The Strategic Execution Gap: Why America Can Find Critical Minerals-and Still Lose Them

Highlights

• China dominates critical minerals not just through bribery tolerance but via a state-backed ecosystem combining financing, infrastructure, and guaranteed downstream demand.
• FCPA enforcement and compliance friction reduce Western investment in high-corruption jurisdictions by up to 24%, giving rivals a structural advantage in securing strategic assets.
• Case studies in Guinea, DRC, and Myanmar show how regulatory asymmetry and capital gaps let Chinese firms absorb critical mineral assets that U.S. companies identified but could not secure.
• The Minerals Security Partnership and revised DOJ FCPA guidelines signal Washington recognizes the problem, but prosecutorial discretion alone cannot close a structural execution gap.
• Winning in Great Powers Era 2.0 requires turning geology into a transaction and a transaction into a full supply chain, including refining, infrastructure, and host-country value-chain development.

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China did not dominate critical minerals because America outlawed bribery. But Western companies operate inside a legal, financial, and governance perimeter that can make investment in difficult jurisdictions slower, costlier, and riskier. The Foreign Corrupt Practices Act (FCPA), sanctions, anti-money-laundering requirements, human-rights considerations, and extensive third-party due diligence all contribute to that friction. Meanwhile, Chinese competitors have often entered the same jurisdictions supported by state-linked financing, infrastructure, diplomatic relationships, and guaranteed downstream demand. But compliance is only part of the problem.

Rare Earth Exchanges® refers to this larger phenomenon as a Strategic Execution Gap: the difference between identifying a strategically important resource and possessing the diplomatic, financial, legal, industrial, and commercial machinery necessary to secure and develop it, develop the partnership, and grow together. And importantly, in Great Powers Era 2.0™, that gap could become decisive.

REEx Insight: Finding the Resource Is No Longer Enough

Critical minerals are turning foreign ministries into business-development organizations.

Embassies, development banks, export-credit agencies, and political leaders will increasingly compete to secure mining concessions, infrastructure, financing, processing, and offtake agreements. Low- and middle-income resource countries will simultaneously demand something more: not simply foreign companies extracting their minerals, but investment that helps them move up the value chain.

This changes global business development. The competitive unit is increasingly not the mining company alone. It is the nation-state-backed ecosystem surrounding the company.

China has practiced a version of this integrated model for years. The United States and its allies are now responding. But aggressive commercial diplomacy will accomplish little if Western governments identify strategic opportunities that their own companies cannot competitively execute. That is the Strategic Execution Gap.

The Regulatory Friction Inside the Gap

Imagine two companies evaluating the same mineral project in a difficult African or Asian jurisdiction. One must price geology, metallurgy, and commodity risk—but also politically exposed persons, beneficial ownership, sanctions, human rights, intermediaries, internal controls, banks, and potentially years of regulatory exposure.

Its competitor may arrive with financing, construction capability, infrastructure, political support, and a downstream customer already waiting for the material.

Research by Hans Christensen, Mark Maffett, and Thomas Rauter found that following intensified extraterritorial FCPA enforcement, affected developed-country companies reduced capital investment in high-corruption countries by approximately 16%, rising to roughly 24% among companies with greater internal-control risk. Acquisition due-diligence periods increased approximately 34%, or 43 days.

That does not mean anti-corruption laws should disappear. It means compliance has an economic cost—and that cost matters when competitors operate under different institutional systems.

Case One: Simandou—When an Intermediary Becomes a Strategic Risk

Guinea's enormous Simandou iron-ore development illustrates the regulatory component of the Strategic Execution Gap. In 2011, Rio Tinto retained a politically connected French investment banker to help preserve its Simandou mining rights. According to the SEC, the consultant began working without a written agreement defining his services.

Rio ultimately paid him $10.5 million. The SEC found that the consultant, acting as Rio's agent, offered or attempted an improper payment of at least $822,000 to a Guinean official. Rio settled the SEC case in 2023 for $15 million.

Chinese participation in Simandou predated the enforcement case, so claiming FCPA enforcement “gave Simandou to China” would be false. Rio remains deeply involved.

But Chinese state-linked Chinalco interests and Baowu also became embedded in the enormous mine-rail-port development. The lesson is more important than the fine: companies operating within different legal and institutional systems can pursue the same strategic asset carrying significantly different risk profiles.

Case Two: Congo—America Sells, China Finances

The Democratic Republic of Congo demonstrates another component of the gap: capital and strategic patience. In 2016, U.S. authorities resolved the Och-Ziff African bribery case involving high-risk intermediaries and natural-resource transactions, including in the DRC. DOJ and SEC consequences exceeded $400 million. That same year, Freeport-McMoRan sold its controlling interest in the enormous Tenke Fungurume copper-cobalt operation to China's CMOC for $2.65 billion. Chinese financial institutions, including China Development Bank, helped finance the acquisition.

Four years later, Freeport sold its undeveloped Kisanfu copper-cobalt project to CMOC for another $550 million. The strategic outcome was striking: an American miner substantially exited one of the world's premier cobalt provinces while a Chinese company accumulated two major assets.

Causation matters. Freeport said Tenke proceeds would help repay debt. There is no solid evidence that FCPA enforcement caused Freeport's exit.

The case instead illustrates capital asymmetry. China didn't simply find cobalt. Its financial and industrial ecosystem helped finance control over it.

Case Three: Myanmar—The Resource the West Can Barely Touch

Heavy rare earths expose yet another part of the Strategic Execution Gap™: strategic accessibility. A 2024 U.S. government advisory identified Myanmar's rare-earth sector as an area of concern, warning companies about sanctions, corruption, money laundering, military connections, and human-rights risks.

Those concerns are legitimate. But they have strategic consequences. Conventional Western miners, banks, and insurers face extraordinary obstacles operating there. Myanmar, meanwhile, borders China's enormous rare-earth separation and magnet industry. Global Witness, using Chinese customs data, reported Chinese imports of heavy-rare-earth oxides from Myanmar increasing from approximately 19,500 tonnes in 2021 to 41,700 tonnes in 2023.

The paradox is difficult to escape: strategically important dysprosium- and terbium-bearing resources occur in precisely the type of jurisdiction Western institutions have powerful reasons to avoid, while China's downstream system remains positioned to absorb the material.

Great Powers Era 2.0: The Embassy Becomes a Deal Team

This is where the Strategic Execution Gap™ becomes geopolitical.

Rare Earth Exchanges expects an unprecedented international business-development push around strategic resources. Diplomats will identify projects. Trade ministries will court governments. Geological agencies will provide technical assistance. Development banks and export-credit agencies will de-risk investments. Governments will facilitate offtakes. Presidents and prime ministers will increasingly discuss mines, refineries, and processing facilities alongside defense, tariffs, and trade. This is already beginning.

The U.S.-led Minerals Security Partnership has combined host-government engagement with financial and diplomatic support for strategic mineral projects. Its Finance Network connects institutions including DFC, EXIM, EIB, JBIC, JOGMEC, KEXIM, and UKEF.

But Great Powers Era 2.0™ adds another negotiating dimension. Resource-rich developing countries increasingly want to move beyond dig-and-ship economics. They want refining, processing, manufacturing, infrastructure, technology transfer, employment, and greater participation in downstream value creation. Consequently, tomorrow's winning proposal may not be: “We will buy your ore.” It may be: “We will help you build an industry.”

China has demonstrated the strategic power of packaging resources with infrastructure, financing, and industrial development. Western governments increasingly must be capable of constructing competitive packages of their own.

America's Emerging Contradiction

A U.S. ambassador can identify an extraordinary deposit. State can elevate it strategically. DFC or EXIM can examine financing. Washington can negotiate with the host government.

But then comes execution.

If the American company faces materially greater compliance uncertainty, financing friction, third-party exposure, transaction costs, and execution time than its competitor, the diplomatic offensive can still end with someone else controlling the asset.

And if the host government demands a refinery, railway, power plant, local processing facility, and guaranteed market access as part of the transaction, America's challenge becomes greater still. Business development without execution capacity does not secure supply chains.

Washington Has Recognized Part of the Problem

Washington has already begun reconsidering the balance. The February 2025 executive order pausing FCPA enforcement argued that excessive enforcement could damage American competitiveness and national security, specifically referencing access to critical minerals and strategic infrastructure. DOJ's June 2025 guidelines subsequently directed prosecutors to consider national-security interests and whether foreign bribery deprived identifiable American companies of fair competitive opportunities.

That recognizes part of the tension. But prosecutorial discretion alone cannot close a structural execution gap.

REEx Conclusion: Build a System That Can Win

America does not need to legalize bribery. Corruption itself increases political instability, expropriation risk, and project costs. America instead needs to make compliant investment globally competitive. That means risk-proportional third-party standards; clearer boundaries around independent subcontractors; accelerated DOJ opinions for strategic projects; government-backed political-risk insurance; shared beneficial-ownership and compliance infrastructure; competitive export financing; long-term offtakes; and financing packages capable of combining mines with power, rail, ports, and processing.

Above all, it requires turning economic diplomacy into execution capacity.

State Department officials, ambassadors, and their allied equivalents will increasingly become originators of strategic opportunities. But successful business development requires far more than introductions.

The winning country must be able to identify the resource, structure the transaction, finance it, navigate the host government, build the infrastructure, process the material, guarantee demand—and increasingly help the host country move up the value chain.

That is the emerging contest of Great Powers Era 2.0.

China did not dominate critical minerals simply because the West outlawed bribery. It built an ecosystem capable of financing, constructing, processing, and politically supporting projects across difficult jurisdictions. The West now needs a competitive version of that ecosystem—without abandoning the rule of law.

In Great Powers Era 2.0, finding the resource is no longer enough. The winner will increasingly be the country that can turn geology into a transaction—and a transaction into a supply chain.

Sources & References

1. U.S. Department of Justice — Foreign Corrupt Practices Act (FCPA) DOJ's primary FCPA resource, including statutory framework, enforcement materials, and compliance guidance. DOJ — Foreign Corrupt Practices Act (opens in a new tab)
2. U.S. Securities and Exchange Commission — Rio Tinto / Simandou Enforcement Action (2023) Primary source for the Guinea case: Rio Tinto's $10.5 million consultant payment, alleged attempted improper payment of at least $822,000, and $15 million SEC penalty. SEC — Rio Tinto Charged With FCPA Violations (opens in a new tab)
3. Rio Tinto — 2026 SEC Filing Source for the continuing Australian investigation associated with the historic Simandou payments and Rio's disclosure concerning potential financial consequences. Rio Tinto SEC Filing — June 2026 (opens in a new tab)
4. U.S. Department of Justice — Och-Ziff FCPA Enforcement Action Primary source concerning bribery schemes involving intermediaries and natural-resource transactions in Africa, including the Democratic Republic of Congo. DOJ — Och-Ziff FCPA Resolution (opens in a new tab)
5. Freeport-McMoRan — Tenke Fungurume Sale to CMOC Corporate documentation for the 2016 sale of Freeport's controlling interest in Tenke Fungurume to China Molybdenum/CMOC for $2.65 billion. Freeport-McMoRan — Tenke Transaction
6. Freeport-McMoRan — Kisanfu Sale to CMOC Corporate source for Freeport's subsequent $550 million sale of its interest in the undeveloped Kisanfu copper-cobalt project in the DRC. Freeport-McMoRan — Kisanfu Transaction
7. U.S. Government — Burma/Myanmar Business Advisory Government warning addressing sanctions, corruption, money laundering, military relationships, and risks associated with doing business in Myanmar, including the rare-earth sector. U.S. Government — Burma Business Advisory
8. Global Witness — Myanmar Rare Earth Investigation Source for the investigation of Myanmar's heavy-rare-earth industry and Chinese trade, including reported growth in Chinese imports of rare-earth oxides from Myanmar. Global Witness — Myanmar Rare Earths Investigation (opens in a new tab)
9. U.S. Government Accountability Office — Conflict Minerals GAO assessment of the Dodd-Frank conflict-minerals disclosure regime and its effects in the Democratic Republic of Congo, including the finding that available evidence did not demonstrate improved peace and security. GAO — Conflict Minerals Report
10. Christensen, Maffett & Rauter — Foreign Corruption Regulation and Investment Academic research underlying the article's important quantitative finding that intensified extraterritorial anti-bribery enforcement was associated with reduced investment in high-corruption countries and longer acquisition due diligence.
11. International Energy Agency — Global Critical Minerals Outlook 2025 Source for China's extraordinary concentration across critical-mineral refining and the broader supply-chain concentration argument. IEA — Global Critical Minerals Outlook 2025 (opens in a new tab)
12. International Energy Agency — Global Critical Minerals Outlook 2026 Updated analysis of critical-mineral supply concentration and the substantially higher capital and operating costs facing diversification projects outside incumbent producing jurisdictions. IEA — Global Critical Minerals Outlook 2026 (opens in a new tab)
13. U.S. Department of State — Minerals Security Partnership (MSP) Primary government source supporting the Great Powers Era 2.0™ argument that critical-mineral diplomacy increasingly combines governments, private industry, host-country engagement, project development, and financing. State Department — Minerals Security Partnership (opens in a new tab)
14. Minerals Security Partnership — Finance Network Particularly important to the REEx thesis because it documents coordination among development-finance institutions and export-credit agencies to mobilize financing for critical-mineral projects. State Department — MSP Finance Network Meeting (opens in a new tab)
15. White House — Executive Order on FCPA Enforcement, February 10, 2025 Primary source for the administration's argument that FCPA enforcement practices can affect U.S. economic competitiveness and national-security interests abroad. White House — Pausing Foreign Corrupt Practices Act Enforcement (opens in a new tab)
16. U.S. Department of Justice — Guidelines for FCPA Investigations and Enforcement, June 2025 Primary source for revised DOJ enforcement considerations, including U.S. national-security and competitiveness considerations. DOJ — FCPA Guidelines (opens in a new tab)