How Mineral Supply Chains Work
Notes on the minerals industry: reserves, mining and refining, concentration, by-product metals, export controls, substitution and recycling.
These notes cover how mineral supply chains are structured and why the usual indicators (reserves, mine output, a single country's market share) often mislead. Part 2 applies the same framework to India: India's critical minerals position.
1. The Three Stages
A mineral commodity passes through three distinct stages. Each has its own geography.
| Stage | Definition | Question it answers |
|---|---|---|
| Reserves | Mineral that has been drilled enough to prove and is economic to extract at current prices and technology | Where could supply come from eventually? |
| Mine production | Ore or concentrate actually extracted in a year | Where does supply come from now? |
| Refining and processing | Conversion of ore into material a manufacturer can use (alumina, cathode, separated oxide, metal) | Where is supply controlled? |
A resource is broader than a reserve. It is mineral known to exist, whether or not it pays to extract. Reserves change when prices or technology change, even if no new ore is found. A higher price turns some resource into reserve, and a lower price turns it back (reserves against resourcesReserves vs ResourcesA resource is metal known to be in the ground. A reserve is the part of it that is economic to extract at today's price with today's technology, and that has been drilled enough to prove it. Reserves move when the price moves, which is why a country's reserves can grow without anyone finding anything.See all terms in the glossary).
1.1 The Aluminium Chain
Aluminium passes through four steps. Bauxite ore is mined. The Bayer process refines it into alumina (aluminium oxide) using hot caustic soda. The Hall-Héroult process smelts alumina into metal by electrolysis, using roughly 14 megawatt-hours of electricity per tonne of aluminium. Gallium is a trace element in bauxite and can be recovered from the Bayer process liquor at the refinery.
Guinea leads the mining stage and has almost no presence downstream. It refines about 0.2% of world alumina. China mines about a fifth of world bauxite and leads every later stage. Concentration rises at each step. China's 99% share of gallium follows from where the alumina refineries that installed recovery circuits are located. No policy set that share directly.
The geography of mining and the geography of processing are separate, and processing is usually more concentrated. A statement that a country "controls N%" of a mineral needs to specify the stage: reserves, mine output, refining or finished component.
2. Measuring Concentration
2.1 Two Measures
Leading-country share is the percentage of world output from the largest producer. It is simple to read but ignores how the rest of the market is divided.
The Herfindahl-Hirschman Index (HHI) is the sum of every producer's percentage share squared (HHIHHI (Herfindahl-Hirschman Index)A concentration score: add up every producer's percentage share squared. One supplier with everything scores 10,000; competition regulators call a market concentrated above 2,500. It captures something a top-country share misses, which is whether the rest of the field is many small producers or two large ones.See all terms in the glossary).
- percentage share of producer i
- maximum value, a single producer with 100% of the market
- threshold for a highly concentrated market in the 2023 US Merger Guidelines (2,500 in the 2010 guidelines)
Two markets can have the same 40% leader and very different HHIs. The HHI is higher when the remaining 60% sits with one or two producers than when it is spread across twenty.
2.2 Mining
USGS Mineral Commodity Summaries 2026, 2025 estimates. Mine-stage production. Shares computed against the sum of countries USGS published.
HHI is the sum of squared percentage shares, so a single supplier scores 10,000. Competition regulators call a market concentrated above 2,500. Source: USGS Mineral Commodity Summaries 2026 (ver. 1.3, May 2026).
China leads roughly a dozen critical minerals at the mining stage, but several of the most concentrated mine-stage markets are led by other countries:
| Commodity | Leading producer | Share of world mine output |
|---|---|---|
| Niobium | Brazil | 93% |
| Cobalt | Democratic Republic of the Congo | 75% |
| Platinum | South Africa | 73% |
| Nickel | Indonesia | 72% |
| Natural graphite | China | 80% |
| Tungsten | China | 81% |
Gallium (HHI 9,804) and niobium (HHI 8,728) are close to single-supplier markets.
2.3 Refining
USGS publishes separate refinery or smelter tables for a limited set of commodities: aluminium, alumina, bismuth, cadmium, copper, gallium, indium, selenium and tellurium. Where these tables exist, China's refining share is usually higher than its mining share: bismuth 86%, magnesium metal 88%, tellurium 78%, silicon metal 72%, indium 70%, selenium 52%.
For most other commodities, including rare-earth separation, no country-level processing table exists. Processing concentration is then described only qualitatively in the USGS chapter text.
2.4 Rare Earths
China mined 69% of world rare-earth output in 2025 (270,000 tonnes of rare-earth oxide equivalent out of 390,000). The United States was the second-largest miner at 13% (51,000 tonnes). It still relied on imports for 67% of the rare-earth compounds and metals it consumed.
The explanation is separation (separationSeparation (Rare Earths)Splitting a mixed rare-earth concentrate into the individual elements. The elements are chemically near-identical, so it takes hundreds of solvent-extraction stages. This, not mining, is the step China dominates, and it is the reason mining rare earths elsewhere does not by itself break the dependence.See all terms in the glossary). The fifteen lanthanide elements plus yttrium and scandium are chemically very similar. Splitting a mixed concentrate into individual oxides takes hundreds of solvent-extraction stages in series. Much of the concentrate mined in the United States was shipped abroad for separation and returned as oxide or metal. The mining statistic and the dependency statistic describe different stages.
Toggle between production and reserves. USGS does not publish a country-level table for rare-earth separation.
Reported as zero on this basis, so they carry no bubble: Canada, Greenland, South Africa, Tanzania. Several of them hold reserves; switch to the reserves view.
Source: USGS Mineral Commodity Summaries 2026 (ver. 1.3, May 2026), world mine production and reserves. This is where ore leaves the ground, which for many commodities is not where it becomes usable material.
3. Why Refining Concentrates
Four factors keep refining capacity concentrated even when ore is available elsewhere.
- Capital and power. A smelter is a multi-billion-dollar asset whose economics depend on a 20-year electricity price. Siting an aluminium smelter is mainly a power decision.
- Environmental cost. Refining and separation produce the most hazardous waste streams in the chain: red mud from alumina refining, acidic effluent and radioactive thorium residues from rare-earth processing. A country that declines to host these steps imports their output instead.
- Permitting time. A new alumina refinery takes roughly 3 to 5 years to build, a smelter 4 to 6 years plus a power contract.
- Qualification. A customer must test a new supplier's material in its own process before buying at volume. For battery anode graphite and aerospace alloys this takes one to three years, during which the plant produces without meaningful revenue (qualificationQualificationThe testing a buyer runs before it will accept material from a new supplier. For battery anode graphite or aerospace alloys it can take one to three years, during which the new plant produces without earning. It is the most commonly overlooked delay in any new-supply story.See all terms in the glossary). USGS describes several new Western plants in 2025 as qualification facilities, for example a spherical purified graphite line in Kellyton, Alabama, and a graphite demonstration plant in New York.
3.1 Ore Export Bans
Since 2012 several producing countries have restricted raw ore exports to force processing onshore. USGS Table 4 lists these measures.
| Period | Country | Measure | Outcome |
|---|---|---|---|
| 2020, 2023 | Indonesia | Nickel ore export ban (2020); bauxite and copper concentrate (2023) | Smelter investment, much of it Chinese-financed, followed. Indonesia rose to 72% of world nickel mine output. |
| 2022 to 2023 | Zimbabwe, Namibia, Tanzania | Restrictions on lithium ore and on cobalt, graphite, manganese and rare-earth concentrates | Far less processing investment arrived. |
| 2025 | Democratic Republic of the Congo | Cobalt export ban in February, extended in June, replaced in October by quotas: 18,125 t for the rest of 2025, then 96,600 t a year for 2026 and 2027 (87,000 t issued, the rest stockpiled) | Instrument aimed at price as well as processing. |
| 2025 | Botswana, Malaysia | Raw diamond export ban; raw rare-earth ore export ban | Beneficiation policies. |
| 2029 (announced) | Gabon | Raw manganese ore exports to end | Four years' notice to attract processing investment. |
Indonesia had three conditions the others lacked: large scale, access to nearby capital, and a metal in strong demand. An export ban creates an incentive to build processing. It does not supply the capital.
4. Reserves
4.1 Unmined Reserves
For each country and commodity, reserve share minus production share gives a rough measure of latent capacity: ore that is proven and economic but not being mined.
Both axes are a share of the world total, so the diagonal is parity. Below the line means a country holds more of the world's reserves than it currently produces.
Not plottable, because USGS publishes only one side of the pair: Burma (reserves NA); India (reserves NA); Madagascar (reserves NA); Nigeria (reserves NA); Thailand (reserves NA).
Source: USGS Mineral Commodity Summaries 2026 (ver. 1.3). Reserves are the part of the resource that is economic to mine today, so the figure moves with price and technology as well as with drilling.
For rare earths, China holds 58% of published reserves and produces 69% of world output. The United States produces 13% from about 2% of reserves. Brazil holds 14.6% of reserves and produced 0.5% of output.
| Commodity and country | Reserve share | Production share | Gap (points) |
|---|---|---|---|
| Phosphate rock, Morocco | 69% | 15% | +54.6 |
| Vanadium, Australia | 47% | 0% | +46.6 |
| Zirconium, Australia | 77% | 33% | +43.4 |
| Niobium, China | 30% | 0% | +30.4 |
| Titanium concentrate, Australia | 38% | 8% | +29.3 |
| Tantalum, Australia | 30% | 2% | +28.0 |
| Manganese, Australia | 32% | 9% | +23.8 |
| Graphite, Brazil | 25% | 4% | +21.1 |
| Nickel, Australia | 19% | 1% | +18.0 |
| Rare earths, Brazil | 15% | 0.5% | +14.1 |
Across the twenty largest gaps among commodities with at least 85% reserve coverage, nine are Australian and four Brazilian. Australia has stable institutions, a mature mining industry and existing rail and port infrastructure, which suggests that geology and governance are not the binding constraints.
Two cases illustrate different causes:
- Niobium, China. China holds about 30% of reserves and mined 40 tonnes in 2025, against Brazil's 104,000. Brazil's deposits are richer and cheaper, so Chinese deposits are uneconomic at current prices. The gap is a cost-based choice that higher prices could reverse.
- Phosphate, Morocco. Morocco holds 69% of world reserves and produces 15%. Phosphorus has no substitute as a plant nutrient, so this is the most consequential reserve concentration in the dataset for food security.
4.2 The Four Gates
| Gate | Content | Typical duration (Western jurisdictions) |
|---|---|---|
| 1. Prove | Drilling to convert resource to reserve; scoping and feasibility studies | 2 to 4 years |
| 2. Permit | Environmental review, water rights, land access, indigenous and community agreements | 5 to 10 years |
| 3. Fund | Project finance underwritten against a long-run price forecast and usually a committed buyer (offtake agreement) | 1 to 3 years, or never |
| 4. Qualify | Customer testing of the new material | 1 to 3 years after first production |
The gates are mostly sequential, so their durations add up.
The funding gate is frequently the binding one. When one country dominates supply and can expand cheaply, a lender to a new entrant has to assume the incumbent may cut prices when the new supply arrives. A price forecast that a competitor can undercut is difficult to lend against. For this reason an export control can help new entrants: it shows the incumbent will not always supply, which makes a price floor more credible.
4.3 Reserve Life
Reserve life is reserves divided by annual production.
| Commodity | Years of reserves at 2025 production |
|---|---|
| Chromium | 11 |
| Antimony, zinc | 18 |
| Tin, lead | 21 |
| Silver | 23 |
| Rare earths | 192 |
| Potash | 204 |
| Phosphate rock | 292 |
Reserve life measures depletion at a fixed rate. It is not a forecast. Companies prove reserves only as far ahead as financing requires, typically a decade or two, so short reserve lives are normal practice. For most metals, reserve life has lengthened over time as exploration replaced what was mined. A long reserve life also does not mean ample supply. Rare earths have 192 years of reserves, but the binding constraint is separation capacity, not ore.
5. By-Product Metals
5.1 Definition
A by-product metal is recovered only as a side effect of processing a host metal. Its supply depends on demand for the host.
| Host process | By-products recovered |
|---|---|
| Copper electrorefining (anode slimes) | Tellurium, selenium, precious metals |
| Zinc smelting residues | Germanium, indium, cadmium |
| Alumina refining (Bayer liquor) | Gallium |
| Molybdenum roasting (flue gas); molybdenum itself is largely a by-product of porphyry copper | Rhenium |
| Lead and tungsten processing | Bismuth |
| Copper and nickel mining (mainly DRC) | Cobalt |
Antimony, silver, lead and molybdenum are produced both as primary products and as by-products, depending on the deposit.
5.2 Weak Price Response
For a primary metal, a high price funds new mines, and supply arrives within five to ten years. For a by-product, the price signal reaches a producer for whom the by-product is a negligible share of revenue.
- world tellurium refinery production
- $120,000/tUS tellurium price ($120/kg)
- world copper mine production
- $9,700/tLME copper, 2025 average (about 440 US cents per pound)
If the tellurium price tripled, copper-industry revenue would rise by about 0.1%. That is too small to change mine plans. Comparable ratios: rhenium is about 1.6% of the value of the molybdenum it comes from, and indium about 1.1% of the associated zinc.
5.3 The 2025 Evidence
Each dot is one commodity, grouped by supply class. Supply class is a classification of each USGS chapter's description of how the metal is produced. Price changes from USGS figure 10.
Price changes from USGS figure 10. Supply class is our own reading of each chapter, recorded with the sentence it rests on in scripts/usgs-annotations.json. Commodities USGS prices but we have not classified are left out rather than guessed at. Source: USGS Mineral Commodity Summaries 2026.
| Group | Median 2025 price change | Count |
|---|---|---|
| By-products | +32% (7 of 10 rose) | 10 |
| Primary metals | +1% (10 rose, 9 fell) | 19 |
The four largest price increases in the report were by-products: bismuth +270%, germanium +106%, rhenium +91%, tellurium +60%. Bismuth production was about 16,000 tonnes in both 2024 and 2025.
Lithium is the contrasting case. It is mined for its own sake. After the 2022 price spike, new mines opened in Australia, Chile, China, Zimbabwe and Mali. World output rose from 222,000 tonnes in 2024 to 290,000 in 2025, a 31% increase, and the price fell 24%. That is the normal supply response of a primary metal.
Several of the largest 2025 by-product increases coincided with Chinese export licensing (section 6), so 2025 does not isolate supply elasticity cleanly.
5.4 Gallium
- world bauxite production
- average gallium content of bauxite, per USGS
- world low-purity primary gallium production
About 96% of the gallium in mined bauxite ends up in refinery residue (red mud) because most alumina refineries have no gallium recovery circuit. Gallium supply is therefore limited by refinery equipment, not by ore. Fitting a recovery circuit is a retrofit of roughly two to three years. A new mine takes much longer. The obstacle is financing the retrofit against a price that the dominant producer can lower. In 2025 the US Department of Energy announced up to $6 million for research into gallium recovery from alumina and zinc processing, and the US Department of War committed $29.9 million to a demonstration facility in Louisiana.
This estimate is approximate. Gallium grades vary by deposit, and not all bauxite is refined to alumina.
6. Export Controls
6.1 China's Controls
| Date | Commodities |
|---|---|
| July 2023 | Gallium, germanium |
| October 2023 | Graphite (and later artificial graphite anode technology) |
| 2024 | Antimony; magnesium materials |
| February 2025 | Bismuth, indium, molybdenum, tellurium, tungsten |
| April 2025 | Seven rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium |
| October 2025 | Five rare earths (europium, holmium, erbium, thulium, ytterbium), then suspended for one year following an agreement with the United States |
| 2025 | Synthetic diamond; lithium battery technology |
| 2026 | Silver |
These are licensing requirements, not bans. The government can tighten or loosen a licensing regime without announcing any change. USGS dates the suspension of the October 2025 controls to "late October" on page 9 and to "November" in the rare-earths chapter (page 157). The suspension therefore lapses in October or November 2026.
6.2 Price Basis
The price basis is the location and terms at which a price is quoted. It decides what a price series can show about an export control.
- A price quoted inside the exporting country (for example, free on board China) reflects domestic supply and demand. An export licence keeps material inside the country, which can depress the domestic price.
- A price quoted outside the exporting country (a US or European price, a Rotterdam warehouse price, the unit value of US imports) reflects what foreign buyers pay.
USGS quotes rare-earth oxides free on board China and most other minor metals on Western bases.
| Controlled commodity | USGS price basis | 2025 change |
|---|---|---|
| Bismuth | US price | +270% |
| Antimony | Cost, insurance and freight | +144% |
| Germanium | European price | +106% |
| Tellurium | US price | +60% |
| Tungsten | Rotterdam warehouse | +51% |
| Gallium | Unit value of US imports | +32% |
| Indium | US warehouse | +22% |
| Graphite | Unit value of US imports | −5% |
| Seven rare earths controlled April 2025 | Free on board China | median +7% |
Controlled commodities priced outside China rose a median of about 56%. Controlled rare earths priced inside China barely moved. The difference follows the price basis, not the policy.
6.3 Rare-Earth Prices
All rare-earth oxides share one price basis, so controlled and uncontrolled elements can be compared with each other.
Common price basis, so the elements are comparable with each other but not with Western-quoted metals. Source: USGS 2026.
The seven elements controlled in April 2025 rose a median of 7%. The four uncontrolled elements rose a median of 31%. This fits the expected effect of an export licence on a domestic price: restricted material accumulates at home and its domestic price weakens. Neodymium and praseodymium, the main magnet elements, were not restricted and rose about 30% each on demand from motors and wind turbines. The sample is small, and 2025 also saw US tariffs, a weaker dollar and record precious-metal prices, so this result is suggestive rather than conclusive.
6.4 Graphite
Graphite has been under Chinese export licensing since October 2023. China mines about 80% of world natural graphite, and the United States is 100% net import reliant, with 46% of its imports from China. The US import price nevertheless fell 5% in 2025 and has fallen about 7% a year over five years. Three explanations are consistent with the data:
- licences appear to have been granted freely;
- synthetic graphite substitutes for natural graphite in battery anodes and steelmaking;
- supply outside China grew quickly (Mozambique from 39,000 to 60,000 tonnes, Tanzania from 27,000 to 75,000 tonnes in one year).
Four questions for assessing any export control. (1) Which price basis is being quoted, inside or outside the restricting country? (2) Is the measure a licence or a ban? (3) Can buyers substitute another material? (4) Did buyers hold stockpiles that delay the effect? Licence approval data is not public, so whether a control binds usually has to be inferred from prices.
7. Substitution
7.1 Concentration and Price
For 31 commodities with both a reliable concentration figure and a five-year price series (rare earths excluded because of their price basis):
| Measure | Value |
|---|---|
| Correlation, leading-country share against five-year price CAGR | r = 0.09 |
| Correlation, HHI against five-year price CAGR | r = 0.14 |
| Five-year CAGR, commodities with a leader at 70% or more (11) | +5.7% a year |
| Five-year CAGR, commodities with a leader below 50% (14) | +6.1% a year |
CAGR (compound annual growth rate) is the constant yearly rate that would take the starting price to the ending price. Given a sample of 31 and a single five-year window (2021 to 2025), the data cannot rule out a modest relationship. They do rule out a strong one.
Mine-stage leading-country share in brackets. Source: USGS 2026, figure 10 and world production tables.
Five of the eleven most concentrated commodities fell in price over five years. Nickel fell for a reason other than substitution: Indonesia's expansion to 72% of world output added supply and lowered the price. Dominance gained by adding capacity tends to push prices down.
7.2 Substitutability
Each USGS chapter ends with a Substitutes paragraph. Compare two entries:
- Cobalt (75% DRC; export ban, then quota in 2025): "The cobalt content of lithium-ion batteries, the leading global use for cobalt, was being decreased; cobalt-free substitutes that use iron and phosphorus held significant market share in China." Five-year price CAGR −10%.
- Manganese (40% South Africa; no export restriction): "Manganese has no satisfactory substitute in its major applications." Five-year price CAGR −4%.
Cobalt had every condition usually cited for a supply squeeze: high concentration, an export restriction, growing demand and by-product supply that could not respond. Its price still fell because lithium iron phosphate (LFP) battery cathodes use no cobalt. Manganese is irreplaceable, but no producer tried to restrict supply, so its price followed costs and the steel cycle. Irreplaceability is necessary for pricing power but not sufficient.
Palladium is the clearest documented substitution. Palladium and platinum perform the same function in automotive catalytic converters. When palladium became expensive relative to platinum, carmakers switched. Palladium was 44% Russian and carried sanctions risk throughout, yet it had the worst five-year CAGR in the sample, −18% a year.
7.3 Types of Irreplaceability
| Constraint type | Example | Durability |
|---|---|---|
| Chemistry | Potassium and phosphorus as plant nutrients | Permanent. No other element performs the function. |
| Physics | Rhenium in single-crystal nickel superalloy turbine blades (about 80% of rhenium use); tungsten in cemented carbides, where substitutes "reduce rather than replace" tungsten | Lasts as long as the performance requirement does. Rhenium compounded at 28% a year on 37% concentration. |
| Engineering | Cobalt in battery cathodes | Temporary. Engineers can design around it within about a decade if prices stay high. |
A common error is to treat an engineering constraint as if it were a chemical one. In 2018 cobalt was commonly described as irreplaceable, in the terms now used for graphite and gallium.
7.4 Pricing Power
| Hard to substitute | Substitutable | |
|---|---|---|
| Concentrated | Pricing power can last. Niobium, rhenium, chromium, gallium in defence uses. | Price spike followed by demand destruction. Cobalt, graphite, silicon, palladium; all have negative five-year CAGRs. |
| Dispersed | Priced on cost and cycle. Manganese, potash, phosphate. | Commodity pricing set by the marginal producer. Most industrial minerals. |
A concentrated supplier of a substitutable input that restricts supply speeds up its own substitution. Each period of high prices pays for engineering work to remove the input. Congo's 2025 cobalt restrictions raised the annual price 27%, against a five-year trend of −10% a year.
The same distinction applies to company analysis. Market share alone is not a competitive advantage. What matters is whether customers can switch away (see economic moats).
8. Recycling
8.1 Scale
USGS reports that in 2025 recycling was "the only source of domestic supply" in the United States for seven critical minerals: antimony, bismuth, chromium, magnesium metal, tin, tungsten and vanadium. None of these has US primary mine production.
Old scrap is material recovered from products at the end of their life. New scrap is manufacturing offcuts. New scrap is cleaner and easier to recycle and is excluded from the figures below.
US dollars. Notes give the share processed domestically or exported. Source: USGS 2026, figure 13.
Total old scrap across the fifteen tracked commodities was about $73.3 billion, of which $36.2 billion was on the critical minerals list. USGS separately puts domestically recycled critical mineral commodities at about $18 billion. That figure counts only material processed within the United States.
8.2 Scrap Flows
The United States exported 68% of its copper scrap by value in 2025 and imported refined copper with a 57% net import reliance, 68% of it from Chile. The binding constraint is secondary smelting capacity, not copper supply. In 2025 a secondary copper refinery (40,000 t/yr of cathode) started in Shelbyville, Kentucky. A secondary smelter in Augusta, Georgia began processing about 90,000 t/yr of copper-bearing scrap into 35,000 t of blister copper. Titanium shows the opposite pattern: 73% of the titanium scrap the United States recycles is imported, because domestic processing capacity exceeds domestic scrap generation.
Scrap is a traded commodity. It moves to wherever furnaces and refineries are, which reproduces the mining-versus-refining split from section 1.
8.3 Recovery Stages
| Stage | Constraint |
|---|---|
| Collection | Solved where a retail channel exists (car batteries); unsolved for small consumer devices |
| Sorting and dismantling | Labour-intensive; cost rises with product complexity |
| Smelting | Capital-intensive; 3 to 5 years to build and permit |
| Minor-metal recovery | Palladium, tantalum, gallium and indium require specialised circuits, economic only at scale |
Lead-acid batteries pass all four stages easily, and 95% of US lead scrap is processed domestically. A smartphone contains milligram quantities of a dozen metals bonded together and fails at three of the four stages.
8.4 Recycler Economics
- refined metal price, set globally
- purchase price of scrap, which tracks the metal price
- logistics and sorting
- energy, labour and environmental compliance
Recycling is a spread business. Scrap prices rise with metal prices, so a recycler captures far less of a price rise than a miner, whose ore costs are fixed. Recycling works best under four conditions:
- An existing collection channel. Lead-acid batteries are returned at the point of sale.
- High value per unit weight. US gold scrap ($12.1 billion) and platinum-group metal scrap ($4.98 billion) support large industries.
- No domestic mine to compete with. This applies to the seven US minerals listed in section 8.1.
- Extended producer responsibility (EPR) regulation. EPR shifts collection costs onto manufacturers.
Recycling is also the only elastic source of supply for by-product metals, whose primary supply cannot respond to price (section 5). Much of the new US capacity in 2025 was government-funded: an $80 million Department of War loan to a magnet recycler in Marion, Indiana; $5.1 million to a recycler in Houston; and up to $500 million from the Department of Energy for battery manufacturing and recycling. Funded capacity shows policy commitment. It does not yet show commercial viability.
9. Economics by Stage
| Stage | Pricing position | Main determinant of returns |
|---|---|---|
| Mining | Price taker; sells an undifferentiated product into a global market | Position on the industry cost curve; commodity cycle |
| Refining, separation, processing | Partly insulated; customers must qualify suppliers and switching is slow | Qualification barriers, energy cost, processing fees |
| Recycling | Spread between scrap and metal prices | Collection access, regulation, processing capacity |
Mining returns follow the commodity cycle, and few miners earn a lasting premium. Policies that add new supply, which most critical-minerals strategies aim to do, lower prices for incumbents. A processing fee also differs from exposure to the metal price. Many listed copper companies in India are smelters earning a treatment charge rather than miners (see copper and uranium). The same pattern of a binding constraint sitting one step downstream of the headline input appears in electricity infrastructure (see the AI energy bottleneck).
10. Limitations
- Two versions of the USGS dataset disagree. The PDF is at version 1.3 (May 2026). The machine-readable CSVs were uploaded in February 2026 at version 1.0 and were not updated with later revisions. Fifteen figures differ. The largest is Brazil's rare-earth reserves: 21 million tonnes in the CSVs against 11 million in the PDF, with a world total above 85 million against above 75 million. These notes follow the PDF.
- "W" means withheld, not zero. Withheld figures are excluded from share denominators.
- Refining data is limited to about nine commodities. Other processing-concentration statements rely on qualitative chapter text.
- Location of production is not ownership. Much of Indonesia's nickel capacity is Chinese-financed and Chinese-operated. The dataset records location only.
- Reserves use different reporting standards. Australian figures often follow JORC-code company reports, while others are government estimates of varying rigour.
- Supply class and substitutability ratings are classifications made from the USGS chapter text. Borderline cases (antimony, silver, lead, molybdenum) are marked as mixed and excluded from the group comparisons.
- Annual average prices blur events. A control imposed in April is diluted by the months before it. The October 2025 rare-earth controls barely appear in 2025 averages.
Key Points
- A mineral has three geographies (reserves, mine production and refining), and they seldom coincide. In the aluminium chain the HHI rises from 2,211 at the mine to 9,804 for gallium recovery.
- Mining is less concentrated than refining and is often led by countries other than China. Examples are Brazil in niobium (93%), the DRC in cobalt (75%) and Indonesia in nickel (72%).
- Reserves indicate where supply is possible, not when it will arrive. Permitting, financing and qualification together take a decade or more. Financing is often the binding gate because incumbents can undercut prices.
- By-product metals such as gallium, germanium, indium, tellurium, rhenium and bismuth respond weakly to their own prices. In 2025 by-products rose a median 32% against 1% for primary metals.
- An export control's effect shows only in prices quoted outside the restricting country. Rare-earth prices quoted free on board China show a domestic surplus, not a global shortage.
- Concentration does not predict price (r = 0.09). Pricing power needs concentration together with low substitutability, as the cobalt and palladium cases show.
- Recycling is a spread business that follows processing capacity. It is the only price-responsive supply for by-product metals.
References
- U.S. Geological Survey (2026). Mineral Commodity Summaries 2026, version 1.3 (May 2026). U.S. Geological Survey, Reston, VA. doi.org/10.3133/mcs2026. World production and reserves tables by commodity chapter; figure 10 (price changes); figure 13 (recycled scrap values); table 4 (export restrictions); p. 9 and p. 157 (suspension of October 2025 rare-earth controls); Substitutes paragraphs in each chapter.
- U.S. Department of Justice and Federal Trade Commission (2023). Merger Guidelines. justice.gov/atr/merger-guidelines. HHI concentration thresholds.
- U.S. Department of Justice and Federal Trade Commission (2010). Horizontal Merger Guidelines. justice.gov/atr/horizontal-merger-guidelines-08192010. Earlier HHI threshold of 2,500.
- Continued in Part 2, India's critical minerals position.
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Software Engineer, Self-Taught Investor
Software engineer who started learning about money in 2016 after a layoff coincided with a new home loan. Went from bank deposits to mutual funds to picking stocks in India and the US, learning through YouTube, screener.in, TradingView, and the hard way. Still learning. This site is her notes made public — for education and sharing only, not financial advice.
