The Diplomat
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Critical Minerals and the New Cold War
Associated Press, Tsvangirayi Mukwazhi
Cover Story

Critical Minerals and the New Cold War

Access to critical materials has become a paramount national security concern and the object of increasing competition between China and the United States.

By Zongyuan Zoe Liu

The ongoing energy transition is transforming the global economy from a hydrocarbon-dependent system to a mineral-intensive one. The global decarbonization shift has supercharged the demand for minerals that are essential for clean energy technologies and electric vehicles (EVs), such as lithium, nickel, cobalt, graphite, copper, aluminum, and rare earth elements. A typical EV, for instance, requires six times the mineral inputs of a conventional car.

The energy sector has become a major demand driver for minerals since the mid-2010s, with a report by the International Energy Agency (IEA) revealing a threefold surge in lithium demand, a 70 percent increase in cobalt demand, and a 40 percent rise in demand for nickel from 2017 to 2022. Driven by the growing market for lithium-ion batteries for energy storage, global demand for cobalt to manufacture batteries grew 26-fold from 2000 to 2020, and 82 percent of this growth occurred in China.

As countries move forward with greening the energy systems that power their economies, the quest for energy security becomes inseparable from securing reliable access to critical minerals at affordable prices with minimal negative externalities on the environment and local communities from extracting and refining processes.

Many critical minerals essential for the energy transition are presently produced with greater geographical concentration than oil or natural gas. For example, in 2019, the Democratic Republic of Congo accounted for about 70 percent of global cobalt production, while China contributed around 60 percent of the global production of rare earth elements. Furthermore, the supply chains for these critical minerals, spanning mining, processing and refining, manufacturing, and end use, are predominantly controlled by a few countries, notably China.

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The Authors

Dr. Zongyuan Zoe Liu is Maurice R. Greenberg fellow for China studies at the Council on Foreign Relations (CFR). Her work focuses on international political economy, global financial markets, sovereign wealth funds, supply chains of critical minerals, development finance, emerging markets, energy and climate change policy, and East Asia-Middle East relations. Liu is the author of “Can BRICS De-dollarize the Global Financial System?” and “Sovereign Funds: How the Communist Party of China Finances its Global Ambitions.” 

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