By: Ashwini Thakare and Piyush Verma
As the global clean energy transition accelerates, access to critical minerals has emerged as one of the most consequential strategic questions shaping industrial competitiveness. Yet the central constraint facing governments and industries today is not the availability of mineral reserves themselves. It is the ability to refine, process, and convert those materials into the inputs required for advanced manufacturing, energy systems, and national security applications. In this evolving landscape, processing capacity, not the geographical possession or the mining, has become the true determinant of strategic advantage.
China’s position in this ecosystem illustrates this reality with clarity. While it does not dominate global reserves of lithium, cobalt, or rare earth elements, it has spent decades building an integrated processing base that spans refining, separation, and downstream manufacturing. Through sustained investment, coordinated industrial policy, and long-term planning, China established capabilities that few others attempted to replicate at scale. Over time, this approach allowed it to become the primary processor of rare earths and battery materials, embedding itself deeply into global value chains. The result is not merely market share but influenced from the ability to convert raw materials into the components that modern economies depend upon. This outcome was not accidental. It reflected a strategic assessment that processing capacity would be as important as resource access in determining industrial leadership. While many countries focused on upstream extraction or relied on global markets to manage midstream risks, China prioritized the development of refining infrastructure, logistics, and technical expertise. That long-term focus created an ecosystem capable of supporting everything from consumer electronics and electric vehicles to defense and advanced manufacturing.
Other countries, facing the implications of this concentration, have begun responding in ways that reflect their own institutional strengths. Japan, after experiencing supply disruptions more than a decade ago, invested heavily in material recovery and processing efficiency. Its emphasis on urban mining and recycling allowed it to reduce dependence on imported raw materials while strengthening domestic technical capabilities. Australia, drawing on its resource base, has pursued a different path — moving deliberately to expand processing capacity so that it can supply higher-value materials rather than exporting unrefined ore. These efforts, supported by targeted public investment and regulatory certainty, signal a broader shift toward industrial upgrading rather than simple extraction.
What these experiences make clear is that success in mineral processing is less about geology and more about governance, capital, and coordination. Refining facilities are capital-intensive, technologically complex, environmentally challenging, and characterized by long development timelines. They require financing structures that can absorb risk over many years, often through public–private partnerships, concessional finance, and guaranteed long-term offtake agreements. Where such mechanisms exist, projects can reach scale.
Technology also plays a decisive role. Advances in separation techniques, solvent recovery, and process optimization have made modern refining more efficient and more adaptable to different regulatory environments. Countries that invested early in these capabilities have been better positioned to integrate into high-value supply chains and meet the performance standards demanded by Environmental, Social, and Governance (ESG)-sensitive advanced manufacturers. These capabilities also help explain why processing has remained concentrated in a small number of jurisdictions despite broader access to raw materials.
Institutional capacity is equally important. Processing facilities require predictable permitting systems, consistent regulatory oversight, and long-term policy clarity. Where governance frameworks are stable and transparent, investment follows and when they are uncertain or fragmented, projects stall. Over time, this divergence has shaped the global geography of processing more than differences in resource endowment or geographical control over resources.
Human capital forms another critical, and often overlooked, pillar. Advanced processing depends on specialized expertise in metallurgy, chemical engineering, and systems integration. Countries that have invested in technical education, applied research, and industry–academia collaboration have been better able to move from pilot projects to commercial-scale operations. These capabilities compound over time, creating ecosystems that are difficult to replicate quickly elsewhere.
Increasingly, international cooperation has become central to addressing these challenges. No single country can efficiently develop the entire critical minerals value chain on its own, particularly for rare earths and battery materials. Partnerships that align investment, coordinate standards, and pool demand are emerging as a pragmatic response. Cooperation among the United States, Australia, Japan, and other Indo-Pacific economies reflects a growing recognition that resilience lies not in isolation, but in diversified and trusted networks. Africa, which holds a substantial share of global critical mineral resources, also represents a significant opportunity. With appropriate infrastructure, financing, and regional coordination, African economies could play a larger role in processing and value addition rather than remaining primarily exporters of raw materials. India is also beginning to play a more active role in this evolving architecture. The recently announced collaboration among Australia, Canada, and India on critical minerals unveiled on the margins of the G20, signals a shared intent to link resource development, processing capabilities, and downstream manufacturing across complementary economies.
Taken together, these trends point to a broader shift in how industrial competitiveness in the mineral extraction business is defined. Processing capacity is no longer a secondary consideration; it is a strategic asset that shapes economic resilience, technological leadership, and long-term growth potential. China’s experience demonstrates what sustained focus in this area can achieve. The response now unfolding across other economies suggests that this lesson has been absorbed. The next phase of the global critical minerals economy will therefore be shaped not by who controls the largest deposits, but by who can most reliably transform resources into the materials that power modern industry. Countries that align policy, capital, and capability around this objective will be best positioned to compete in an increasingly contested global economy. Those that do not may find themselves permanently dependent, regardless of how abundant their resources may be.
Ashwini Thakre is a Consultant with the World Bank Group and Piyush Verma is Senior Fellow for the Energy & Climate Program at ORF America.