From Critical Minerals to Strategic Leverage

A country can have a mineral and still have very little power over it.

However much this may sound weird, it has reasons to it. If a resource is found under your country’s land, surely it belongs to you. But in today’s economy, owning a resource is only the first step. The mineral must be mined, separated, refined, processed and turned into parts before it can be used by industries.

So the key question is not simply who has the mineral. It is who controls the steps between the mineral in the ground and the technology that needs it.

This difference is becoming more important in the relationship between India, the United States and China. Critical minerals are no longer seen only as materials that are mined and sold. They are important inputs for semiconductors, advanced manufacturing, batteries, energy systems and other key technologies.

China’s position shows why processing matters. The International Energy Agency estimates that China has an average share of around 70 per cent in the refining of 19 of the 20 most important critical minerals. China also accounts for around 94 per cent of the production of permanent magnets that contain rare earths.

These figures do not mean that China has every mineral. They show that a large part of the work that makes minerals useful to industries takes place in one country. This creates a form of dependence that cannot be solved simply by owning minerals in the ground.

The resource is not the real chokepoint

Consider what happens when the supply of a mineral is disrupted.

If one country controls only the mining of a resource, another producer may be able to make up for the loss. But if a country controls refining, separation or the production of parts that industries actually need, replacing that capacity becomes much harder.

A mine can take years to develop. A refinery needs money, technology, skilled workers and reliable infrastructure. A processing facility becomes strategically important when its output is difficult to replace, not just because of the value of the material it handles.

China’s strong position in processing and permanent-magnet production gives it influence over the stage at which raw materials become useful for industries. This influence can affect prices, create supply problems and, during political tensions, become a source of power.

This risk is no longer just a theory.

In June 2025, Ford temporarily stopped work at several US factories for more than three weeks because of shortages of magnets containing rare earth minerals imported from China. China had introduced a new approval process for rare-earth exports, which slowed supplies and affected carmakers beyond Ford.

The event showed how a problem at one stage of a supply chain can spread through the wider industrial system. The effects reach far beyond mining and affect industries that depend on the materials produced.

Why Pax Silica exists

This helps explain why Pax Silica was created.

The initiative is not simply another agreement to buy minerals. It is an effort to build a wider system around the materials and capabilities needed for advanced technologies.

The US-led initiative aims to reduce what Washington calls “coercive dependencies” and build a secure supply chain across the AI system—from minerals and chips to security and transport. Its areas of cooperation include critical minerals, semiconductor design and manufacturing, logistics, computing and energy infrastructure.

The basic idea is that a country’s ability to lead in technology depends on the supply chains that support it. A country may be good at designing a technology but still face risks if an important input can be disrupted.

For the United States and its partners, finding other sources therefore means more than finding new mines. It means building other processing and manufacturing facilities so that a problem in one country does not stop the wider system.

But this raises an important question for India: where does it fit into this emerging supply chain?

India’s initial exclusion was revealing

India’s initial absence from Pax Silica may be more revealing than its later entry.

When the first group of countries joined the initiative, India was left out. The countries that joined at first had established strengths in some part of the AI or semiconductor supply chain. India, by contrast, did not yet have similar processing capacity and expertise in critical minerals.

However, India’s position should not be seen only as a lack of resources. The country has large rare-earth resources and its own mining and refining capabilities. At the same time, it still depends on rare-earth magnets and related products made further down the supply chain.

The difference is between having resources and controlling the stages that turn them into important industrial inputs.

India has big plans in semiconductors, AI and advanced manufacturing. It also wants to take part in efforts to reduce dependence on China. But having similar political goals does not automatically give a country a place in a supply chain. Its role depends on the capabilities it can offer.

In critical minerals, having deposits, mining potential and demand from industries does not automatically mean that a country controls the processing stages on which those industries depend.

India’s later entry into Pax Silica should therefore be seen as both an opportunity and a signal. The country is being included in a new system aimed at reducing dependence on China. At the same time, this system highlights the gaps that remain in India’s position in critical-mineral supply chains.

From exclusion to participation

India later signed the Pax Silica declaration on February 20, joining an initiative that is clearly designed to reduce risks in strategic supply chains. The move also came with US investment commitments in India’s AI infrastructure.

The important change is not simply that India moved from outside the initiative to inside it. It is that the relationship between India and the United States is increasingly shaped by the question of which countries can help build reliable technology supply chains.

If American and European companies are looking for alternatives to supply chains that depend heavily on China, India could attract investment by developing its processing and manufacturing capabilities. But taking part in these initiatives will create lasting strategic value only if it leads to real production capacity.

Otherwise, supply chains may involve more countries without becoming less dependent on the same processing facilities. A supply chain is not truly spread across different countries just because more countries take part. The important question is whether the main supply problem has been solved.

The bilateral relationship is moving deeper into processing

The same idea can be seen in the India-US framework on critical minerals and rare earths.

In May 2026, India and the United States reached a framework covering the mining and processing of critical minerals and rare earths. It also included efforts to build stronger and more varied supply chains. A separate Quad framework involving Australia, India, Japan and the United States aims to bring together around $20 billion in government and private-sector support for critical-mineral supply chains.

The focus on processing is important. If new mineral deposits are developed but the materials still have to pass through the same small group of refining and processing networks, the main risk remains.

That is why cooperation on processing, recycling and investment matters more than simply announcing new sources of raw materials.

India-US cooperation is also starting to move beyond traditional mining.

During Prime Minister Narendra Modi’s visit to Washington, the two countries agreed to launch a Strategic Mineral Recovery initiative. It aims to recover important minerals from heavy industries such as aluminium, coal mining, oil and gas.

This points to a different way of thinking about mineral security. Supply does not always have to begin with a new mine. Some important materials can also be recovered from existing industrial activity and waste.

This means that domestic supply can come not only from mining the land, but also from recovering minerals from industries and waste. Mineral security can be improved not only by finding more resources, but also by creating more places and processes where useful materials can be recovered and processed.

But diversification is not the same as resilience

Pax Silica, the Quad framework and the India-US rare-earth arrangement all show movement towards more varied supply chains. But none of them, by itself, proves that China’s strong position has already been reduced.

Building a mine is one project. Building a refinery is another. Creating alternatives that can compete with existing processing facilities requires investment, technical knowledge and time. Diplomatic agreements can create a plan for cooperation, but they cannot prove on their own that supply is now less concentrated.

India’s initial exclusion from Pax Silica makes this especially clear. Official sources do not show that a lack of processing capacity was the formal reason for India’s exclusion, even though India’s ability to process minerals remains an important limit.

This difference matters. A gap in a country’s capabilities should not be treated as proof of the stated reason behind a diplomatic decision.

The main question is whether India can turn its participation in these agreements into a stronger position in critical-mineral supply chains. If it can, its role in reducing dependence on China will become more important. If it cannot, India may remain part of the system without becoming one of the countries that has a major influence over it.

The new geography of strategic leverage

For much of the twentieth century, geopolitical power was often linked to control over land, energy resources, shipping routes or military strength.

The emerging industrial economy adds another layer: power can also come from controlling processing stages that other countries cannot easily replace.

This is why a rare-earth magnet can matter to geopolitics, why materials used in semiconductors matter to technology plans, and why refining capacity can matter as much as mining rights. When a supply chain is disrupted in one country, it can create an industrial problem thousands of kilometres away if the affected input cannot easily be replaced.

The strategic value of a resource therefore depends more and more on where the main supply problem lies.

India’s challenge is not simply to own more minerals. It is to strengthen its position in the stages that decide whether those minerals can be turned into useful industrial inputs and supplied reliably to industries.

That is also why the emerging India-US relationship on critical minerals is more important than a normal trade partnership involving raw materials.

Washington is trying to reduce its dependence on a small number of suppliers. India wants to build a more important role in the supply chains that support key technologies. These goals overlap, but they are not the same.

The United States needs reliable supply chains. India needs to develop the capabilities that make it an important part of those supply chains. The point where these two goals meet is where strategic leverage can emerge.

In this world, owning the resource is only the first step. The real power lies in controlling the stages that turn that resource into something the global economy cannot easily do without.

The race over critical minerals is ultimately about something bigger than minerals: the ability to control the key industrial stages of the technologies that will shape economic power.