The Critical Minerals Race: How Geopolitical Tensions Are Reshaping Global Supply Chains

As the world grapples with accelerating geopolitical tensions and the urgent demands of the energy transition, the global critical minerals landscape is undergoing a profound transformation. The traditional rules governing supply chains are being rewritten, driven by unprecedented demand surges and mounting supply constraints that expose the fragility of our interconnected economic systems.

Speaking at the International Mining Conference in Riyadh, Nikolaus Lang, Managing Director and Senior Partner at Boston Consulting Group, offered a sobering assessment of the challenges ahead. "Global minerals supply chains are being redrawn because demand is rising sharply at the same time as supply is becoming more constrained, concentrated, and politicised," he explained.

The Demand-Supply Imbalance

The numbers paint a stark picture of the challenge we face. Demand for critical minerals essential to energy transition, electrification, and advanced manufacturing is projected to grow by 2-3 times by 2040. Electric vehicle and battery markets alone will drive exponential increases in demand for lithium, nickel, cobalt, copper, and rare earth elements.

Yet supply remains structurally constrained. In several key minerals, between 20-30% of the supply required by 2035 has not yet been identified or financed. Processing capacity remains heavily concentrated, often in single countries, creating dangerous dependencies that threaten both economic stability and national security.

Geopolitical Weaponisation of Resources

This concentration has transformed critical minerals from cyclical commodities into strategic assets vulnerable to geopolitical manipulation. Recent years have witnessed China imposing export restrictions on gallium, germanium, and rare earth technologies, Indonesia banning nickel exports, and rising resource nationalism across Latin America.

For liberal democracies committed to free trade and multilateral cooperation, these developments represent a fundamental challenge. The weaponisation of resource dependencies undermines the principles of open markets whilst forcing nations to reconsider their strategic autonomy in critical sectors.

Artificial Intelligence as a Game-Changer

Artificial intelligence emerges as a crucial enabler in addressing these challenges. Lang emphasises that AI is revolutionising mineral exploration by analysing geological, geophysical, satellite, and historical drilling data simultaneously. Leading miners report that AI-supported targeting can increase discovery success rates by 2-3 times whilst materially reducing exploration costs.

This technological advancement is particularly vital given that global exploration pipelines have declined by nearly 40% since 2012, even as demand accelerates. AI's capacity to integrate complex data sets and anticipate risks earlier represents a significant opportunity for more efficient resource allocation and investment decisions.

Saudi Arabia's Strategic Positioning

Marcin Lech, Managing Director and Partner at BCG, highlighted Saudi Arabia's emerging role as a credible ecosystem builder in the critical minerals space. The Kingdom's strategic approach spans domestic exploration, competitive processing, downstream demand creation, and international partnerships.

"What sets Saudi Arabia apart is the ecosystem it has deliberately put in place," Lech noted. The Mining Investment Law has materially improved transparency, licensing timelines, and investor protections, positioning the Kingdom as one of the most improved mining jurisdictions globally according to the Fraser Institute's Annual Survey.

Saudi Arabia's geopolitical neutrality and ability to work with both Eastern and Western partners represents a valuable differentiator as supply chains fragment and investors seek diversification away from single-country dependencies.

Looking Ahead: Risks and Opportunities

The greatest risk facing the global minerals sector in 2025 is not demand, which remains robust, but whether supply can be mobilised quickly enough in an increasingly fragmented world. Export controls, localisation requirements, carbon border measures, and resource nationalism are becoming more prevalent.

Whilst many of these policies are understandable from national security perspectives, their cumulative effect risks undermining project economics, increasing volatility, and discouraging long-term investment precisely when the world requires more capital investment, not less.

For liberal democracies, the path forward requires a delicate balance between protecting strategic interests and maintaining commitment to open markets and international cooperation. The critical minerals race will test our ability to navigate these competing priorities whilst ensuring the energy transition proceeds at the pace and scale required to address climate change.

The transformation of global critical minerals supply chains represents both a challenge and an opportunity for those committed to liberal values and multilateral solutions. Success will require innovative approaches that combine technological advancement with strategic thinking and international collaboration.