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Geopolitical Shifts Drive Protectionism in Critical Minerals Race

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Highlights

  • Governments in Europe and North America are increasing protectionism to secure critical mineral supply chains.
  • 72 nations have enacted more interventionist policies to protect resource access and energy security.
  • Strategic initiatives aim to reduce dependency on China and Russia through domestic mining and international partnerships.

As competition for critical minerals intensifies, governments in Europe and North America are adopting unprecedented levels of protectionism and state intervention, reminiscent of early 20th-century practices.

A recent study on the Resource Nationalism Index (RNI) published by Verisk Maplecroft, a consultancy, reveals significant policy shifts aimed at securing mineral supply chains essential for energy security and the green transition. This trend reflects mounting geopolitical tensions and fallout from global shocks like the pandemic and Russia’s invasion of Ukraine.

Key Findings

The report highlights a marked increase in resource nationalism, with 72 nations enacting more interventionist policies over the past five years. Europe, notably Germany, has seen the sharpest rise in protectionism, spurred by short-term needs such as energy security and long-term goals of critical mineral independence. Germany’s policies include seizing Russian energy assets and forming strategic partnerships with resource-rich allies like Canada and Australia to secure access to rare earths, lithium, and cobalt. Similarly, the EU’s Critical Raw Minerals Act and initiatives like the European Raw Materials Alliance aim to cut reliance on external sources by promoting domestic mining, recycling, and investments in Africa and South America.

In North America, the U.S. has tightened trade and investment controls under the CHIPS and Science Act and the Inflation Reduction Act, limiting Chinese involvement in critical sectors. The Mineral Security Partnership, involving allied nations, seeks to bolster domestic production and diversify supply chains. Canada mirrors this trend with its Critical Minerals Strategy and stricter foreign investment rules, effectively restricting Chinese influence while promoting sustainable mining practices.

Limitations and Assumptions

The study assumes that reshoring and diversifying supply chains will address national security concerns without significantly impacting costs. However, decoupling from China, the dominant player in critical mineral processing, risks raising prices, slowing innovation, and creating supply bottlenecks. Moreover, the focus on Western-led alliances may underestimate the resilience of rival nations, potentially fostering countermeasures that further fragment global markets.

Rare Earth Exchanges probed for biases.  The framing of China and Russia as primary adversaries simplifies the geopolitical landscape, neglecting the nuanced interdependence of global trade. The report’s optimism about Western initiatives also downplays challenges like technological gaps, environmental hurdles, and the slow pace of developing alternative supply chains.

But the paper’s conclusion certainly covers a trend: the intensifying race for critical minerals underscores a shift toward strategic resource nationalism, where state intervention and corporate alliances aim to secure supply chains and reduce reliance on geopolitical rivals. While these measures enhance domestic resilience, they also create a complex and costly global risk landscape, requiring careful balancing of national interests, sustainability, and economic growth.

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