// Directive: X0483
By SIRM
Part One
Critical minerals (CMs) generally refer to minerals essential for economic and national security that are subject to supply chain risks and vulnerabilities. Minerals are often considered critical because of their unique properties, scarcity, and the lack of viable substitutes. The unique physical and chemical properties of these minerals—e.g., conductivity, magnetism, and strength—make them irreplaceable in many modern technologies. These vital metals and minerals are used in communications, critical infrastructure, defence, renewable energy, and much else besides. Many industries would shut down overnight without them, including defence. Moreover, the demand for these minerals is only expected to increase. In short, CMs are integral to our modern way of life and our future.
Growing reliance on CMs for defence technologies has emerged as a crucial issue in many nations’ national security calculations. While economic and national security are often seen as separate spheres, economic security is increasingly recognised as a critical component of national security, particularly when disruptions in supply chains can directly impact defence and technological capabilities. Unfortunately, we have seen processing and mining supply chains increasingly concentrated in recent years. China’s central position in global critical mineral production has created highly concentrated supply chains. For example, China dominates the rare earths supply chain, controlling 70% and 90% of rare earth mining and refining, respectively. Such concentration means that the supply chain is particularly vulnerable to shocks such as natural disasters, war or geopolitical fallout.
The classification of certain minerals as “critical” often arises because one country or another currently is heavily reliant on importation to secure that mineral. From the broader Western perspective, securing a reliable and sustainable supply of CMs has proven difficult, particularly as global competition for resources intensifies and geopolitical tensions rise. Further complicating this challenge is the dual-use nature of many CMs, which are essential for both civilian and defense purposes.
For this reason, we are seeing increasing state intervention in critical mineral markets. Governments are figuring out how best to grow domestic production as well as use international partnerships across the globe to increase supply chain resilience. The prospects for these efforts will be discussed before moving on to the special topic of defence.
Part two
Current vulnerabilities in many countries’ CM supply chains stem from decades of globalisation and liberalization. Short-term focus on outsourcing in mining and processing has prioritized economic efficiency and lower environmental standards over strategic resource sovereignty. One way to try and reverse this trend is to grow and optimise domestic production. This makes the most of a country’s mineral deposits while cultivating our midstream processing and recycling to help enable a circular economy and reduce the impact of external shocks.
Such efforts likely require more than simply encouraging the private sector to invest in the sector. Price decreases and volatility—in 2024, for example, lithium spot prices fell by 75%—often hit new and emerging projects the hardest. Investors therefore prefer to invest in stable and diversified supply chains rather than new domestic projects. Moreover, the long lead time for a mine to come online after mineral discovery, and the uncertainty associated with future commercial success, present additional risks to investment. Governments should therefore provide access to finance to help reduce risk for these projects.
As domestic production grows so will the need for the commensurate workforce and talent to help meet this demand. Governments will need to develop and fund education, training, and apprenticeship programs in mining, metallurgy, and advanced material processing to bridge the talent gap.
Part three
For most nations—for all nations, to some degree—future demand for CM will not be met by domestic production alone. The need to diversify supply of critical minerals through working with international partners will remain a pressing need. Governments can support industry to identify investment opportunities in shared supply chains by building and leveraging their country’s respective international partnerships. This will help to create a secure and diverse supply of critical minerals that limits exposure to global shocks.
Multilateral organisations and initiatives can play an important role in coordinating investment and action on supply chains. Friend-shoring of supply chains is an emerging concept that prioritises establishing supply chain partnerships with politically stable and friendly nations. This approach is particularly relevant for CMs, since it aims to reduce the risk of supply chain disruptions that result from geopolitical tension, strife, and conflict with adversarial countries. The U.S.-led Minerals Security Partnership (MSP), established in June 2022, represents a significant initiative in the friend-shoring direction. Referred to as “NATO for minerals and metals,” or as “metallic NATO,” the MSP is a strategic move to secure reliable and responsible supply chains for CMs that are crucial for the defence industry and other high-tech sectors.
Part four
In the sensitive sector of defence, there is an even more heightened imperative to secure the supply of critical minerals needed to meet future demand while supporting global diversification of critical minerals supply chains. The strategic importance of CMs is highlighted by their indispensable role in a wide array of military applications. Defence CMs are a specific subset within this category, focused exclusively on minerals that are crucial for defence and military technologies, highlighting their essential role in maintaining military capabilities and readiness. These include everything from precision-guided munitions and advanced communication systems to space-based military assets.
The Russian-Ukraine War demonstrates that mass remains as important as ever in modern conflict. It highlights the necessity of a robust CM supply chain for both advanced technology and large-scale defence production needs. Net importers of critical minerals face acute strategic vulnerabilities in the event of hostilities.
The classified nature of many military technologies obscures the true demand for CMs in this sector. However, we do know where some areas of “criticality”. Hypersonic missiles, for example, rely on advanced heat-resistant alloys containing niobium to withstand extreme temperatures during flight. The rare earth elements (REEs)—in particular, dysprosium, praseodymium, and neodymium—arguably are the most significant defence CMs because of their unique properties and their indispensable roles in advanced military systems. These minerals are integral to precision-guided munitions, radar, sonar systems, jet engines, missile guidance systems, night vision technologies, and are crucial for the high-strength magnets in control systems. Space-based military assets, such as satellites and direct-ascent anti-satellite (DA-ASAT) weapons, are highly mineral-intensive, which further emphasises the critical role of minerals in emerging defence technologies.
Options to implement targeted, industry-led resilience measures for the defence sector include stockpiling, including through procurement mechanisms.
Part Five
To ensure a reliable, sustainable and future-proof supply of CMs, nations must navigate the delicate balance between national security and economic feasibility. Whilst the following recommendations consider the trade-offs associated with these two imperatives, the evolving geopolitical environment demands that governments give increasing weight to national security concerns.
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