China has firmly established itself as the world’s dominant force in the production and supply of critical minerals.

These minerals include rare earth elements (REEs), cobalt, lithium, and other materials essential for modern technologies such as smartphones, electric vehicles (EVs), renewable energy systems, and military defense applications. With China controlling an estimated 70-90% of the global production of some of these critical materials, the international community is increasingly concerned about the geopolitical, economic, and environmental implications of this dominance.

The vast concentration of power in the hands of one nation raises important questions about the future of global supply chains, the fairness of market access, and the protection of nations’ natural resources. This article examines China’s role in critical minerals production, the risks associated with the over-exploitation of natural resources, and the legal frameworks that can be developed to protect nations from undue resource extraction, ensuring a more equitable and sustainable global system.

1. China’s Dominance in Critical Minerals Production

Critical minerals are fundamental to the manufacturing of products ranging from electronics to green technologies. Rare earth elements (REEs), such as neodymium and dysprosium, are integral to the production of magnets used in wind turbines, electric vehicle motors, and advanced military equipment. Similarly, lithium and cobalt are key components of lithium-ion batteries that power smartphones, laptops, and electric vehicles. As the world increasingly shifts toward renewable energy and electric vehicles in the fight against climate change, the demand for these minerals has skyrocketed.

China’s dominance in critical minerals production has evolved over the last few decades. Through strategic investments in mining operations, processing facilities, and international trade agreements, China has been able to secure control over nearly the entire supply chain. For example:

• Rare Earth Elements (REEs): China accounts for around 70-80% of global rare earth mining, with even higher concentrations of refining and processing capabilities.
• Lithium: As the world’s largest producer of lithium, China is playing a central role in the growing market for electric vehicles and energy storage technologies.
• Cobalt: A substantial proportion of global cobalt production comes from China, making it a key player in the global battery supply chain.

While this dominance has provided China with significant economic leverage, it also raises critical concerns about the concentration of control over essential global resources. Over-reliance on a single country for such crucial materials poses serious risks, including supply disruptions due to geopolitical tensions, price volatility, and potential economic coercion.

2. The Risks of Over-Exploitation of Natural Resources

The over-exploitation of natural resources is a growing concern, especially in regions where critical minerals are mined under questionable conditions. The extraction of critical minerals often comes with significant environmental and social risks, including:

A. Environmental Degradation

Mining for critical minerals frequently leads to deforestation, pollution, and ecosystem destruction. The extraction of rare earth elements, for example, often involves the use of toxic chemicals like sulfuric acid, which can contaminate surrounding water supplies and harm local communities. In regions where environmental regulations are lax or poorly enforced, the impact of mining operations can be devastating.

B. Human Rights Violations

The mining of minerals like cobalt, which is predominantly sourced from the Democratic Republic of Congo (DRC), has been linked to child labor, poor working conditions, and human rights abuses. This exploitation of vulnerable populations can result in serious violations of international labor standards and undermine the ethical sourcing of critical minerals.

C. Geopolitical Instability

The centralization of critical minerals production in a single country, such as China, creates significant geopolitical risks. In the event of a diplomatic or trade dispute, the country in control of these resources could leverage its position to disrupt supply chains, manipulate prices, or restrict exports, potentially destabilizing global markets. This has been seen with China’s temporary halt of rare earth exports to Japan in 2010, which serves as a warning for the vulnerability of global supply chains.

3. The Need for International Legal Frameworks

To mitigate the risks posed by the over-exploitation of natural resources, global legal frameworks must be established to ensure that critical minerals are extracted and traded in a way that benefits all nations, promotes sustainability, and protects human rights. The following legal reforms and regulations could help address the challenges associated with the extraction of critical minerals:

A. Strengthening International Mining Regulations

International agreements should be put in place to regulate the mining of critical minerals in a way that ensures environmental protection and sustainable development. The UN Guiding Principles on Business and Human Rights provide a useful framework for encouraging responsible business practices in resource extraction, while the OECD Due Diligence Guidance can help companies identify and mitigate risks related to human rights and environmental harm in the mining supply chain.

Countries should also work together to develop more robust standards for the sustainable extraction and processing of critical minerals. This includes ensuring that mining operations are conducted with minimal environmental impact, such as reducing water and energy usage, properly managing waste, and minimizing contamination. Strengthening regulations for tailings management and reclamation of mining sites could prevent environmental disasters and protect local ecosystems.

B. Promoting Ethical Sourcing and Transparency

Legal requirements for due diligence in the supply chain are essential for promoting ethical sourcing of critical minerals. This involves establishing traceability systems that allow companies and consumers to verify the origin of the minerals they use. Several countries, such as the United States and European Union, have already begun implementing laws that mandate greater transparency in the supply chains for conflict minerals, such as cobalt and tin.

The European Union’s Conflict Minerals Regulation, for example, requires companies to ensure that their supply chains for minerals do not fund armed conflict or contribute to human rights abuses. Such legislation should be expanded globally to ensure that all minerals, particularly critical ones like rare earths and lithium, are sourced ethically.

C. Creating a Global Minerals Trading Agreement

A binding global minerals trading agreement could help regulate the extraction and trade of critical minerals by setting out clear rules for pricing, trade, and environmental impact. Such an agreement could also establish mechanisms for market stabilization and prevent monopolistic practices. By encouraging diversification of supply chains, nations could reduce their dependence on any one country, particularly China, and ensure that resources are distributed more equitably around the world.

This agreement could also address concerns over resource nationalism, whereby countries seek to control the extraction of critical minerals within their borders, potentially limiting access to global markets. Establishing a multilateral approach to resource governance would provide stability to both producers and consumers and encourage transparency in the global market.

D. Strengthening Regional Cooperation

Countries should also pursue regional agreements to strengthen cooperation on critical mineral extraction. For example, the African Union could work with its member states to create collective standards for the extraction of cobalt, lithium, and other critical minerals in Africa, ensuring that environmental and labor standards are met while maximizing the benefits for local communities. Similarly, the Association of Southeast Asian Nations (ASEAN) could develop cooperative efforts to manage and regulate the extraction of rare earth elements in the region.

E. Promoting Research and Development for Alternative Sources

To reduce global dependence on critical minerals controlled by a single nation, international legal frameworks should encourage research and development into alternative sources of these minerals. This includes the exploration of recycling technologies for used electronic products, the development of substitute materials in technology manufacturing, and investment in deep-sea mining and space-based mining as potential future sources of critical minerals.

4. Conclusion: Legal Reforms for a Sustainable Future

China’s dominance in critical mineral production highlights the importance of global cooperation and strong legal frameworks to regulate resource extraction, trade, and consumption. By creating international agreements that promote sustainable and ethical practices, countries can better protect their natural resources and ensure that the benefits of these materials are equitably shared.

Through strengthened mining regulations, ethical sourcing requirements, and global cooperative frameworks, the international community can mitigate the risks of over-exploitation and reduce the geopolitical leverage that comes with resource monopolies. Only through coordinated action and comprehensive legal reform can nations safeguard their natural resources, protect the environment, and create a more resilient and sustainable global economy.