The Three Essential Steps to Building a Critical Minerals SCRM Program

Article Highlights:

• Unlike in other nations with comparable territories and populations, China has used aggressive policies and government subsidization to embrace a first-mover philosophy in the critical minerals sector.
• Any effective critical minerals SCRM program needs to start by calibrating the scope of materials it covers. To determine the critical minerals the SCRM program should be built around, companies should examine full material declarations (FMDs) and determine the substances that are most indispensable to their operations. 
• Given China’s continuing efforts to leverage its control over critical mineral supply chains to squeeze U.S. industry, American companies should seek out alternative critical minerals sourcing wherever it’s possible to do so. 

A handful of critical minerals play a disproportionate role in some of the world’s largest sectors and their global supply chains. Due to its conductivity, copper is an essential material for a wide range of complex goods, including cars, computers, and wireless networks. Nickel is integral to the process of alloying other metals like steel and chromium, and is used in EV batteries, semiconductor devices, and a vast swath of home appliances. And cobalt is a key material for the lithium-ion batteries that power everything from consumer electronics and medtech devices to power tools. 

While critical minerals like these have been coursing through international supply chains for decades, over the past two years unrestricted access to the materials has come under threat. As trade tensions between the U.S. and China have escalated, Beijing has begun imposing export restrictions on many of the critical minerals the nation produces and refines. And because China dominates the extraction and production of so many of the world’s critical minerals and rare earth elements (REEs), these trade barriers could pose a significant risk to U.S. manufacturers that rely on the uninterrupted flow of copper, nickel, cobalt, and other minerals. 

The emergence of this new, rapidly evolving risk variable makes now as good a time as ever for businesses to develop and implement a critical minerals supply chain risk management (SCRM) program. If trade and diplomatic relations continue to deteriorate between America and its superpower rival, organizations without robust contingency plans for accessing critical minerals could be facing dire shortages. And from a business perspective, the consequences of those shortages could be nothing short of devastating.

Assessing China’s Critical Minerals Dominance 

Over the past few decades, China has made a concerted, largely successful effort to consolidate its power over the production of critical minerals. The nation has done this through a sophisticated combination of measures, including ramping up domestic processing and refining, and strategically investing in mines in African countries and other mineral-rich regions. 

Unlike in other nations with comparable territories and populations, China has used aggressive policies and government subsidization to embrace a first-mover philosophy in the critical minerals sector. We can see the fruits of those yearslong efforts today. China is now able to weaponize its control of critical minerals, deploying it as a form of geopolitical leverage and even strategic coercion against rivals like the U.S. 

But before focusing on what levers China has already pulled to restrict access to these materials and throttle their supply chains, it’s worth examining the specific minerals the People’s Republic of China (PRC) has an inordinate level of control over. 

Cobalt 

• Primary Uses: EV and rechargeable batteries; super alloys, including turbine engines; steel used in aerospace and defense and machinery manufacturing. 
• Percentage of Mining/Extraction: Relatively low, but China also owns or has ownership stakes on many of the cobalt mines in the Democratic Republic of Congo (DRC)
• Percentage of Refining: 73%

Lithium

• Primary Uses: Lithium-ion (rechargeable) batteries; medical technologies; cement formulations. 
• Percentage of Mining/Extraction: 18%
• Percentage of Refining: 72%

Graphite

• Primary Uses: Foundry facings; automotive parts; batteries; metalworking crucibles.
• Percentage of Mining/Extraction: 62%
• Percentage of Refining: 95%

Manganese

• Primary Uses: Metal alloys; dry cell batteries. 
• Percentage of Mining/Extraction: 15-20%
• Percentage of Refining: 95%

Rare Earth Elements (scandium, dysprosium, etc.)

• Primary Uses: Screens, monitors, and other electronic displays; semiconductors; steel alloys; batteries. 
• Percentage of Mining/Extraction: 60%
• Percentage of Refining: 90%

The State of China’s Critical Minerals Restrictions 

Over the past two years, the Chinese Communist Party (CCP) has implemented a succession of export controls aimed at bolstering its control over the world’s critical minerals and retaliating against the U.S.’s own protectionist measures. While these actions have generally been measured, with a narrowly defined scope and limited ripple effects, they’ve also accumulated over time. As early as 2023, a Congressional committee recommended that an incentive structure be created in the U.S. to promote the production of rare earth elements. The committee observed that these materials were used in “electric vehicles, wind turbines, wireless technology, and countless other products.” 

• December 2023: China Bans Export of Processing Technologies

At the end of 2023, China’s Ministry of Commerce announced that it was banning the export of technologies used for processing and refining rare earth elements (REE). While Chinese officials cited national security as the primary driver of the measure, experts construed the move as a counterattack against the U.S. Dating back to at least 2022, the Biden administration had been pursuing an aggressive industrial policy against China, restricting the nation’s access to the cutting-edge semiconductors so critical to powering AI and emerging defense technologies. 

• December 2024: China Restricts Germanium and Gallium Exports to U.S.

China took a relatively drastic step in December 2024, when it implemented export controls on several metals used in semiconductor manufacturing and the electronics supply chain. The Ministry of Commerce restricted the shipment of germanium, gallium, antimony, and other critical materials to the U.S. As the Center for Strategic and International Studies pointed out at the time, the measure marked the “first time Chinese critical minerals export restrictions were targeted at the United States, rather than all countries.” 

China took a relatively drastic step in December 2024, when it implemented export controls on several metals used in semiconductor manufacturing and the electronics supply chain.

And unlike the restrictions China imposed on exporting processing technologies a year earlier, the Ministry of Commerce made no effort to disguise the true purpose of its actions this time. Foreign Ministry spokesperson Lin Jian asserted at the time that China “firmly opposes the U.S. overstretching the concept of national security, abuse of export control measures, and illegal unilateral sanctions and long-arm jurisdiction against Chinese companies.”

• April 2025: China Imposes Export Restrictions on Rare Earth Elements

This past April, just two days after President Trump unveiled his “Liberation Day” tariffs, the PRC again turned to critical minerals as a potent counterpunch against U.S. trade actions. On April 4, the Ministry of Commerce implemented export restrictions on seven rare earth elements (REEs), and related magnets, materials that are used in the aerospace and defense, automotive, and semiconductor manufacturing industries. The REEs covered by the new restriction included samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. 

Crucially, the new export rules are not an outright ban. Chinese firms are able to apply for a special license to export the minerals and magnets to foreign customers. At the same time that the new restrictions were announced, the Chinese Communist Party (CCP) also added 16 U.S. companies to its export control list—the vast majority of which were U.S. defense contractors. 

Key Steps to Building a Critical Minerals SCRM Framework 

While many businesses operating in sectors like automotive, aerospace and defense, and consumer electronics might have established supply chain risk management (SCRM) programs, fewer have resources focused exclusively on critical minerals. Given the increasingly volatile trade landscape, however—as well as China’s monopolistic control over a myriad of critical minerals—U.S. firms need to start acting more strategically to protect these supply chains. 

While many businesses operating in sectors like automotive, aerospace and defense, and consumer electronics might have established supply chain risk management (SCRM) programs, fewer have resources focused exclusively on critical minerals.

Identify the Critical Minerals Essential to Operations

Any effective critical minerals SCRM program needs to start by calibrating the scope of materials it covers. Whether it’s lithium, cobalt, copper, or specific rare earth elements, original equipment manufacturers (OEMs) are likely to be highly dependent on some, but not all, of these raw materials for their production processes. To determine the critical minerals the SCRM program should be built around, companies should examine full material declarations (FMDs) and determine the substances that are most indispensable to their operations. 

Look for Alternative Sourcing Outside of China

As the past two years have vividly demonstrated, China is aggressively leveraging its control over various critical mineral supply chains to squeeze U.S. industry and force its geopolitical rival to reconsider existing trade policies against China. Given these circumstances, American companies should seek out alternative critical minerals sourcing wherever it’s possible to do so. 

While it’s true that China dominates production of many critical minerals and REEs, they’re not always the only game in town. Cobalt, for example, is mined in a handful of countries throughout the world, including Russia, South Africa, and Canada, and Australia and Chile actually extract more lithium annually than China does. OEMs need to adopt a proactive, investigatory approach to their critical mineral supply chains to examine how to go about cultivating a sourcing network that doesn’t lead back to China. 

Use Z2Data to Leverage Supply Chain Visibility and Bolster Resilience 

In order for organizations to start implementing strategies to diversify critical minerals sourcing and proactively identify threats to supply continuity, they need to gain in-depth visibility into their supply chains. Because high-tech sectors often go several manufacturing tiers deep, a company’s direct suppliers may not be aware of how the critical minerals incorporated into their goods are being sourced. Because of this, OEMs need to map their sub-tiers to see where their raw materials are coming from. This visibility can subsequently give organizations the data and intelligence necessary to take measured steps toward building supply chain resilience. 

Supply chain risk management (SCRM) platform Z2Data provides companies with a multifaceted tool for increasing visibility and gathering data and intelligence across suppliers. Powered by dynamic internal databases and augmented with supplier campaigning, Z2Data’s sub-tier intelligence allows users to carefully scrutinize the manufacturers behind their direct suppliers. In addition, the platform has a workflow tool that gathers conflict minerals reporting templates (CMRTs) and extended minerals reporting templates (EMRTs) from thousands of suppliers all over the globe to help businesses stay compliant. 

To learn more about how Z2Data can help organizations build out their critical minerals risk management, schedule a free demo with one of our product experts.