Report by the Finnish Institute of International Affairs, October 2025
This report on the strategic competition for Critical Raw Materials (CRMs) and Rare Earth Elements (REEs) concludes that securing supply chains has become a central tool for geoeconomic statecraft.
Key takeaways: Defining geoeconomic asymmetries
The accelerating global competition for CRMs and REEs is defined by three major asymmetries in the sector:
- Concentration of Supply (Dominant): China has solidified a dominant role in sourcing, processing, and refining, controlling between 60–90% of supply chain segments and acting as the leading refiner of 19 out of 20 most important critical minerals.
- Accelerated Demand (Driving Factor): Electrification, the energy transition, digital transformation, AI, and defence industries all depend on a mix of CRMs and REEs, accelerating demand and transforming these resources into a foreign policy and economic security concern.
- Strategic Response (Diplomacy): Minerals diplomacy has emerged as the central tool for geoeconomic actors, including the US and the EU, to secure these resources, blending cooperative, coercive, and binding elements to maintain access.
Intensifying competition and governance gaps are emerging
While minerals diplomacy is designed to secure essential resources for defence and emerging technologies, the intensifying contest exposes inherent governance challenges and strategic shifts:
- Splintering of transatlantic strategy: Initiatives previously aimed at multilateral cooperation, such as the Minerals Security Partnership (MSP) Forum, are now splintering. The US approach has increasingly shifted toward competitive industrial policy, prioritizing bilateral and binding deals over alliance-building, exemplified by the agreement with Ukraine.
- Pressure on resource-endowed countries: Countries rich in mineral resources are facing increasing pressure to commit to specific deals, which often forces them to navigate an economic security dilemma between development opportunities and potential dependency on great-power patrons.
- Governance gaps and local legitimacy: The rapid acceleration of mining activity creates gaps concerning transparency and respect for local populations and environments. Conversely, addressing the Social Licence to Operate (SLO) is introducing a form of geoeconomic soft power, where projects focused on equitable outcomes and community buy-in can attract cooperation.
- Long-term mitigation: Efforts are underway to reduce dependencies through circular-economy approaches, prioritizing policies and practices to recycle CRMs and REEs from end-of-life devices and reusing minerals found in mining side streams.
This summary is based on extracts from the final report authored by Cordelia Buchanan Ponczek. The full version can be found here.
Photo credit MiningWatch Portugal on Unsplash
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