Critical Mineral Supply Chains 2025: Why Midstream Processing Is the New Geopolitical Choke Point

Escalating Supply Chain Risks from Critical Mineral Processing Monopolies

The primary structural risk in global technology and energy supply chains has decisively shifted from upstream mining concentration to midstream processing dominance, a domain overwhelmingly controlled by China. This midstream choke point grants a single nation the ability to dictate supply, price, and availability for nearly all critical minerals, posing a direct threat to manufacturing and infrastructure deployment worldwide.

• Between 2021 and 2024, the strategic focus was largely on securing upstream mining assets, with nations competing for access to raw materials in countries like the Democratic Republic of Congo (DRC) and Australia. The risk was perceived as a race for resources at the source.
• From 2025 to today, the risk has materialized in the midstream. China demonstrated its willingness to “weaponize” its processing dominance by implementing export controls on key minerals like gallium and germanium, a move that directly impacts the global semiconductor, defense, and EV industries. This validates that control over refining, not just mining, is the most potent form of geopolitical leverage.
• The scale of this midstream control is a structural vulnerability for the global economy. China refines approximately 73% of the world’s cobalt, 68% of its nickel, and holds a commanding 85-90% share of rare earth element (REE) processing, creating a bottleneck that is far more difficult and expensive to bypass than opening a new mine.

Strategic Alliances to Counter Critical Mineral Supply Chain Dominance

In response to China’s consolidated midstream control, Western nations and their allies have accelerated the formation of strategic partnerships aimed at building resilient, alternative supply chains. These alliances represent a fundamental shift from competing for raw materials to collaborating on the development of shared, non-Chinese processing and refining infrastructure.

• A primary example is the US-Australia Critical Minerals Partnership, which leverages Australia’s upstream dominance in lithium to attract investment for building out domestic midstream processing capabilities. The goal is to create a “mine-to-metal” supply chain independent of China’s refineries.
• The Mineral Security Partnership (MSP), which includes the United States, the European Union, Japan, and other allied nations, focuses on catalyzing public and private investment into strategic projects along the entire value chain, with an emphasis on high environmental, social, and governance (ESG) standards to differentiate from existing supply routes.
• These partnerships moved from conceptual frameworks in the 2021-2024 period to active project funding and policy alignment from 2025 onward. Initiatives like Canada’s Critical Minerals Strategy now explicitly allocate billions to fast-track the development of processing facilities, a direct reaction to the demonstrated supply chain risks.

Table: Key Critical Mineral Partnerships (2025)

Geographic Breakdown: Where Mineral Choke Points Are Concentrated

While upstream mining is geographically dispersed across several key nations, the midstream processing stage is dangerously centralized in China, creating a global bottleneck. This geographic imbalance means that nations rich in raw materials often lack the power to control their own resources, as they remain dependent on a single country for value-add processing.

Processing, Not Mining, Defines Geographic Choke Points

This chart perfectly visualizes the section’s core argument by showing that while mining is geographically diverse, midstream processing is dangerously centralized in China, creating the choke point.

(Source: Voronoi)

• Between 2021-2024, the map of critical mineral power was defined by upstream producers: the DRC for cobalt (over 70% of global mining), Australia for lithium (roughly 50%), Chile for copper (over 25%), and Indonesia for nickel.
• In 2025, the map’s most critical feature is the processing funnel. Raw materials from Australia, the DRC, and Chile are predominantly shipped to China for refining. Even US-mined materials, such as from MP Materials’ Mountain Pass mine, are often sent to China for final processing.
• Indonesia represents a key shift. By banning the export of unprocessed nickel ore in 2020, it successfully leveraged its upstream dominance to force downstream investment, primarily from Chinese firms. This created an integrated nickel processing hub within its borders, demonstrating a viable, albeit challenging, strategy for resource-rich nations to capture more value.

Technology Maturity: China’s Processing Moat Creates High Barriers to Entry

The most durable structural advantage in the critical minerals sector is derived from mature, technologically complex, and cost-efficient processing capabilities, a domain where China has built a multi-decade technological moat. Replicating this industrial and intellectual property base represents a significant barrier for Western nations attempting to build alternative supply chains.

Investment Hurdles Create High Barriers to Entry

The chart details the specific investment barriers that create the ‘technological moat’ and high barriers to entry, making it difficult for Western nations to build alternative processing capacity.

(Source: The Oregon Group)

• Prior to 2025, China’s dominance was established through decades of state subsidies, lax environmental regulations, and intellectual property acquisition in complex refining techniques like solvent extraction for REEs. This allowed it to build a cost structure that market-driven economies could not match.
• From 2025 onward, the challenge for competitors is not just capital but also technical expertise. Building new refineries is a slow, capital-intensive process that requires specialized knowledge in often toxic and difficult chemical processes. The long lead times mean China’s midstream advantage will persist for the foreseeable future.
• This technological gap is the core of the choke point. While new mines can be opened, developing the human capital and industrial ecosystem to convert raw ores into high-purity, battery-grade materials at scale is a far greater challenge, locking in global dependency on China’s mature industrial base.

SWOT Analysis: Strategic Positioning in the Global Minerals Contest

The strategic landscape is defined by the tension between nations with geological wealth and the single nation with overwhelming processing power. Western efforts to de-risk are creating new opportunities for alliances, but the primary threat of midstream weaponization remains potent and has been validated.

Chart Contrasts Mining Diversity with Processing Monopoly

This chart perfectly illustrates the strategic tension in the SWOT analysis, contrasting diversified upstream extraction (a strength) with China’s near-monopolistic control over midstream processing (a weakness/threat).

(Source: CaixaBank Research)

• Strengths are concentrated in upstream mining, with specific nations holding dominant positions in key minerals.
• Weaknesses stem from a collective failure by Western nations to invest in midstream refining, creating a critical dependency.
• Opportunities are emerging through new strategic partnerships and resource nationalism, as countries like Indonesia leverage their assets.
• Threats are centered on China’s proven ability to disrupt global supply chains through its control of processing.

Table: SWOT Analysis for Critical Mineral Choke Points

Scenario Model: Watching for Signals of Supply Chain Realignment

If Western alliances fail to finance and construct new midstream refining capacity at scale by 2027, watch for increased price volatility and targeted supply disruptions in the EV, defense, and semiconductor sectors. This would signal a failure to de-risk and a further consolidation of China’s structural power over the global economy.

EU Forges New JVs for Resilient Supply

This map shows the EU’s strategy of linking mining with new processing joint ventures, serving as a concrete example of the ‘signals of supply chain realignment’ the section advises watching for.

(Source: CleanTechnica)

• If this happens: Watch for announcements of new, large-scale refinery projects in North America, Europe, or Australia securing final investment decisions (FID). The pace and scale of these projects are the primary signal of a successful strategic response.
• Watch this: Track China’s export policies. Any expansion of export controls beyond gallium, germanium, and specific rare earths would indicate an escalation of its chokepoint strategy.
• These could be happening: Upstream producers like Chile and the DRC may follow Indonesia’s model, demanding more in-country processing. This would further fragment the supply chain but could also create new investment opportunities for non-Chinese firms. The race is no longer for rocks, but for the refineries that process them.

Frequently Asked Questions

What is the ‘midstream choke point’ and why is it now considered the biggest risk?

The ‘midstream choke point’ refers to the refining and processing stage of the mineral supply chain, which is overwhelmingly dominated by China. According to the article, it is now the biggest risk because control over refining—not just mining—is the most potent form of geopolitical leverage, granting a single nation the ability to dictate the supply, price, and availability of essential materials for global industries like EVs, defense, and semiconductors.

Has China actually used its dominance in mineral processing as a geopolitical tool?

Yes. The article explicitly states that China demonstrated its willingness to ‘weaponize’ its processing dominance by implementing export controls on key minerals like gallium and germanium. This move confirmed that the theoretical threat of supply disruption is now a realized and proven capability.

What are Western countries and their allies doing to address this supply chain vulnerability?

They are forming strategic alliances to build alternative, non-Chinese processing and refining infrastructure. Key examples mentioned include the US-Australia Critical Minerals Partnership, aimed at creating a ‘mine-to-metal’ supply chain, and the Mineral Security Partnership (MSP), which coordinates investment from the US, EU, Japan, and others into strategic projects. Canada has also launched its own Critical Minerals Strategy to fast-track domestic processing facilities.

Why is it so difficult for other countries to build their own processing facilities and compete with China?

The primary barriers are China’s ‘technological moat’ and cost structure. China has a multi-decade advantage built on state subsidies, intellectual property in complex refining, and a mature industrial ecosystem. For other nations, building new refineries is a slow, capital-intensive process that requires specialized technical expertise in often toxic chemical processes, making it a far greater challenge than simply opening a new mine.

How has the strategic focus on critical minerals shifted from the 2021-2024 period to 2025?

Between 2021 and 2024, the focus was primarily on securing upstream mining assets and raw materials from countries like the DRC and Australia. From 2025 onward, the risk has materialized in the midstream, and the strategic focus has decisively shifted to building out processing and refining capacity to counter China’s dominance, as evidenced by the formation of concrete, well-funded partnerships and national strategies.