The New Resource Governance

A rare point of agreement across recent U.S. administrations has been recognition of the national security and economic stakes of a secure minerals supply. There is now a broad consensus that minerals are essential for twenty-first century strategic industries, and governments are increasingly organizing industrial and economic-security strategies around access to them. Semiconductors to power the AI boom, batteries to electrify transport, magnets and wiring for power generation and defense technologies — each depends on a reliable supply of mineral feedstocks. Meanwhile, resource-rich countries are seeking to capitalize on projected market growth and convert mineral wealth into near-term domestic resource mobilization and long-term industrialization.

Given how vital these minerals have become to economic and national security, it is tempting to draw parallels with oil — the defining strategic commodity of the twentieth century. Oil is indispensable to industrial production, consumer use, and the projection of military power. It underpinned unprecedented economic growth and industrial transformation. Oil wealth provided a developmental ladder for countries endowed with reserves, from Saudi Arabia to Norway. And oil is the commodity around which the modern machinery of supply security was built: strategic reserves, producer diplomacy, and decades of policy aimed at energy independence.

Yet to cast strategic minerals as the “new oil” is to confuse more than clarify. Oil is a comparatively homogeneous and fungible commodity, with standardized production chains, a century and a half of market development, and deep global spot and futures markets. Minerals, meanwhile, differ sharply in market size, production structure, strategic function, and exposure to technological change. Some are traded in large and relatively liquid markets; others are produced and sold through thin, opaque, and highly concentrated supply chains. Some underpin broad-based industrial activity, while others matter principally because a small quantity is indispensable to a set of military, energy, or advanced manufacturing applications. Almost all mineral supply is slow and costly to expand, yet demand can shift quickly as technologies evolve, substitutes emerge, or policy priorities change. As minerals become central to geoeconomic diplomacy, these distinctions necessitate policies tailored to the specific vulnerabilities, commercial realities, and development prospects of each mineral and country.

Mineral markets are smaller, thinner, and more heterogeneous than oil markets

“Critical mineral” is a policy label, not a cohesive geological definition. Each mineral has its own production chain, often novel, capital-intensive, and non-transferable to other resources. Some, like finished forms of copper and nickel, are traded on commodity exchanges, but for many, including the primary forms that producer countries often export, markets remain thin, opaque, and volatile. “Critical” is therefore better understood as highlighting the necessity and supply-chain vulnerability of the mineral – which is specific to country-contexts — and not its overall demand outlook.

Primary mineral markets are a fraction of the size of primary fossil-fuel markets, and much of their value is concentrated within iron and copper trade, two commodities that are broadly essential to infrastructure and together represent three-quarters of global primary mineral markets. Minerals that attract the greatest strategic attention often occupy far smaller markets, precisely due to the unique vulnerability and concentration specific to their production and use. Their importance follows from the rippling consequences of supply disruption, not from the scale or stability of upstream demand. For example, the IEA estimates that full implementation of China’s expanded rare-earth export controls could place USD 6.5 trillion in annual downstream production outside China at risk — about 600 times the value of Chinese exports subject to mineral export controls in 2025.

Unlike oil, where the marginal barrels from a new field will barely dent a trillion-dollar market, for specialized minerals, a single new production site can swing global supply and send prices collapsing. Gallium, for example, is relatively straightforward to recover at alumina refineries, but the market is so small that additional production could quickly overwhelm demand and undermine the prices needed to justify investment in new recovery capacity. Even with iron ore — the world’s largest mineral market — the entrance of substantial new high-grade supply from the Simandou project in Guinea is expected to weigh on prices and pressure established producers from Australia to Brazil. Mining is therefore both lumpy, because a single site can contribute meaningfully to global supply, and clunky, because production is complex, capital-intensive, and tightly coupled to processes specific to each mineral.

Mineral supply is slow, rigid, and embedded in complex value chains

While oil and gas projects can often be brought online in a matter of a few years, mining projects can take a decade or more from discovery to production — on average, it takes about 6 years to develop an oil project and nearly three times that for a new mining project.¹ Extracting oil and gas is like tapping into a pressurized reservoir; once drilled, natural pressure does much of the work, and output can be adjusted as market conditions change. Mining, by contrast, typically demands relentless mechanical labor at industrial scales, requiring correspondingly enormous capital expenditures. Once a mine is built, it cannot be turned off without incurring huge costs, and ramping production up or down in response to price spikes can take years. This rigidity makes mineral supply far less responsive to price or policy shifts, to the benefit of those who already control production and processing.

Mineral production is also tightly bound to the geology and engineering of a particular resource. Some minerals support dedicated extraction operations. Others are recovered as co-products from the same ore or in trace amounts during the processing of another metal. Depending on the mineral, expanding production could require a new mine, the redesign of an existing operation, or investment in recovery capacity at a refinery whose output is governed primarily by the market for another product.

Fossil fuels feed into relatively short supply chains, with the majority burned for energy consumption. Mineral value chains, in contrast, are long and complex, and their end products are often durable, lasting 10-30 years, with potential for recycling and reuse. The motivation for raw-mineral exporters to develop processing and refining capabilities is clear, as far greater commercial value circulates in processed metals and semi-manufactured products than in less-processed ores — with this comparison even more pronounced against the end-products that utilize them.

Successfully downstreaming, however, requires a comprehensive industrial policy that addresses not only the immense capital and technical requirements of processing but also its infrastructure, skilled labor, and energy needs, along with the associated environmental and social burdens. Refineries depend on low-cost and reliable power, efficient transport and logistics, a steady supply of chemicals, technical expertise across firms and the workforce, and more. Their development also creates new waste streams and environmental impacts that must be carefully managed. Taken together, these factors mean that new capacity outside established processing hubs often carries steep capital and operating-cost premiums, making it difficult for new entrants to compete with dominant suppliers.

Long-term demand depends on strategic use and technological choice

While the future need for critical minerals as a class is clear, the demand outlook for most critical minerals individually is anything but. Many critical-mineral applications exist within sectors with rapidly developing technological frontiers; technological substitution and input-efficiency improvements present a persistent uncertainty to long-term demand forecasts. Lithium, for example — which is often erroneously referred to as the “new oil” or “white gold” — has been at the center of the energy-transition critical-minerals boom, propelled by its dominance in leading battery chemistries. Yet alternatives are emerging in stationary and grid-scale storage, while outsized expectations during the last growth cycle contributed to overcapacity and a corresponding crash in prices. While prices have recovered from recent lows, battery-grade lithium carbonate prices in July remained at less than one-third of their peak in late 2022.

Non-battery applications for lithium, meanwhile, are narrow and offer little prospect of comparable growth. Batteries now account for almost 90% of global lithium use, leaving long-term demand overwhelmingly dependent on lithium-based battery chemistries. Even if we can safely anticipate needing more batteries over the long term, we cannot assume that all of them will require lithium — which was, until recently, the default assumption by scenario modelers. Capital spending by lithium companies and investment in new exploration both fell by nearly half in 2025 compared to 2024, reflecting how the private sector is already adjusting to both near-term volatility and long-term uncertainty in lithium markets. There are significant risks for countries and communities banking on the lithium sector as a source of long-term revenue and development opportunity. Similarly, cobalt – which was once considered irreplaceable in battery cathodes – is already being engineered out of many applications due to human rights and cost concerns, especially through the proliferation of lithium-iron-phosphate batteries. As a result, long-term demand projections for cobalt have been revised downward.

The mismatch between decade-long extraction-development horizons and the pace of technological change makes investment in extraction and processing a fundamentally risky proposition. Even when long-term demand is expected to grow, cyclical and near-term mismatches between supply and demand growth, efficiency gains in key technologies, entirely new technologies, or a host of other factors can undermine market prices and project economics. These risks extend into processing, where excess capacity and intense competition can frustrate downstreaming ambitions and affect even mature markets with strong infrastructure and access to capital. In copper, tight concentrate supply and rapid smelter expansion have pushed treatment and refining charges — what smelters are ordinarily paid by miners — to historic lows. Annual benchmark charges settled at zero in 2026, while spot charges have remained negative since 2024, with smelters paying miners to take their ore. Smelters are consequently operating well below nameplate capacity and have become increasingly dependent on volatile revenue from by-product streams. These conditions are placing growing pressure on existing operations and could further concentrate strategic midstream capacity.

The New Resource Governance

The greater complexity and variability of mineral markets and supply chains imply that frameworks inherited from oil and gas will not transfer effectively to policies seeking to ensure supply security or domestic value capture. Critical minerals instead require a new generation of resource strategies that are highly case-specific and grounded in the details of particular mining processes, mineral markets, value chains, and end uses.

Advanced economies seeking to reduce concentrated dependencies must examine which capacities deserve targeted supply- or demand-side support, where resilience requires direct market intervention, and where long-term partnerships with producer countries are necessary. The appropriate instrument will vary by market. For small markets, security may be addressable through stockpiles, offtake arrangements, targeted alliances, or public risk-sharing. For larger markets, policy will also need to consider supporting infrastructure, permitting, investment conditions, and the commercial and market barriers to diversification at scale, and multi-stakeholder coordination is essential.

Resource-rich countries, meanwhile, must translate ambitions for mining-driven development, downstream industrial expansion, and domestic resource mobilization into targeted and sequenced initiatives. They need to distinguish between opportunities that can support durable revenue, employment, and industrial development and those likely to produce stranded assets, fiscal shortfalls, or costly ambitions lacking sufficient market support. Opportunity hinges on market size, price volatility, the structure of demand, the cost and complexity of production, the availability of power and other critical infrastructure, and the state’s ability to design fiscal and industrial policy around realistic expectations. In some cases, these factors may favor a strategy focused on a strong tax system, local employment and economic spillovers, and the use of mining revenue to support economic diversification. In others, targeted downstreaming within a broader industrial-development agenda can offer promise, so long as risks are managed carefully.

Importing and producer countries alike are left with disappointing outcomes when minerals strategies are built around temporary price spikes and fail to properly account for uncertainties. Importers risk committing public capital against vulnerabilities that technological change resolves on its own, or funding new capacity into markets too small to absorb it. Producers risk subsidizing mining operations that cannot compete on cost, building fiscal expectations on prices that do not hold, or pursuing costly downstreaming plans that fail to account for energy, input, labor, and market-access requirements. And if resource-rich countries are asked to supply minerals without a serious strategy for domestic value capture, the global politics of critical-minerals partnerships will become increasingly fragile.

Yet because many mineral markets are small and have received far less sustained institutional attention than oil and gas, the knowledge needed to design and implement the fine-grained strategies critical minerals require remains thin and uneven. In its absence, oil-and-gas experience, expertise, and advice — based on assumptions around fungibility, market structure, supply responsiveness, and demand stability that are inapt for many minerals — may look like acceptable substitutes. They are not. Critical minerals demand a different kind of resource governance. Only by engaging with the details can governments match their ambitions to the specific opportunities and constraints before them, and effectively translate strategic demand into durable public value.