Race for resources shifts from oil to critical minerals
In the 20th century, nations fought over oil resources, whereas in the 21st century, the competition has shifted to critical raw materials needed for the energy storages of the data systems running the digital society and the increasingly electrified society. China has acquired a central role in the supply chain and has now demonstrated its readiness to use it against the West.
Materials classified as critical minerals include elements and alloys that are essential for digital services, energy production or defence capabilities, such as lithium and cobalt. In conflicts over resources, nations are preparing to protect not only current key technologies but also the raw materials needed for disruptive technologies, such as superconductors needed for quantum computing or fusion reactors.
Of the critical raw materials, rare earth metals, for example, are not rare as such, but they occur in natural mineral compounds in low concentrations. Separating and processing them is dangerous and dirty work that has been difficult to do profitably within the framework of Western environmental standards.
Recycling of equipment will not solve the supply of critical minerals in the short or medium term, as it is not yet profitable on an industrial scale.
China has harnessed mineral supply chain as a tool for influencing
China has been building binding long-term trade agreements with African and South-East Asian countries, under which it has established mines or reserved the production of existing mines far into the future. Chinese companies have also globally acquired mining companies that have ended up in financial difficulties, as well as their existing claims.
Mining is an industry highly sensitive to economic fluctuations. Therefore, private companies reporting on a quarterly basis find it difficult to compete with a State prepared to withstand even heavy financial losses in pursuit of long-term returns.
China has also been able to take over the processing market. Western companies have outsourced environmentally hazardous refining activities to Chinese companies that have been able to implement them at a lower cost.
Since China has gradually managed to take control of a significant part of the supply chain of critical materials, it has gained not only long-term economic returns but above all influence.
China responded to the US tariffs with export restrictions on critical minerals and now requires export licences for critical raw materials also to Europe.
Future conflicts will be fought over critical minerals
Regional conflicts are often driven by an access to a critical resource. While oil has been a key factor in raising the geopolitical position of the Arabian Peninsula, it has also contributed to the region’s increased conflict sensitivity.
Future conflicts are likely to occur in areas containing critical minerals, which are more easily accessible either through climatic factors or through developing technologies. Tensions can be predicted in the Arctic to increase in the Arctic areas exposed from under permafrost and shallow sea areas whose international position is unclear. The development of submersible drones will also enable more cost-effective mineral exploration from the seabed. Even though such operations may still not be economically particularly viable, strategic necessity will create an incentive.
China has sought to strengthen its presence not only in Africa but also in South America, which already produces a large part of the world's copper, for example. In the future, Russia will be a potential source of critical minerals for both China and the United States.
Finland has significant mineral reserves on a European scale, but mining has often conflicted with other industries, such as tourism, or natural livelihoods like reindeer herding. In the future, the importance of mining activities is likely to increase, and Finland’s mineral reserves will be assessed as European strategic resources.