Critical Minerals: The West's New Geopolitical Battleground

Summary

China's dominance in critical mineral refining poses a national security risk, according to Thomas Nrosski, author of "Mineral War." While the West is increasing exploration, the true vulnerability lies in processing and smelting, areas where China holds overwhelming control. Key minerals like gallium, rare earths, and graphite are heavily concentrated in China, impacting industries from tech to defense. The US is attempting to re-shore processing, exemplified by a new smelter deal with Korea Zinc, but reversing decades of dependence will take significant incentives and policy changes, including tariffs and subsidies, to encourage downstream manufacturers to move away from Chinese products. The current global political climate, marked by increasing military budgets and potential conflicts, amplifies the urgency. Investors looking to capitalize on this trend should focus on equity in pre-production companies outside of China, as liquid futures markets for many of these specialized materials are scarce. The US faces a critical juncture, akin to the 1970s oil crisis, to secure its future supply chains.