Four reasons the West lost critical minerals

1. Chinese competition

2. Environmental outsourcing

3. Geology

4. Industrial decline

For starters, predatory Chinese pricing destroyed Western production. Magnesium is most instructive. Back in 1995, production was distributed across Brazil, Canada, China, France, Israel, Norway, Russia and the US. US magnesium production was then 13-times that of China and amounted to 45% of world magnesium production. By the end of the 1990s, Chinese state-subsidised pricing undercut every Western competitor, and production in Canada, Norway and France collapsed. US producers followed suit.

The last US producer, US Magnesium, struggled to hold on, buoyed by anti-dumping duties; it declared force majeure in 2021 and filed for bankruptcy last year. Thirty years after it dominated the magnesium market, the US no longer has any domestic production, and China controls 88% of the world’s production, with 50% overcapacity. The pricing undercut remains in force, with Chinese magnesium trading well below any remaining Western producer at $1.15/lb.

Metallurgical silicon and polysilicon are on the same downward trajectory, being pushed offshore. Market forces will not reverse this path without structural intervention.

Secondly, the West subcontracted production to other countries to limit its environmental liabilities. For instance, antimony minerals (stibnite ore) contain significant concentrations of lead and arsenic alongside their primary compound. Today, stibnite is concentrated, roasted, oxidised and smelted into antimony metal in China. Processing generates a slag loaded with toxic impurities, which is disposed of locally. The cleansed antimony metal is then exported to Western markets for further processing into flame retardants and lead alloy hardeners. US and EU producers import the clean product, without inheriting the environmental cost.

Any domestic reshoring strategy needs permitting frameworks that enable responsible handling of environmental co-products, or it will replicate the stibnite scenario onshore with fierce backlash from stakeholders. If producers and governments increase their production capacity, the environmental impact of metal waste should be assessed and mitigation measures implemented.

Another reason is the monopoly on mineral geology held by certain countries, which has made production structurally unviable elsewhere. In short, not all offshoring was driven by Chinese pricing. Low-grade deposits of niobium were once available internationally. That changed when Brazil’s Companhia Brasileira de Metalurgia e Mineração (CBMM) discovered a deposit of exceptional quality, now estimated at 842 million tonnes, giving it an unparalleled cost advantage over competitors. CBMM and Brazil now control more than 90% of the global niobium supply. Geology rendered production of ferroniobium, the main commercial form of niobium, structurally unviable (and unprofitable) in the West.

The US has imported its entire niobium supply since 1959, a fact that has only become a strategic vulnerability in this decade. By 2020, Chinese entities owned 26% of Brazilian niobium production, including a direct stake in CBMM dating back to 2011. Niobium is an essential component of the heat-resistant superalloys used in hypersonic missile systems and advanced aerospace equipment, technologies at the centre of the global power competition. The US supply chain’s vulnerability has strategic consequences as Beijing has effective leverage over a material vital to the US military.

Lastly, de-industrialisation eroded the infrastructure that supported heavy industry. Ferrotungsten was historically smelted in the West but is now produced almost exclusively in China and Russia using the same 50-year-old technology developed by Western engineers – but the workforce to operate that technology no longer exists in its home market.

The US’ most serious loss is the specialised infrastructure, smelting and refining required: trained metallurgists, chemical suppliers, refractory lining fabricators, and the small and medium-sized enterprises (SMEs) that keep heavy industrial operations functional. By 2029, more than half of the domestic mining workforce will reach retirement age.

Additionally, the number of mining and mineral engineering programmes in the US has shrunk by 40%, from 25 in 1982 to 15 in 2023. In contrast, China currently operates more than 38 mineral processing schools and 44 mining engineering programmes.

To sum it up, structural interventions include ongoing investment in metallurgical education and supporting SME infrastructure, as well as market protection against unfair trade, and accelerated, financially viable mining development for geologically monopolised minerals. If the US and EU want to avoid repeating the unfortunate cycle of offshoring their production, both governments must understand the sector’s historical progression. While throwing free money onshore for critical minerals is necessary, it is not an adequate solution for now.