The United States is making steady strides in a critical mineral race, which has been considered by some to be yesterday’s war that the country already lost to China. Billions of dollars invested in public-private projects combined with reforms made through executive orders over the past few years created a more favorable industrial environment for making tangible progress in the onshoring of such minerals.
Importantly, the ongoing race between Washington and Beijing – long defined as one for rare earths, nickel, zinc and other strategic mineral deposits – is increasingly moving down the supply chain to include refineries, separation plants and entire industrial ecosystems built around them.
Considerations for the ownership structures of companies along the supply chain and the advantages competing governments could gain through indirect influence over them should therefore be incorporated into national critical minerals strategies in a proactive way.
China has already demonstrated how processing can become a strategic asset in addition to the ownership of large deposits. In the field of rare earth elements production, in which China already holds nearly half of the world’s total deposits, up to 95% of separation and refining capacity is also concentrated in Beijing’s hands. In gallium and germanium production – minerals vital for the manufacturing of computer chips, solar panels and electric cars – China has a near-total monopoly.
Stay ahead of the geopolitical week.
MD Briefing delivers expert analysis across five global fronts — the Indo-Pacific, energy, geoeconomics, European security, and the Middle East — every Monday morning. Free.
Beijing first imposed export controls on germanium and gallium in 2023 and later escalated measures and outright banned exports to the U.S. in 2024, threatening the supply of materials vital for a number of high-value industrial sectors.
Other mineral-producing countries have also picked up on China’s strategy. As one of the first, Indonesia imposed a similar export ban on its unrefined nickel ore, having realized that the value of a mineral increases dramatically when a country can also process it at home.
Washington is now trying to build a similar kind of industrial resilience and strategic leverage. Korea Zinc’s Project Crucible is a useful example here. The $7.4 billion joint venture with the U.S. government and the South Korean refining firm is building a large smelting facility in Clarksville, Tennessee and will produce 13 critical minerals, including germanium, gallium and antimony. These minerals are vital for U.S. defense and technology.
Collaborative projects of this kind have an important caveat: While governments can subsidize refining capabilities to be built on their country’s soil, those firms’ decisions and proprietary technology can be controlled by foreign entities via their ownership structures.
Korea Zinc’s ongoing governance dispute with Young Poong and MBK Partners, who have sought to gain control over the company in a battle for seats on the board of Korea Zinc, is a timely illustration of the risk. MBK Partners has had a long track record of business cooperation with China, which extends to the automotive sector, where zinc is a vital material in the process of galvanization. It worked alongside Chinese state-owned automakers such as BAIC and Dongfeng in addition to Chinese investment firms on the acquisitions of CAR Inc. and eHi. China Investment Corporation also owns approximately 5% of one of MBK Partners’ investment funds. With regards to Project Crucible, Young Poong and MBK Partners both initially opposed the joint venture, claiming that the Project lacks business needs and undermines Korea’s national security by putting strategic assets under U.S. influence. After their attempts failed, the two detractors eventually sought to take ownership over the project during a launch event in Tennessee.
Such ties raise serious questions about the extent to which a scenario in which MBK Partners and Young Poong acquired more than 50% ownership of Korea Zinc would pose significant risks to U.S. critical minerals and national security strategies.
Indonesia has already faced this problem in its nickel strategy. Its downstreaming strategy helped position the country as a processing hub with earnings increasing significantly. Nevertheless, Chinese companies continue to control about 75% of Indonesia’s smelting capacity, providing the overwhelming majority of capital, technology and expertise. This has essentially exchanged one dependency for another.
In the context of the U.S.’s new strategic partnerships, ownership should become a serious consideration as a change in control can affect the implementation timetable for new projects, capital commitment, the list of suppliers as well as customers, and production itself.
In the form of offtake agreements, that is, securing the right to buy future mineral output, China does not even necessarily need to control a firm to gain or retain leverage in the critical minerals sphere. Technical partnerships by means of supplying processing equipment or engineering expertise can similarly create pathways towards dependence.
When it comes to a project subsidized by the government, as in the case of Korea Zinc’s joint venture project, which has been backed by a $210 million CHIPS Act award , ownership and governance can no longer be treated separately from national strategy.
The U.S. has made important progress in rebuilding critical minerals capacity, but the next phase of this strategy should also examine who controls the companies operating refineries, who finances their expansion and with whom they form business relationships. Leaving strategic influence vulnerable to changes in ownership or indirect foreign access should not be treated as peripheral corporate matters, but as integral components of U.S. critical minerals and national security policy.
