China’s dominance of the world’s most critical mineral markets was built beneath the radar of official state-owned enterprises and diplomatic communiqués. It is a story of shell companies, shadowy intermediaries, under-the-table deals, and a relentless, state-backed campaign to lock up the resources that power the 21st century, from batteries in electric vehicles to guidance systems in hypersonic missiles. This effective and forward-looking strategy has left the United States and its allies scrambling to catch up. This sprawling, opaque network of Chinese cutouts and proxies has quietly seized control of the mineral arteries running through Southeast Asia, sub-Saharan Africa, and Central Asia.
A Shadow Network of Shells and State Finance
The scale of China’s ambitions is matched only by its patience and ingenuity. In the Democratic Republic of the Congo (DRC), Indonesia, Kazakhstan, and beyond, Chinese state-linked shell companies have become the tip of the spear in a global campaign to secure first rights to bismuth, tin, rare earths, and other minerals vital to modern industry and defense. These companies are rarely household names. They are registered in offshore jurisdictions or appear as minority partners in joint ventures with local firms, their true ownership buried under layers of legal camouflage. But their impact is unmistakable. In the DRC, Chinese intermediaries have quietly acquired controlling stakes in cobalt and copper mines, often through contracts that are never made public but guarantee them right of first refusal on mineral exports. The Indonesian government’s majority-owned PT Tbk acts as both a major tin producer and a gatekeeper for foreign access, while in Kazakhstan, the Eurasian Resources Group, with significant government ownership has enabled Chinese interests to access chromite and other minerals not just in Central Asia but also in Africa and Brazil.
This network is powered by a flood of state-backed finance. A 2025 study by AidData found Chinese policy and commercial banks, working in tandem with private Chinese firms and financiers outside China, issued nearly $57 billion in loans from 2000 to 2021 for mining and processing copper, cobalt, nickel, lithium, and rare earths in 19 low- and middle-income countries. More than three-fourths of this lending went to Chinese-owned ventures and subsidiaries, and two-thirds flowed into joint ventures and subsidiaries in which the host government had no significant ownership. This is not the Belt and Road Initiative as the world knows it; this is a parallel, mineral-focused strategy that has quietly outpaced the BRI in both scale and impact.
Tools of Control
The tactics deployed by this silent cartel are as sophisticated as they are ruthless. One of the most effective is the use of right-of-first-refusal (ROFR) agreements, which give Chinese buyers priority access to mineral output, often at market or below market prices. These deals are negotiated in secret, with little transparency or oversight, making it almost impossible for U.S. or allied interests to even know what resources are available, let alone compete for them. In Kazakhstan, the government’s stake in the Eurasian Resources Group allows for the negotiation of such agreements, which can be extended to projects in Africa and Brazil. The result is that China’s state-linked companies are able to snap up critical minerals before anyone else has a chance.
China also employs price manipulation and market flooding, using its enormous refining and production capacity to drive down global prices and squeeze out competitors. Fifteen years ago, China’s rare earths oversupply forced the bankruptcy of the only rare earths mine in the U.S. More recently, lithium prices crashed by more than 80% from 2022 peaks, rendering many Western operations unprofitable despite booming demand. In Indonesia, a glut of Chinese-backed nickel production forced the closure of all Australian nickel mines over the past two years, with even mining giant BHP suspending operations at its Nickel West facilities until at least 2027. The same pattern has played out in cobalt, where a surge in Chinese-controlled exports from the DRC led to a dramatic increase in supply, slashing global prices and reducing tax revenues for the Congolese state.
China has also employed export restrictions to achieve its strategic objectives. In 2010, Beijing banned rare earth exports to Japan following a maritime dispute, demonstrating how mineral dependence can be turned into geopolitical leverage. More recently, China imposed restrictions on exports to the United States after escalating tariff disputes, particularly targeting heavy rare earths essential for defense applications. In late 2024, China implemented additional export controls on graphite and tungsten, critical for batteries and specialized steel production, causing immediate disruptions in Western manufacturing. These moves exploit choke points in Western defense supply chains, most notably for components used in F-35 fighters and precision munitions.
China’s grip on critical minerals is not limited to extraction. The real chokehold is in processing. China refines 73% of the world’s cobalt, 68% of its nickel, 59% of lithium, and 40% of copper. For rare earths, China is responsible for approximately 61% of global production and 92% of processing. This gives Beijing the ability to dictate global prices, limit availability, and impose export restrictions at will. For many African countries, China is both the largest importer of and only realistic customer for their minerals. As of 2023, China imported nearly $10 billion worth of minerals from sub-Saharan Africa alone, solidifying its position as the primary destination for African mineral exports. In 2023 and 2024, Chinese companies invested nearly $8 billion in African metals and mining projects, buying interests in lithium processing plants in Mali and Zimbabwe and expanding their presence in South Africa, Zambia, Guinea, Angola, and Nigeria.
Infrastructure, Coercion, and Corruption
The story of the silent cartel is also a story of soft coercion. The BRI and its resource-for-infrastructure model have become the public face of its engagement in Africa and Central Asia. These deals offer roads, railways, and ports in exchange for long-term mineral concessions, often with repayment terms that favor Chinese interests and tie recipient countries to Beijing’s logistical networks. In Central Asia, Chinese firms have bought into regional transit infrastructure, including railways and ports, effectively controlling the routes by which minerals reach global markets. The China-Kyrgyzstan-Uzbekistan railway and the Tacheng-Ayagoz line are now key arteries for critical mineral exports, with Chinese joint ventures embedded in their management. As a result, U.S. and European firms find themselves locked out of bidding processes, facing high transit costs and regulatory barriers designed to favor Chinese partners.
The human cost of this shadow empire is often hidden. In the DRC, leaked files published by The Sentry revealed that the shell company at the center of a multibillion-dollar mining deal, Congo Construction Company, received $55 million from foreign sources, much of it funneled through intermediaries who paid off local officials to keep the project on track. The deal, which was supposed to help rebuild critical infrastructure, instead became a vehicle for fraud, bribery, and the enrichment of powerful elites, while the promised benefits for ordinary Congolese citizens failed to materialize. This pattern is repeated across the continent, where Chinese-backed deals are often shrouded in secrecy, plagued by delays, and marred by environmental and labor abuses.
China’s dominance is not simply the result of its natural resource endowment or technical expertise. It is the product of decades of deliberate government strategy, often involving lower environmental standards and labor costs than its competitors. The extraction and processing of rare earths, for example, are expensive and environmentally damaging, with all rare earth deposits containing radioactive components. Many countries, including those in the European Union, are hesitant to produce them due to the challenges of disposing of radioactive waste. China, by contrast, has been willing to bear these costs in exchange for global market dominance.
Constraints, Vulnerabilities, and a Path Forward
The United States, meanwhile, has struggled to adapt. Its approach – prioritizing transparency, private-sector involvement, and environmental standards – has left it at a disadvantage. U.S. investments, often channeled through agencies like the Development Finance Corporation and Export-Import Bank, cannot match the speed, flexibility, or risk tolerance of Chinese state-backed cutouts. U.S. law restricts Defense Production Act grants to a handful of allied countries, leaving the Pentagon unable to directly support mineral projects in the regions where Chinese influence is strongest. Even innovative proposals, such as leveraging U.S. arms sales and security assistance to secure ROFR mineral agreements with non-allied governments, face significant hurdles. Local governments often prefer the deals offered by Chinese shell companies, and U.S. oversight requirements can slow negotiations to a crawl. Meanwhile, the U.S. defense industrial base remains acutely vulnerable to supply disruptions, with over 95% of rare earth demand and 94% of bismuth imports coming from China.
The policy implications are stark.
- China’s dominance over critical minerals could hinder the U.S.’s ability to respond militarily to a Chinese invasion of Taiwan, as any action might risk further restrictions on essential materials needed for U.S. defense.
- The Department of Defense currently lacks policies to secure mineral supplies from non-allied partner countries and is restricted from awarding Defense Production Act grants to projects outside the United States, Canada, Australia, and the United Kingdom. Even if Congress were to expand the list of eligible countries, investment in prospective commercial projects does not guarantee production or continued access, as projects face significant technical, financial, and governmental risks.
- Moreover, even if the U.S. were to secure ROFR agreements, the administration could still prioritize allocating funds to domestic projects, given the political imperative to onshore supply chains.
To compete, the U.S. must expand the list of countries eligible for Defense Production Act grants, develop its own network of trusted intermediaries and joint ventures, condition security assistance and arms sales on mineral access with streamlined approval processes, invest in domestic and allied mineral processing capacity, and push for international transparency standards that expose shell company ownership and shadow contracts. Without the ability to match China’s flexibility, risk tolerance, and willingness to operate in the gray zones of global commerce, U.S. efforts will remain hamstrung.
The consequences of inaction are becoming clearer by the day. As China tightens its grip on the world’s mineral supply chains, the risks to U.S. national security, economic competitiveness, and technological leadership grow ever more acute. The Pentagon’s own 2023 National Defense Industrial Strategy mentions “minerals” and “rare earth elements” only four times in more than 22,000 words, a telling sign of how far the issue has flown under the radar. Yet the stakes could not be higher. The New Lines Institute’s report “Materiel for Minerals: How the U.S. Can Leverage Security Assistance to Secure Supply Chains,” notes that “The United States imports, largely from China, more than 95% of its demand for rare earth elements, which are used in DDG-51 Aegis destroyers, F-35 Lightning aircraft, and other advanced weapons systems. This dependence leaves the U.S. defense industrial base vulnerable to supply chain disruptions, whether caused by export controls, civil unrest, or natural disasters.”
For the U.S., the path forward is fraught with challenges. The Materiel for Minerals report by Jahara “Franky” Matisek, Morgan D. Bazilian, and Gregory Wischer proposes a bold new approach: leveraging U.S. security assistance, military cooperation, and foreign military sales to secure ROFR offtake agreements for minerals in exchange for arms and training. This “materiel-for-minerals” strategy would give the Department of Defense the right, but not the obligation, to buy specific volumes of minerals at market prices, providing a buffer supply that could be tapped during supply cutoffs or shortages. This strategy now has precedent: Earlier this year, the Trump administration negotiated a minerals deal with Ukraine in exchange for continued U.S. security assistance.
But even this approach has limits. The U.S. can award Defense Production Act grants only to projects in the United States, Canada, Australia, and the United Kingdom. Prospective projects in non-allied countries face high risks of stoppage, expropriation, or government disputes, as seen in Mozambique, New Caledonia, and Panama. Even in allied countries, new mineral projects confront long lead times and significant risks in commissioning and ramping up production. S&P Global estimates that the time from first discovery to first production for a mining project in the United States is 29 years. For 31 of the 50 minerals on the U.S. critical minerals list, imports are used to meet over 50% of consumption; for another 12, imports supply 100%.
For now, the world’s mineral supply chains remain a battleground in the great power competition of the 21st century. The silent cartel moves quietly, but its impact is felt everywhere – from the mines of Congo to the factories of Shenzhen, from the corridors of Washington to the ports of Jakarta and Almaty. The question is not whether the U.S. and its allies can match China’s playbook but whether they are willing to play the game at all.
The views expressed in this article are those of the author and not an official policy or position of New Lines Institute.
