Rare Earth Mineral Race

The global economy is currently witnessing a massive pivot in how nations source the raw materials required for the future. While China has long held a dominant position in the processing and supply of critical minerals, Western nations and major corporations are now aggressively investing in alternative supply chains. This article explores the race to secure lithium and copper assets outside of Chinese control.

The State of the Supply Chain

To understand the urgency, you have to look at the numbers. Currently, China processes approximately 60% of the world’s lithium and nearly 80% of its cobalt. While copper mining is more distributed globally, the refining capacity is still heavily concentrated in Asia.

This concentration creates a bottleneck for the United States and Europe. As regulations mandate a shift toward electric vehicles (EVs) and renewable energy grids, the demand for these minerals is projected to outstrip supply within the next decade. The International Energy Agency predicts that lithium demand alone could increase by over 40 times by 2040 if climate goals are to be met.

Western governments are responding with policy. The U.S. Inflation Reduction Act (IRA) and the European Union’s Critical Raw Materials Act are specifically designed to incentivize domestic mining or sourcing from “friendly” trade partners.

The Lithium Rush: Developing Domestic Assets

Lithium is often called “white gold” because it is the central component of the lithium-ion batteries that power EVs and store solar energy. The race to find lithium outside of China has triggered a mining boom in North America and Australia.

Thacker Pass and the Nevada Push

One of the most significant projects in the United States is the Thacker Pass mine in Humboldt County, Nevada. Operated by Lithium Americas, this site holds the largest known lithium resource in the U.S.

  • Major Investment: In early 2023, General Motors announced a $650 million equity investment in Lithium Americas to secure access to phase one production from this site.
  • Timeline: Construction is underway, with production expected to begin in the second half of 2026.

The Rise of “Lithium Valley”

California is attempting to turn the Salton Sea area into a major production hub. This region sits atop geothermal brine reservoirs rich in lithium.

  • The Tech: Companies like Controlled Thermal Resources and Berkshire Hathaway Energy are developing direct lithium extraction (DLE) technologies. This method extracts lithium from brine while using geothermal steam to generate electricity.
  • Partnerships: Stellantis (the parent company of Jeep and Chrysler) has already signed a supply agreement with Controlled Thermal Resources.

Big Oil Enters the Chat

Perhaps the most surprising entrant into the lithium race is ExxonMobil. In late 2023, the oil giant announced plans to become a leading lithium supplier. They have acquired drilling rights in the Smackover formation in southern Arkansas. ExxonMobil aims to start production by 2027 and supply enough lithium for 1 million EVs annually by 2030.

The Copper Crunch: Wiring the New Economy

While lithium gets the headlines for batteries, copper is the backbone of electrification. An EV requires roughly 2.5 times more copper than a standard combustion engine car. Wind turbines and solar panels are also copper-intensive.

The Battle for Zambia and the DRC

Africa’s Copperbelt, spanning Zambia and the Democratic Republic of Congo (DRC), is the focal point of this competition. Historically, Chinese entities have owned the majority of mines in the DRC. However, Western companies are making moves to re-enter the region.

  • Ivanhoe Mines: This Canadian company is rapidly expanding the Kamoa-Kakula Copper Complex in the DRC. It is projected to become one of the world’s largest copper mines.
  • KoBold Metals: Backed by Breakthrough Energy Ventures (a fund supported by Bill Gates and Jeff Bezos), this startup uses artificial intelligence to find mineral deposits. They recently discovered a massive copper deposit at the Mingomba project in Zambia.

The Lobito Corridor

Infrastructure is just as important as the mines themselves. The United States and the EU are currently backing the refurbishment and expansion of the Lobito Corridor. This railway line connects the mineral-rich regions of the DRC and Zambia to the port of Lobito in Angola.

  • Strategic Goal: This creates a direct export route to the Atlantic Ocean, bypassing traditional routes that often lead East toward Asian ports. It is a tangible effort by the G7’s Partnership for Global Infrastructure and Investment (PGII) to counter China’s Belt and Road Initiative.

Challenges in Non-Chinese Markets

Diversifying the supply chain is difficult due to several structural hurdles.

1. Permitting Timelines In the United States and Canada, opening a new mine can take 10 to 15 years due to rigorous environmental reviews and legal challenges. For example, the Resolution Copper project in Arizona has been stalled for years due to concerns regarding Indigenous land and environmental impact.

2. Refining Capability Mining the ore is only step one. The material must be refined into battery-grade chemicals. Australia produces about half of the world’s raw lithium, but they ship the vast majority of it to China for processing. Companies like Pilbara Minerals are now working with South Korean partner POSCO to build processing capabilities outside of China to close this gap.

3. Price Volatility Commodity prices fluctuate wildly. In 2022, lithium prices soared to record highs, only to crash in 2023 and 2024 due to a temporary slowdown in EV demand growth. This volatility makes it risky for Western investors to fund expensive, long-term mining projects without government guarantees.

Frequently Asked Questions

What is the difference between Rare Earth Elements and Critical Minerals? Rare Earth Elements (REEs) are a specific group of 17 metallic elements (like neodymium) used in magnets and electronics. Lithium and Copper are not technically “rare earths,” but they are categorized alongside them as “Critical Minerals” because they are essential for the economy and have vulnerable supply chains.

Why is copper supply running low? Existing major mines in Chile (the world’s top producer) and Peru are aging. Ore grades are declining, meaning miners have to dig up more rock to get the same amount of copper. New discoveries are becoming harder to find and more expensive to develop.

Which countries have the most lithium? Chile, Australia, and Argentina hold the largest reserves. The “Lithium Triangle” in South America (Chile, Argentina, Bolivia) holds more than half of the world’s known lithium resources.

What is the Minerals Security Partnership (MSP)? The MSP is a coalition of 14 countries (including the US, UK, Canada, Japan, and EU members) formed in 2022. Its goal is to catalyze public and private investment in responsible critical mineral supply chains globally.