Energy geopolitics is undergoing its most fundamental transformation since the discovery of oil. While petroleum remains crucial, the world's focus is shifting toward a complex web of critical materials—lithium, cobalt, rare earths, uranium, and renewable technologies—that power the global energy transition. China dominates processing and manufacturing across multiple supply chains, controlling over 80 percent of solar panel production and most battery material refining. Meanwhile, resource-rich nations from Kazakhstan to the Democratic Republic of Congo have emerged as pivotal players in this new order. Unlike the oil era's relatively simple geography of wells and pipelines, today's energy security depends on securing dozens of materials across fragmented supply chains. This transition creates new vulnerabilities: concentrated processing capabilities, resource nationalism, and the risk that climate goals may deepen rather than reduce energy dependencies. The nations that master this complexity—through diversification, strategic partnerships, or technological innovation—will define the balance of power in the coming decades.
The Strategic Context
The architecture of global energy is fragmenting. For most of the past century, energy security meant controlling oil flows through a handful of chokepoints—the Strait of Hormuz, the Suez Canal, key pipelines. Today's energy map is exponentially more complex. The transition to renewable energy and electric vehicles has created dependencies on dozens of critical materials, each with its own geography, politics, and vulnerabilities.
This shift coincides with intensifying great power competition. The United States and European Union are racing to reduce their dependence on Chinese supply chains while Beijing leverages its dominant position in processing and manufacturing. Russia continues wielding energy as a weapon through traditional hydrocarbons and its control over uranium enrichment. Meanwhile, resource-rich developing nations are asserting greater sovereignty over their mineral wealth, demanding higher royalties and local processing requirements.
The stakes extend beyond economics. Control over critical material supply chains increasingly determines industrial competitiveness, military capabilities, and climate transition speeds. Nations that fail to secure reliable access risk economic stagnation and strategic vulnerability.
Critical Material Dependencies
Lithium: The New Oil
Lithium has become the most strategically important material of the energy transition. Global demand is expected to increase sixfold by 2030, driven by electric vehicle adoption and grid-scale battery storage. Yet production remains highly concentrated in the "lithium triangle" of Chile, Argentina, and Bolivia, which together hold roughly 60 percent of known reserves.
Chile currently dominates production, extracting lithium from the Atacama Desert's brine pools. However, recent moves toward nationalization under President Gabriel Boric have created uncertainty for international investors. Bolivia sits on potentially the world's largest reserves but has struggled with technical challenges and political instability. Argentina, more welcoming to foreign investment, is rapidly expanding production but faces water scarcity issues.
Processing tells a different story. China controls approximately 60 percent of global lithium refining capacity, transforming raw ore and brine into battery-grade chemicals. This gives Beijing leverage over the entire downstream supply chain, from batteries to electric vehicles.
Cobalt: The Ethics Problem
Cobalt presents perhaps the most acute ethical and security dilemma in critical materials. The Democratic Republic of Congo produces roughly 70 percent of global supply, much of it under conditions that raise serious human rights concerns. Artisanal miners, including children, work dangerous sites while Chinese companies control most major industrial operations.
Alternative sources exist—Australia, Cuba, and the Philippines produce smaller quantities—but scaling them would take years. Meanwhile, battery chemistry innovations are reducing cobalt requirements, with some manufacturers moving toward cobalt-free designs. However, high-performance applications, particularly in electric vehicle batteries, still depend heavily on cobalt-rich chemistries.
Rare Earth Elements: China's Monopoly
Rare earth elements, essential for wind turbines and electric vehicle motors, represent perhaps China's strongest leverage in critical materials. While these elements are not actually rare geologically, their processing requires complex chemical separation techniques that China has mastered over decades.
China controls roughly 85 percent of global rare earth processing capacity. The United States has only one functioning rare earth mine, at Mountain Pass, California, and must ship its ore to China for processing. This dependency became a flashpoint during the 2019 trade war when Beijing threatened export restrictions.
Efforts to build alternative supply chains are underway. Australia's Lynas Corporation operates processing facilities in Malaysia, while the U.S. government has invested in domestic processing capabilities. However, these alternatives remain small relative to Chinese capacity and would take years to scale significantly.
Energy Infrastructure Dependencies
Solar Manufacturing: China's Industrial Policy Success
China's dominance in solar panel manufacturing represents one of industrial policy's greatest successes. Through subsidies, forced technology transfers, and massive scale investments, Beijing has built an integrated supply chain controlling over 80 percent of global production.
This dominance extends across the entire value chain. China produces 97 percent of solar wafers, 91 percent of cells, and 81 percent of modules. The province of Xinjiang alone accounts for roughly 40 percent of global polysilicon production, raising human rights concerns given documented forced labor practices against Uyghur populations.
Western governments are responding with their own industrial policies. The U.S. Inflation Reduction Act provides substantial subsidies for domestic solar manufacturing, while the European Union's Green Deal Industrial Plan aims to boost local production. However, the scale gap remains enormous—China added more solar capacity in 2023 than the United States' entire installed base.
Nuclear Fuel: Russia's Quiet Leverage
Nuclear power is experiencing renewed interest as governments seek reliable, low-carbon baseload electricity. However, the nuclear fuel cycle presents significant vulnerabilities. While uranium mining is relatively diversified—Kazakhstan produces 43 percent, followed by Australia and Canada—enrichment services are highly concentrated.
Russia's Rosatom controls approximately 40 percent of global uranium enrichment capacity and 17 percent of reactor fuel production. This gives Moscow significant leverage over nuclear operators worldwide, including in allied nations. The 2022 invasion of Ukraine highlighted these dependencies when several European utilities scrambled to secure alternative fuel supplies.
The United States banned Russian uranium imports in 2024, but with extensive exemptions allowing continued purchases through 2027. Building alternative enrichment capacity will require years and billions in investment.
Regional Realignment and Alliances
The scramble for critical materials is reshaping diplomatic relationships and creating new forms of strategic competition. Traditional energy partnerships built around oil are evolving into more complex arrangements spanning multiple materials and technologies.
Europe is pursuing "critical raw materials partnerships" with resource-rich nations, offering development aid and market access in exchange for preferential supply agreements. The EU has signed deals with Canada for critical minerals and is negotiating similar arrangements with African nations.
The United States is leveraging defense partnerships to secure supply chains. The AUKUS agreement with Australia and the United Kingdom includes provisions for critical mineral cooperation, while the Quad partnership with Australia, India, and Japan emphasizes supply chain resilience.
China continues expanding its Belt and Road Initiative to secure access to critical materials, often through direct investment in mining operations. Chinese companies have acquired significant stakes in lithium projects across Latin America and cobalt mines in the Democratic Republic of Congo.
Strategic Options and Constraints
Governments face difficult trade-offs in securing critical material supplies. Diversification efforts must balance security concerns with economic efficiency, while climate transition urgency limits the time available for building alternative supply chains.
Stockpiling offers one approach, but most critical materials are expensive and degrade over time. The United States maintains strategic petroleum reserves but has been slower to build stocks of critical minerals. Japan and South Korea have been more aggressive in government-backed stockpiling programs.
Recycling presents longer-term promise but currently provides only small fractions of total supply. Battery recycling could eventually supply significant quantities of lithium, cobalt, and nickel, but building this infrastructure requires sustained investment and supportive policies.
Substitution offers another pathway, with ongoing research into alternative battery chemistries and materials. Sodium-ion batteries could reduce lithium dependence for some applications, while improved recycling could create circular supply chains for critical materials.
Our Take: The world is witnessing energy geopolitics' most profound transformation since oil's emergence as the dominant fuel. Unlike the relatively simple geography of petroleum—wells, refineries, pipelines—today's energy security depends on managing dozens of materials across fragmented global supply chains. This complexity creates both vulnerabilities and opportunities. Nations that successfully navigate this transition through strategic partnerships, technological innovation, and supply chain diversification will gain significant advantages. Those that remain dependent on single sources or fail to adapt their diplomatic and economic strategies risk finding themselves increasingly vulnerable in an era where energy security means much more than securing oil supplies.