The Resource Curse Is Back. But We’re Looking in the Wrong Place

Highlights

• The emerging critical minerals economy differs fundamentally from oil: power lies not in mining locations but in control of processing, refining, and industrial ecosystems—predominantly concentrated in China.
• Unlike the traditional resource curse of mismanaged mineral wealth, the real risk is strategic dependence on integrated supply chains that take decades to build and can be weaponized through export controls and refining monopolies.
• Solving this requires building alternative processing capacity in the West, not just better governance in resource-rich nations—yet there's little evidence of political will matching the scale of industrial execution needed.

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By now, the warning feels familiar: a new age of critical minerals—lithium, cobalt, rare earths—will bring with it a new version of the “resource curse,” destabilizing developing economies and fueling geopolitical conflict. In a recent Foreign Affairs essay (opens in a new tab), Rabah Arezki, Frederick van der Ploeg, and Michael Ross make that case with force and clarity. They are not wrong. But they are not quite right either.

The problem is not what they see. It is what they miss.

The authors describe a world in which countries rich in minerals may fall prey to corruption, economic distortion, and volatile demand. This is the classic story of oil: windfalls that distort governance, economies that fail to diversify, and markets that boom and bust.

But the emerging mineral economy does not resemble the oil age nearly as much as we would like to believe. Oil was about where the resource sat in the ground. Critical minerals are about who controls the system that transforms them.

That distinction changes everything.

Consider rare earths. Mining is scattered across continents, but refining—the step that converts raw material into usable inputs—is overwhelmingly concentrated in China. The same pattern holds across graphite, cobalt, and other critical materials. The leverage is not at the mine. It is in the processing plants, the chemical know-how, and the industrial ecosystems that take decades to build.

The Foreign Affairs piece acknowledges concentration. But it treats it as a feature of geography and governance, not of deliberate industrial strategy. It frames instability as a byproduct of weak institutions, rather than as something that can be engineered through control of chokepoints—such as export licenses, quotas, and refining monopolies.

This is not just a semantic difference. It is a strategic one.

If the risk were merely that developing countries might mismanage mineral wealth, the solution would be familiar: better governance, transparency, and diversification. But if the real power lies in processing and industrial systems, then the problem is not mismanagement. It is dependence.

And dependence is not solved by reforming Congo or Chile. It is solved by building capacity elsewhere—something the West has been slow, and in many cases unwilling, to do.

Here, too, the essay is silent. There is little discussion of how long it would take to build alternative refining capacity, how much it would cost, or whether political ambition in Washington and Brussels is matched by industrial execution. There is no serious accounting of how difficult it is to replicate China’s integrated supply chains, or how pricing power can be used to deter new entrants.

In other words, the authors diagnose volatility. They do not diagnose control. This matters because it reframes the stakes. The coming era is not simply one of unstable commodity markets or misgoverned resource states. It is one in which industrial ecosystems confer geopolitical power, and where that power can be exercised with precision.

The old resource curse was about too much wealth in the wrong places. The new one may be about too little capability in the right ones. Until we understand that, we will keep preparing for the last crisis—while the next one takes shape somewhere deeper in the supply chain.