Why the U.S. is unlikely to curtail China’s critical minerals dominance

The U.S. hosted a critical minerals summit to diminish China’s dominance in global battery production, amid complexities of trade dynamics and public-private investments linked to Chinese firms, particularly in lithium-rich South America.

The United States government recently hosted a critical minerals summit aimed at reducing China’s predominant role in the global production of smartphones, weapons systems, lithium-ion batteries and electric vehicles (EVs).

The meeting, which included representatives from Argentina, Australia, Bolivia, Canada, Chile, the Democratic Republic of Congo, India, the European Union, Japan, South Korea and the United Kingdom, is part of a larger structural trend that Canadian Prime Minister Mark Carney recently called a “rupture” to the rules-based international order.

At first glance, the U.S. government’s weaponization of tariffs and trade indicate changing dynamics in global trade and the development of critical minerals, advanced manufacturing and emerging technologies. On closer inspection, American efforts to weaken China’s dominance over the critical minerals industry face a more complicated reality and an intricate web of public- and private-sector investment agreements tied to Chinese firms.

According to the International Energy Agency, China accounts for more than 80 per cent of global battery production. The figure jumps to 90 per cent for grid scale batteries that are used to store wind and solar power.

Global battery sales have grown sixfold since 2020, a direct result of falling prices and the competitiveness of China’s low-cost manufacturing model. Over the same period, manufacturing of grid-scale battery systems has expanded 20-fold.

Within this reality, the idea that the U.S. can strategically reduce China’s role in the production and processing of critical minerals appears highly unlikely.

Over the past year, the U.S. upped its efforts to reduce China’s involvement in South America, a region that accounts for more than 50 per cent of the world’s known lithium deposits.

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