The Hidden Politics Behind Our Phones and Electric Cars
Your phone may fit in the palm of your hand, but the supply chain behind it stretches across continents. Electric vehicles (EV), batteries, wind turbines, and smartphones all rely on minerals such as lithium, nickel, cobalt, copper, and rare earth elements. These are often called critical minerals because they are essential to major industries and can be difficult to replace when supply is disrupted. Lithium, nickel, and cobalt are used in rechargeable batteries, while rare earth elements are required for wind turbines, advanced electronics, and defense technology. Meanwhile, copper is increasingly becoming more important as countries expand their electricity grids, EV output, and renewable-energy infrastructure.
As governments invest in cleaner energy and companies continue to develop new technology, demand for these minerals will remain important. The issue, however, is not simply whether enough of these resources exist underground. The real problem is whether countries can reliably access, process, and use them without depending too heavily on one supplier.
The Mine is Only the Beginning
When people think about the competition for critical minerals, they usually picture the mine itself: open pits, trucks hauling ore, and raw material being pulled from the ground. But a mineral is not very useful the moment it leaves the earth. Before lithium can power a battery or rare earth elements can be used in a wind turbine, they must be refined, processed, and turned into materials manufacturers can work with.
That is why the real power in this industry is not always at the mine. Large mining companies often own or invest in the smelters, refineries, and processing facilities that turn raw ore into usable metal. Some are also connected to battery makers or manufacturers further down the supply chain. In other words, owning the deposit is only one part of the business. The companies that process, sell, and move the material can have just as much influence over whether it reaches the factories that need it.
How Supply Chains Still Lead Back to China
The cobalt supply chain shows how quickly a mineral can become tied to China, even when it is mined elsewhere. The Democratic Republic of Congo (DRC) is the world’s largest producer of mined cobalt, but the companies connected to that supply are not only Congolese. CMOC, a Chinese mining company, owns the Tenke Fungurume copper-cobalt mine after buying a controlling stake from the American company Freeport-McMoRan and later taking full ownership. It also controls most of the nearby Kisanfu deposit, where CATL, one of China’s largest battery makers, became involved through a stake purchase and later became one of CMOC’s largest shareholders. The point is not just that Chinese companies own mines abroad. It is that cobalt mined in DRC can still be tied to Chinese ownership, financing, refining, and battery production before it ever reaches an EV. China is the world’s leading producer of refined cobalt, even though much of the raw cobalt it processes comes from the DRC.
Rare earths demonstrate a similar issue. MP Materials operates the Mountain Pass mine in California, the only major rare earth mine in the United States. At first, this sounds like a clear alternative to Chinese supply. But when the mine restarted, Shenghe Resources, a Chinese rare earth company partly owned by China’s Ministry of Natural Resources, held a stake in the venture and became MP Materials’ main customer. Shenghe bought the mine’s rare earth concentrate and sent it to China for processing because the United States did not yet have the facilities needed to separate and refine the material domestically. The U.S. Department of Defense later stepped in and became MP Materials’ largest shareholder, supporting the company’s efforts to build domestic processing capacity. Mountain Pass shows that a mine can be domestic in location while still relying on China for the processing needed to make the material usable.
Lastly, Indonesia’s nickel industry illustrates how complicated diversification can be. The country is now the world’s largest nickel producer and introduced a ban on raw nickel exports in 2014 to keep more of the industry’s value within its borders. In reality, however, this change led to substantial investment from China, as Chinese companies set up smelters and industrial parks in Indonesia to maintain access to Indonesian nickel. While Indonesia has seen more processing take place within the country, Chinese capital, technology, and buyers still play a major role in the sector. This makes it clear to countries trying to reduce their dependence on China that moving production outside China does not always mean removing China from the supply chain.
Across nearly every stage of this chain, China’s presence is hard to avoid. According to the International Energy Agency (IEA), China is the leading refiner for nearly all of the strategic minerals it analyzed, commanding the majority of global processing capacity. That does not mean other countries have no resources of their own. It means that even when minerals are mined in DRC, Indonesia, or the United States, they may still pass through Chinese companies or Chinese-controlled processing before reaching global manufacturers.
For businesses, this dependence creates a real risk. A battery company may access lithium, cobalt, or nickel from one country but still depend on another country to process it. If trade restrictions, political conflict, or export controls affect that step, the company may not receive the material it needs on time. Production can slow down, costs can rise, and finding another supplier may not be easy. Having access to the mineral is therefore not enough if it cannot be processed and delivered when needed.
When Control Becomes Leveraged
China’s control over critical minerals has already become part of political disputes. In April 2025, after the United States introduced new tariffs on Chinese goods, China responded by placing seven rare earth elements and related magnets under export controls. The rules did not formally apply only to the United States, but they immediately made it more difficult for manufacturers to obtain materials used in EVs, electronics, and defense equipment. Automakers in the United States and Europe struggled to source the magnets they needed, and some were forced to reduce production or pause it temporarily.
Japan has faced a similar problem. In January 2026, China expanded restrictions on dual-use exports to Japan as tensions between the two countries continued to rise. These restrictions covered materials and products that can be used for both civilian and military purposes, including rare earths, permanent magnets, gallium, germanium, and graphite. This was not the first time Japan had faced this kind of pressure. In 2010, China restricted rare earth exports during a dispute over the Senkaku/Diaoyu Islands. This matters because these are not easy materials to replace quickly. If a company depends on China for the processed version of a mineral, finding another mine is not enough. It also needs another facility that can refine, separate, and manufacture the material at the same scale.
These examples show why control over processing matters. China does not need to cut off every mineral to create pressure. Limits on a small group of hard-to-replace minerals can slow factories, raise costs, and remind companies how few alternatives they really have.
Building Alternatives to China
The G7 has started to act on those concerns. In June 2025, leaders met in Kananaskis, Alberta, and launched the G7 Critical Minerals Action Plan. The initiative aims to make critical-mineral markets more reliable, encourage investment in new projects, and support innovation across the supply chain. A year later, the G7 made that goal more specific. At its 2026 summit, leaders agreed that by 2030, no single country outside the G7 should provide more than 60% of the rare earths and permanent magnets they rely on. Over time, they hope to lower that number to 50%.
The target is mainly about reducing dependence on China. The G7 is not trying to stop trading with China entirely. Instead, it wants to make sure its members have other suppliers to turn to if trade restrictions, political disputes, or supply disruptions make Chinese supply less reliable.
That goal is easier to announce than to achieve. Finding minerals in other countries is only the beginning. Mines, refineries, and processing facilities can take years to build, and companies are often hesitant to invest when prices are unpredictable. If mineral prices fall or demand changes, a project that once looked profitable can quickly become risky. Companies also need confidence that someone will buy what they produce once the project is finished. The IEA found that 75% of the 20 strategic minerals it studied had experienced more price volatility than oil, which helps explain why investors can be cautious about committing money to long-term projects.
Canada is trying to make those projects easier to build through the Critical Minerals Production Alliance, a Canada-led G7 initiative created alongside the 2025 action plan. The alliance is meant to support projects that can supply minerals outside highly concentrated markets. That support can include public funding, research partnerships, cooperation with allied countries, and agreements that help companies find buyers.
Those buyer agreements are especially important. Before a company spends millions of dollars on a mine or processing facility, it needs some assurance that there will be demand for what it produces. An offtake agreement helps provide that assurance by having a buyer agree in advance to purchase a certain amount of the mineral once the project is operating. This makes the project less risky and can help companies secure financing.
Canada has already started using this approach. Its first round of projects under the alliance, announced in October 2025, included 26 investments and partnerships expected to support $6.4 billion in critical-mineral projects. Some are in Quebec. Nouveau Monde Graphite’s Matawinie Mine received support through agreements involving the Canadian government, Panasonic in Japan, and Traxys in Luxembourg. Rio Tinto’s scandium plant in Sorel-Tracy also received support, along with an agreement for the federal government to purchase part of its future production.
Canada has also said it plans to stockpile certain critical minerals for domestic and allied defense industries. In simple terms, this means keeping reserves of important materials in case trade disruptions or political conflict make them harder to access. Countries have long stockpiled resources such as oil or military equipment. Now, minerals used in batteries, magnets, aerospace, and advanced technology are being treated in a similar way.
The fight over critical minerals is not about the minerals alone—it is about the world being built around them. Batteries, EVs, phones, defense systems, and clean-energy infrastructure all depend on supply chains most people never think about, but governments can no longer ignore. China’s position has pushed the G7 to rethink security. It is no longer just about what countries can produce, but whether they can keep producing it when trade becomes uncertain. The challenge is not to create a world without China, but instead to build one where access to the materials behind modern technology does not depend so heavily on a single country.