As clean energy and defense needs surge, a Wharton professor warned that Washington overlooked a growing mineral threat for decades, leaving key U.S. supply chains exposed. The professor said China now dominates refining for materials essential to batteries, wind turbines, and advanced electronics. The comments arrive amid rising concern about costs, availability, and geopolitical leverage.
The scholar argued that policy neglect, offshoring, and slow permitting created structural dependence on foreign processing. The core claim is stark. Beijing controls most refining capacity for several critical minerals, including rare earths. That dominance raises risks for automakers, grid developers, and defense contractors.
The Wharton professor says Washington ignored the mineral threat for decades, leaving U.S. supply chains exposed and Beijing in control of 90% of global refining.
How the Dependence Took Shape
After the 1990s, the United States scaled back domestic mining and processing. Cheaper overseas production, looser environmental rules, and long timelines at home encouraged reliance on imports. Over time, China built out processing plants and trained a specialized workforce. It also secured upstream access through long-term contracts and overseas investments.
Analysts estimate that China handles the vast majority of rare earth refining and a dominant share of processing for graphite, manganese, and battery-grade lithium and cobalt. The exact share varies by mineral, but government and industry reports often place China’s role at more than half of global capacity. In rare earths, estimates approach 90% of refining.
What Is at Risk
The exposure is concentrated in sectors central to U.S. economic and national security plans. Electric vehicle batteries depend on processed lithium, nickel, cobalt, and graphite. Wind turbines and precision-guided systems use rare earth magnets. Grid-scale storage needs battery materials at growing scale.
- Electric vehicles and charging networks
- Grid storage and renewable power projects
- Semiconductors and advanced electronics
- Aerospace and defense systems
Manufacturers face higher costs and delays when supplies tighten. Concentration in one country can also turn a commercial problem into a diplomatic one. Even short disruptions can ripple through assembly lines and project timelines.
Competing Views on the Path Forward
Supporters of faster action want a broader set of tools. They point to permitting reform, tax credits for processing, and expanded federal loan support. They also back allied sourcing through trade agreements and the Minerals Security Partnership.
Environmental advocates caution against shortcuts. They argue that any new mining and refining must meet strict standards for water, air, and community protection. They urge more recycling, efficiency, and substitution to reduce the need for new extraction.
Industry groups say both tracks are needed. They call for predictable permitting, clear incentives, and long-term purchase agreements that justify investment in U.S. or allied facilities. Without that, they warn, projects will struggle to secure financing.
Signs of a Policy Shift
Recent laws and executive actions show a change in approach. Measures include tax credits for battery materials, Defense Production Act support, and new funds for processing and recycling. Agencies are backing pilot plants for lithium, nickel, and rare earths. Automakers are signing supply deals with partners in Australia, Canada, and South America.
Experts say progress will take years. Processing plants require specialized technology, reliable power, and skilled labor. Building environmental and community trust adds time but helps projects succeed.
What to Watch Next
Several factors will shape outcomes. First, the speed of U.S. permitting and the scale of financing. Second, the success of allied projects in friendly jurisdictions. Third, advances in recycling and new chemistries that reduce cobalt or rare earth use.
Price swings may continue as new supply comes online. Policy clarity will influence where companies place their next factories and research centers. Consumers could see the impact in vehicle prices and delivery timelines.
The warning from the Wharton professor reflects a broader concern shared by many in industry and government. Reliance on one country for processing creates clear strategic risk. The United States is now racing to rebuild capacity, deepen alliances, and close gaps. The next two to five years will reveal whether those efforts can secure steady supplies without sacrificing environmental safeguards.
