Sector Deep Dive: Critical Minerals and Rare Earths - November 2025
- Team NorthStar
- 4 days ago
- 3 min read
Critical Minerals (including rare earth elements, lithium, and cobalt) are at the forefront of geopolitical competition, reshaping industrial power, energy security, and global economic alignment. The sector's growth is underpinned by a race for supply chain sovereignty, with nations showing increasing interest in resource nationalism and processing technology. Our November 2025 Sector Deep Dive report from NorthStar Insights explores the key trends and strategic dynamics for businesses and investors.
Key Market & Growth Trends
Global market power is defined by processing dominance, while new investment targets in the MENA region are driving diversification in supply.
China's Processing Monopoly: China processes nearly 90% of critical minerals globally and produces 70% of rare earths, making control over the value chain the primary measure of market power.
Investment & Diversification Targets: Saudi Arabia targets a USD $75 billion mining GDP contribution by 2035 under Vision 2030, fueling new capacity building. Gulf sovereign wealth funds (SWFs) are deploying billions into the sector.
Strategic Reserves: Morocco controls approximately 70% of global phosphate reserves, an indispensable asset for global fertilizer and battery supply chains.
This growth is fuelled by global energy transition demand (EVs, renewable energy), state-backed investment, and rising market demand from the electric vehicle and defense industries.
Geopolitical & Security Dynamics
Strategic competition, primarily between the U.S. and China, is fragmenting global trade and transforming critical minerals into instruments of statecraft.
U.S.-China Rivalry as Fragmentation Factor: The competition between the U.S. and China is a prominent factor. The U.S. is imposing 100% tariffs on China (effective November 2025) and expanding the Mineral Security Partnership (MSP), while China is strengthening its BRICS and Belt and Road Initiative (BRI) mineral networks.
Resource Nationalism as Policy: China is using its leverage through export controls, most recently expanding restrictions on 12 items in October 2025, including rare earths, lithium batteries, and graphite. The U.S. currently relies on China for 97% of its heavy rare earths.
Minerals as Statecraft: Control over the supply chain defines national technological and economic sovereignty. The U.S. response includes a USD $1 billion Department of Defense stockpiling initiative and a USD $5 billion overseas mining fund to diversify supply.
These divergent approaches create regulatory uncertainty for businesses and pose operational and market access risks.
Challenges & Opportunities
The sector is defined by supply chain vulnerabilities and significant opportunities arising from new, resilient regional alliances.
Processing Infrastructure Gaps: The core vulnerability in the MENA region is that most ores are exported unrefined, limiting value capture due to fundamental processing infrastructure gaps, technological deficits, and water scarcity.
Maritime Instability Risks: Geopolitical flashpoints create acute risks. Instability in critical maritime trade routes like the Red Sea/Suez Canal (e.g., disruptions by Houthis) and the South China Sea could severely disrupt global supply.
Strategic Alliances: Emerging markets and strategic alliances, particularly between APAC and MENA, are forming a powerful corridor to challenge current dependencies. These partnerships combine MENA capital/resources with APAC technology/processing expertise to drive mutual autonomy.
Value-Chain Integration: Operational examples include Ma'aden (Saudi Arabia) partnering with MP Materials to develop new critical minerals supply chains. Gulf sovereign funds are investing USD $1.2 billion in emerging market mining companies to secure early-mover advantages and strengthen infrastructure.
The Critical Minerals sector presents both transformative potential for the energy transition and significant geopolitical risks to industrial stability. Businesses should conduct thorough scenario planning and explore opportunities by prioritizing diversified sourcing and deep value-chain integration across the emerging APAC and MENA corridor. To know more about how we can help, please reach out to ceo@northstar-insights.com
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