2023 as reported in commodity pricing services. China's Ministry of Commerce announcement: "Announcement on Controlling the Export of Gallium and Germanium Related Items," Ministry of Commerce of the People's Republic of China, 3 July 2023, effective 1 August 2023.

⁴ Ministry of Commerce of the People's Republic of China, "Announcement on Strengthening the Export Control of Graphite Items," 20 October 2023, effective 1 December 2023. The controls applied to high-purity, high-hardness, and high-strength synthetic graphite and natural flake graphite, covering the primary grades used in lithium-ion battery anodes.

⁵ Ministry of Commerce of the People's Republic of China and Ministry of Industry and Information Technology, joint announcement on export prohibition of gallium, germanium, and antimony to the United States, December 2024. The prohibition removed the licence pathway that had previously allowed case-by-case approvals and applied categorically to US-destination shipments.

⁶ International Energy Agency, Global Critical Minerals Outlook 2025, ibid. Demand scenarios: under the Announced Pledges Scenario, global demand for lithium reaches approximately 500,000 tonnes by 2030 compared to roughly 180,000 tonnes in 2023; graphite demand approximately doubles; cobalt and nickel grow by 50-80 percent. Under the Net Zero Emissions by 2050 Scenario, all figures are substantially higher.

⁷ Ibid. Chapter on supply adequacy and investment gaps. The IEA's analysis of announced and committed projects outside China shows material shortfalls against demand projections through at least 2032 for lithium, 2030 for rare earth processing, and 2033 for battery-grade graphite. Government initiatives including the US IRA, EU Critical Raw Materials Act, and Japan's economic security programmes are factored into the analysis but assessed as insufficient to close the gap within this timeframe.