The Quad, comprising the United States, Japan, Australia, and India, has launched a Critical Minerals Initiative to counter China's dominance in the rare earths and critical minerals sector. This initiative aims to secure and diversify the supply chains for these essential resources, which are crucial for various strategic sectors, including defense, electric mobility, telecommunications, and electronics.
The Quad Critical Minerals Initiative is a direct response to concerns over China's near-monopoly on rare earth elements and mineral processing. China controls a significant portion of the global critical mineral supply chain, with substantial interests in mines worldwide and a highly developed midstream segment for refining and processing. According to the International Energy Agency, China accounts for approximately 62% of global rare earth production and 92% of their processing. They also control 85% of rare earth processing, 65% of nickel refining, and more than half of lithium output. This dominance has raised fears that China could weaponize its control over these resources, potentially disrupting supply chains and exerting economic and political pressure.
The initiative reflects the Quad nations' shared concerns about the potential for China to use restrictions on mineral exports as leverage, as demonstrated in past trade disputes. The joint statement released by the Quad emphasized the importance of diversified and reliable global supply chains, expressing concerns about the "abrupt constriction and future reliability of key supply chains, specifically for critical minerals" and the use of "non-market policies and practices". The Quad aims to reduce reliance on any single country, particularly China, through this collaborative effort.
Each Quad member brings unique strengths to the initiative. Australia has vast reserves of lithium and rare earth minerals. Japan possesses advanced capabilities in urban mining and recycling. The United States offers scale and investment. India's role is growing, with new lithium discoveries, a growing manufacturing base, and strategic partnerships. By pooling financial resources and coordinating investments, the Quad nations aim to de-risk investments, scale up mineral processing within trusted networks, and establish an independent supply chain outside of China. The initiative will focus on joint investments, shared processing capacity, data sharing, and coordination on export controls.
The Quad's strategy involves strengthening cooperation on securing and diversifying reliable supply chains and promoting electronic waste (e-waste) critical minerals recovery and reprocessing. This includes coordinating with private sector partners to encourage increased investments in critical minerals projects. By improving intra-Quad partnerships and solidifying trade with other countries, the Quad nations aim to "China-proof" their critical mineral supply chains.
However, the Quad's initiative faces potential challenges. Trade frictions and disagreements among the partners could strain the alliance. Some analysts suggest that a more market-driven approach, focusing on easing trade tensions and building stable cooperative ties, would be more effective. The high costs associated with developing alternative supply chains and the complexities of coordinating diverse national interests also pose hurdles. Despite these challenges, the Quad Critical Minerals Initiative represents a significant step towards building a more resilient and secure supply chain for critical minerals, reducing dependence on China, and promoting economic and national security.
