Highlights

• China dominates critical minerals through control of processing (90%+ capacity), not mining—making midstream refining the true geopolitical bottleneck that shapes global power dynamics.
• The U.S. imports 100% of heavy rare earths and remains years behind in building processing infrastructure, while export controls and mineral alliances replace open markets.
• Deutsche Bank's 2026 report argues that processing dominance—not resource ownership—will determine economic and military power for decades, requiring structural industry transformation.

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A March 2026 report by Marion Laboure (opens in a new tab) and Camilla Siazon at the Deutsche Bank Research Institute argues that critical minerals—especially rare earths—have evolved from simple industrial inputs into strategic “chokepoints” shaping global power, with China dominating processing and the U.S. and allies struggling to catch up. For the lay reader: modern technologies—from electric vehicles to fighter jets—depend on these materials, but the real control lies not in mining them, but in refining and turning them into usable components. The report frames this shift as a move toward “infrastructure realism,” where control of supply chains—not just markets—determines geopolitical influence.

Marion Laboure, Lead Author

Study Methods & Approach

The study is a macro-strategic analysis, synthesizing data from institutions like the USGS, IEA, Atlantic Council, and government policy frameworks. It uses historical comparison (notably “Fordism”) and scenario modeling (2026–2035) to interpret how industrial control translates into geopolitical leverage.

Key Findings Explained Simply

1. Processing—not mining—is the real bottleneck

Rare earths are not especially rare underground, but separating them is technically difficult and expensive. China controls over 90% of processing capacity, giving it leverage over global supply.

2. China built dominance through decades of strategy

State-backed investment, low-cost production, and vertical integration allowed China to control mining, refining, and manufacturing—effectively setting global prices and standards.

3. The U.S. and Europe remain highly dependent

The U.S. imports 100% of heavy rare earths and remains years away from building comparable capacity. Europe faces similar challenges, especially in processing.

4. Minerals are now geopolitical weapons

Export controls, stockpiling, and bilateral “mineral alliances” are replacing open markets. The study shows that supply disruptions could impact defense systems, energy infrastructure, and GDP within weeks.

Implications for Industry and Policy

For investors and operators, the message is clear:

• Rare earths are no longer just commodities—they are strategic infrastructure
• Midstream (processing, magnets, refining) is the true value and risk center
• Governments will increasingly intervene through subsidies, offtakes, and partnerships

Limitations & Controversial Elements

The report is not empirical or predictive—it relies on scenario modeling and policy interpretation rather than new field data. It may overstate state control while underweighting market innovation (e.g., recycling, substitution technologies). Additionally, the concept of “infrastructure realism” is interpretive and may not fully capture the role of private capital and global trade dynamics.

Conclusion: A Structural Shift, Not a Cycle

The study concludes that the world is entering a long-term transition where control of critical mineral supply chains defines economic and military power. However, reshaping these systems will take years—if not decades.

For Rare Earth Exchanges™ readers, the takeaway is blunt:

the race is not for resources—it is for processing dominance.

Citation: Laboure, M., & Siazon, C. (2026). Critical Minerals – Chapter 2: The Great Rebalancing. Deutsche Bank Research Institute.