Breaking China's Chokehold on Critical Mineral Supply Chains

Asia and the Pacific

2025-07-15

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Source: Congress.gov

Summary

The meeting addressed the United States' significant reliance on the People's Republic of China (PRC) for critical minerals and explored strategies to secure resilient, diversified supply chains free from Chinese control for economic and national security purposes. <citation data-start-id="2.4" data-end-id="2.8"></citation><citation data-start-id="2.20" data-end-id="2.21"></citation><citation data-start-id="3.2" data-end-id="3.3"></citation> This dependency, reinforced by China's global investments and market tactics, poses a direct threat to the United States and its allies. <citation data-start-id="2.13" data-end-id="2.13"></citation><citation data-start-id="7.3" data-end-id="7.3"></citation>

Themes

China's Dominance and Predatory Practices

The People's Republic of China maintains a substantial "chokehold" on the global critical minerals market, controlling 92% of rare earth element processing and dominating battery and magnet component manufacturing. <citation data-id="2.12"></citation> This dominance extends to 70% of global rare earth element mining and 99% of gallium refining, essential for advanced microelectronics in U.S. defense systems. <citation data-start-id="71.5" data-end-id="71.7"></citation> China weaponizes this control through export restrictions and price manipulation, as demonstrated by bans on minerals like gallium, germanium, and rare earths. <citation data-id="2.13"></citation><citation data-id="9.17"></citation><citation data-start-id="67.8" data-end-id="67.10"></citation> These tactics, often backed by state subsidies and unethical labor practices, distort global markets and undermine competition. <citation data-id="7.35"></citation><citation data-id="11.16"></citation><citation data-id="11.24"></citation> This strategy is seen as a "quiet war" to displace the United States and deprive it of industrial capacity needed for defense and modern economy. <citation data-start-id="7.1" data-end-id="7.9"></citation>

Strategies for Diversification and Resilience

To counter China's dominance, several strategies were proposed, including strengthening international partnerships with allies like Canada, Australia, Japan, and South Korea through initiatives such as the Minerals Security Partnership (MSP) and the Quad Critical Minerals Initiative. <citation data-id="2.24"></citation><citation data-id="3.14"></citation><citation data-id="127.1"></citation> Domestic production must be increased, despite challenges in permitting, and the U.S. should leverage its significant mineral resources, including rare earth elements found in coal and coal waste. <citation data-start-id="2.14" data-end-id="2.15"></citation><citation data-start-id="71.13" data-end-id="71.15"></citation> The use of U.S. international finance tools like the Development Finance Corporation (DFC), Export-Import Bank (Ex-Im Bank), and the Defense Production Act (DPA) needs reauthorization and strengthening. <citation data-id="9.9"></citation><citation data-start-id="22.1" data-end-id="22.2"></citation> Targeted tariffs are also recommended to protect strategic industries from China's market distortions. <citation data-id="9.19"></citation> Additionally, developing recycling capabilities for critical minerals could meet up to 30% of global needs in the coming decades. <citation data-id="11.47"></citation><citation data-id="20.3"></citation>

Challenges and Obstacles

Significant challenges impede the U.S. and its allies in securing critical mineral supply chains. The lengthy and complex permitting processes for mining projects in the U.S. can take decades, driving up costs and discouraging private investment. <citation data-id="2.18"></citation><citation data-id="30.8"></citation> The federal government's financial capacity is limited in fully subsidizing large-scale domestic expansion. <citation data-id="2.19"></citation> China's ability to flood markets with low-cost minerals, often due to state subsidies and lower environmental/labor standards, makes it incredibly difficult for U.S. and allied producers to compete fairly. <citation data-id="15.11"></citation><citation data-id="41.4"></citation> There is also a lack of public awareness regarding the severity of the critical mineral dependency on China. <citation data-id="53.6"></citation><citation data-id="55.9"></citation>

Tone of the Meeting

The tone of the meeting was largely urgent and bipartisan, with speakers emphasizing the critical importance of addressing the issue of mineral dependency for national security and economic competitiveness. <citation data-start-id="3.2" data-end-id="3.3"></citation><citation data-id="3.7"></citation> There was a shared recognition of the severe threat posed by China's market dominance and manipulative tactics. <citation data-id="7.5"></citation><citation data-id="9.14"></citation> Speakers called for bold and immediate actions, highlighting the need for collaboration between government, the private sector, and international partners. <citation data-id="7.11"></citation><citation data-id="9.32"></citation> While acknowledging past failures and the complexity of the problem, there was an optimistic outlook that with coordinated effort, the U.S. and its allies could overcome this challenge. <citation data-id="11.31"></citation><citation data-id="45.12"></citation>

Participants

Transcript

Test.
Representative Troy Downing be allowed to sit on this dais and participate in today's hearing.  Without objection, so ordered.   The Committee on East Asia and the Pacific will come to order.  This hearing aims to explore strategies for the United States to reduce global dependence on the People's Republic of China for critical minerals by partnering with the private sector and allied nations.  Let me now recognize myself for an opening statement.  I think we're still morning, so good morning.   and welcome to East Asia and the Pacific Subcommittee's hearing titled Breaking China's Chokehold on Critical Mineral Supply Chain.  I want to thank our witnesses for joining us this morning.  Critical minerals, lithium, cobalt, real earth elements and others are the building blocks of modern technology, powering electric vehicles, microchips and advanced defense systems.   Global demand for these minerals is surging, with lithium demand alone growing nearly 30% annually from 2021 to 2024, driven by rising electric vehicle battery production.  Yet,   The People's Republic of China, or PRC, controls 92% of global real earth element processing and dominates the manufacturing of battery and magnet components.  This chokehold, reinforced by China's tens of billions in global mining investments and tactics like price manipulation and export restrictions, poses a direct threat to the United States and our allies.   While the U.S.  possesses significant mineral resources, domestic production alone cannot meet the speed or scale of this demand.
The U.S.  manufacturing, their operation costs increase significant in the region, increasing the regional bureau.  It will take decades to permit a natural mining in America.   Moreover, the federal government lacks the financial capacity to fully subsidize the level of investment needed to drive large-scale private sector expansion of domestic production.  Relying solely on domestic solutions is insufficient, therefore, so we need a bold global strategy to secure resilient, diversified supply chains free from Chinese control.   The current geopolitical landscape offers an opportune window to act.  The recent developments such as President Trump's critical minerals agreement with Ukraine and the U.S.  facilitated peace deal in the Democratic Republic of Congo open new opportunities to access vital resources.   We've also seen coordination like the recently announced Quad Critical Minerals Initiative underscore the importance of critical minerals to broader regional engagement.  As the administration renegotiates trade relationships, we can strengthen partnerships with our allies to build non-Chinese supply chains, enhancing both economic and national security.   So today's hearing, we will explore these challenges and opportunities.  We will examine how to build a proactive global strategy to establish supply chains free from Chinese dominance.  So our goal today is very clear, to ensure the United States and its allies have secure, reliable access to the critical minerals that will define the future of technology and security.
I look forward to a productive discussion.  And now let me now recognize the ranking member from California, Representative Barra, for his opening statement.
Thank you, Madam Chairwoman.  And obviously, this is an incredibly important hearing.  Your testimony could be my testimony, and that demonstrates the bipartisan nature of   creating redundant supplies of critical minerals and rare earth elements, weaning ourselves off of the chokehold that China currently has, where we've watched them use their current export restrictions on rare earths in retaliation to some of the trade negotiations that President Trump's leading.  We can't be dependent on that.  And again, so with that, certainly thank you for this important hearing.   Creating and building a diversified, resilient, secure critical mineral supply chain is crucial to our national security.  That's why landmark legislation like the Inflation Reduction Act, in which Senator Manchin played a key role, led to historic investments to support domestic critical mineral supply chains and started to diversify us away from foreign entities of concern.   Unfortunately, in the big beautiful bill, some of these demand incentives with regards to electric vehicles, battery manufacturing, et cetera, potentially are going to be undermined.  And that's something that certainly as we look at implementation of this bill, I think we ought to correct to continue to build those demand signals.  Also, while domestic production of critical minerals is crucial for the United States security, we can't do it alone if we want to shift away from reliance with China.   That's why our subcommittee is going to play an important role to make sure the State Department, the Development Finance Corporation, and other national security agencies have the tools they need to build resilient global supply chains.  I've, you know, in the prior administration worked closely with the State Department, worked closely with Under Secretary Fernandez,   to build those strong international partnerships on supply chain resilience, both bilaterally and through multilaterally initiatives, including the Minerals Security Partnership.
The MSP brings together 14 partner countries, including Australia, India, Japan, South Korea, and the United Kingdom,   as well as the European Union to strengthen critical mineral supply chains.  The MSP finance network convenes development finance institutions like the DFC and its equivalents in the MSP partner nations to leverage private sector investment for critical mineral projects, focusing on minerals that are most relevant for advanced technologies, defense, energy, and industrial processes.  It's a positive sign that our ally, South Korea,   has now succeeded the United States as chair of the MSP.

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