Highlights

• A study by Payne Institute researchers demonstrates China's strategic control of critical minerals through non-profit-maximizing behaviors.
• China uses mineral production as a geopolitical weapon, prioritizing long-term global control over immediate economic gains.
• Traditional economic models fail to capture the complex strategic motivations behind dominant producers' market behaviors.

In “Modeling Dominant Producer Priorities in Critical Mineral Models (opens in a new tab)”, Reese Epper, Sito Abasi Udoh, Jordan Kengue, Brad Handler, and Dr. Ian Lange (opens in a new tab), via Payne Institute for Public Policy (opens in a new tab), Colorado School of Mines report on China’s overwhelming control of critical minerals like cobalt, nickel, and graphite is more than a market imbalance—it’s a geopolitical weapon. In this compelling new study, Colorado-based researchers model how a dominant producer like China may act not to maximize profits but to secure long-term global control, price stability, and even domestic employment. The team challenges traditional economic models, shifting the narrative from classical supply-and-demand to strategic behavior shaped by national interest.  A topic Rare Earth Exchanges has pondered significantly since the launch of the media site October 10, 2025.

The authors build customized models for key minerals, simulating scenarios in which China, acting as the dominant producer, adjusts output to achieve strategic outcomes—like crushing fringe producers by undercutting prices or stabilizing markets to reinforce its grip. The models reveal that traditional policy tools can backfire when dominance—not profit—is the goal. Surprisingly, other nations' well-intentioned price stabilization efforts may strengthen China’s control by reducing the volatility, which gives smaller producers a fighting chance.

Using real production and pricing data, the authors demonstrate that China's past behavior—such as its 2010 rare earth embargo on Japan—was not an anomaly but a preview of a repeatable, systemically powerful strategy. By modeling market dynamics through this lens, the study underscores how geopolitical motivations override classical economic assumptions, a reality that policymakers, investors, and supply chain strategists must now accept.

Crucially, the study finds that attempts to protect domestic or fringe producers without confronting China’s strategic behavior may result in long-term dependency. Policies that fail to account for non-profit-maximizing behavior—such as strategic stockpiling or state-subsidized price suppression—can accelerate market exits by competitive players, entrenching Chinese dominance even further. And it’s clear that the Chinese rare earth complex represents moves for political and economic control more than profit-seeking behavior.

In short, the Payne Institute’s research sends a wake-up call for those who purport to care about these things. Critical mineral markets are not just economic arenas—they are battlegrounds of industrial policy and statecraft. Any serious plan to diversify or defend national supply chains must move beyond classical models and prepare for a world where dominant players like China prioritize power over profit. This modeling approach lays the foundation for more realistic forecasting—and smarter interventions—in a rapidly evolving mineral security landscape.

Follow the link to the paper (opens in a new tab).