Milton Friedman once famously used a pencil to illustrate the power of capitalism. Something so mundane, bought for less than a dollar at any corner store, depended on a vast and invisible web of global cooperation. The wood came from one place, and the metal, rubber, paint, and machinery from another — each requiring its own supply chains, tools, and labor. No single person could make a pencil on their own, yet the world produces billions of them.
Now, imagine what Friedman would say about a smartphone. Or an electric vehicle. Or an F-35 fighter jet.
At the foundation of it all, however, is something even humbler than a pencil: rocks. Blasted, shoveled, crushed, and burned — earth transmuted into metal, machines, and power. Our world is built from the ground up.
The importance of critical minerals and mining is not a novel concept, but we want to share our updated perspective — shaped by the accelerating convergence of technology, capital, and policy — and help explain the complex process that transforms rocks into global supremacy.
What are critical minerals?
Critical minerals are the quiet enablers of modern power. They sit at the heart of technologies that define contemporary life and security, including electric vehicles, satellites, precision-guided weapons, batteries, and more. They are called “critical” not merely because of their unique properties or limited substitutes, but because the supply chains that deliver them are fragile. They stretch across continents, and are vulnerable to geopolitical maneuvering, trade dependencies, and the erosion of industrial capacity.
Unlike bulk commodities such as iron or copper, many critical minerals are not extracted in high volumes as primary targets. Instead, they are typically recovered as byproducts or sourced from complex ore bodies that demand specialized processing. Their scarcity isn’t always geological; it’s often logistical, technical, political, and, most of all, economical. As an old quip has it: rare earths are not actually rare — just rarely worth the trouble.
In many cases, though, there are no viable substitutes for these minerals in their most critical applications. Rare earth magnets, for example, remain unmatched in efficiency; lithium-ion batteries still lead in energy density and commercial readiness. In 2022, the United States government officially designated 50 “critical minerals,” and some of the most strategically significant — including rare earths, lithium, cobalt, nickel, graphite, copper, and uranium— are laid out in the table below:
Why critical minerals matter
Of course, this level of concentration introduces significant risk. While the total economic value of select critical mineral imports may appear modest, their strategic value is not — these materials underpin hundreds of billions of dollars in downstream industrial output. For the United States, this creates systemic vulnerabilities across entire sectors. Without secure access to these foundational inputs, the United States cannot fully execute its industrial strategy or safeguard its national interests.
China has already demonstrated its willingness to weaponize its control of mineral supply chains for geopolitical leverage, as they did throughout the 2010s and more recently this past April. Crucially, China’s dominance didn’t happen overnight; it is the result of a decades-long, deliberate strategy to control every step of the critical minerals value chain:
- At the mining stage, state-backed firms secured access to major deposits abroad through equity stakes, loans, long-term offtakes, and diplomatic leverage — particularly in Africa, Southeast Asia, and South America.
- In processing, China invested heavily in refining capacity, often ignoring environmental concerns and leveraging looser regulations to drive down costs and outcompete global players.
- For manufacturing, it fostered national champions, becoming the world’s leading producer of batteries, magnets, and solar panels, among other advanced technologies.
The result is that China is now a linchpin of global industry — one the West is scrambling to avoid. However, the real challenge isn’t just securing mineral deposits, but building full supply chains at speed and scale. Sparse tech adoption, execution gaps, market volatility, and regulatory drag all hamper progress, especially upstream.
Fixing this starts with understanding how the critical mineral ecosystem actually works.
Mining 101
Value in mining flows through a series of distinct industrial stages — exploration, extraction, processing, and manufacturing — each with its own technical demands and economic logic. Firms typically specialize in a piece (or pieces) of the chain, shaped by differences in expertise, capital requirements, and risk.
Like most industrial supply chains, the real picture is more complex than what might be suitable for a blog post — consider this Mining 101.
Exploration
Exploration is the most speculative stage of the critical minerals supply chain, typically led by small, independent firms known as “juniors.” Operating on lean budgets and fast timelines, they punch above their weight in tech adoption, using tools like hyperspectral imaging, machine-learning-based target generation, advanced downhole geophysical methods, and autonomous survey drones.
The process begins with desktop studies and field surveys, followed by geophysical mapping and drilling to collect core samples. These are logged, assayed, and modeled to estimate size, grade, and economic viability. All of this culminates in a series of technical reports that support capital raising or asset sales, as ongoing work further defines the grade and scale of the ore body.
At this point, permitting begins in limited form, covering surface disturbance and drilling, but not full-scale development. Regulatory demands often require environmental baselines, indigenous tribe consultation, and land-use agreements before a single drill turns.
From a business perspective, exploration remains a high-risk numbers game. Most targets fail, and even the best can take a decade or more to reach production. This helps explain why most juniors exit post-discovery. But that’s changing: Companies like KoBold Metals are staying in longer, blending exploration with development to capture the value of a producing mine.
Yet without new exploration, the system stalls. As legacy deposits deplete and demand surges, the future of mineral supply will hinge not just on how we mine, but on how — and where — we search.
Extraction
Once a deposit is deemed viable, it enters the extraction phase — the capital and time-intensive process of turning a deposit into a producing mine. This stage is typically led by “majors,” or operators with the engineering skill, financing, and regulatory experience to navigate years of development. In America, permitting spans federal, state, and tribal levels. In emerging markets, political and logistical challenges dominate, and issues like corruption and conflict often complicate matters. Either way, timelines are typically measured in years or decades, not months.
Extraction is more than digging up rocks with haul trucks and backhoes. Most mines also include some level of onsite processing: hard rock operations, for example, drill, blast, crush, and grind ore before using flotation or magnetic sorting to isolate valuable minerals. Brine systems pump mineral-rich fluids and concentrate them through evaporation, often over a course of 12 to 18 months. Whether rock or brine, on-site concentration aims to minimize logistics and capture more upstream value.
While technologies like autonomous vehicles, rapid orebody modeling, and precision blasting are becoming more common — and in some cases already deployed — uptake remains slow. Site teams are often left patching together disparate tools for only marginal productivity gains. Even the most advanced operators struggle to deploy these tools across multiple sites, resulting in bespoke implementations.
Many mines underperform not just due to technical challenges, but because of deeper process issues: permitting delays, unrealistic feasibility assumptions, or setbacks in execution. Others stall out entirely — not for lack of resources, but due to fragmented data systems, siloed teams, and institutional resistance to change. Shockingly, many core workflows still depend on spreadsheets, clipboards, and decades-old software. It’s not uncommon to find consultants and contractors piecing together whiteboards with legacy desktop tools running on Windows XP. As ore grades decline and margins tighten, the cost of this inefficiency becomes lethal.
Processing
Chemical processing is the most technically demanding and capital-intensive step in the critical minerals supply chain. It’s where raw concentrates — from ore, brine, or slurry — are refined into high-purity compounds and metals used in batteries, magnets, and other advanced technologies. Processing has also become the key bottleneck in the global minerals race — complex, capital-intensive, under-digitized, and central to everything downstream.
But these processes are highly specific: lithium from spodumene, for example, must be roasted, leached, purified, and crystallized into lithium hydroxide. Rare earths require complex solvent extraction to separate individual elements, often across hundreds of stages. Despite the complexity, many facilities still rely on manual sampling and spreadsheet-based tracking, and operate with poor energy efficiency.
Margins, however, can be significant. A ton of lithium hydroxide, for example, can sell for many multiples of its inputs. And even small gains in recovery or uptime can radically boost economics. Advanced in-line sensors, real-time analytics, AI-driven control systems, and modularity, as well as novel chemical processes, promise to further raise yields and reduce costly waste. Yet, such innovations often remain stuck in pilot stages and underutilized.
Larger plants benefit from scale and, typically, tighter controls, but have a greater dependence on a consistent supply of raw material. Without integration with upstream mines or long-term offtake contracts (binding agreements to pre-purchase product), even efficient facilities can falter. Many midstream projects fail not due to chemistry or operational challenges, but because the supply isn’t secured.
China dominates the processing market, controlling most global refining for lithium, rare earths, nickel, graphite, and cobalt. Its edge today comes from scale, industrial clustering, deep talent networks, offtakes, and years of operational experience. Replicating this in America is hard because permitting is slow, capital is expensive, and the talent pool is shallow. Additionally, volatile market prices pose existential risks to early-stage projects, while long development timelines leave them vulnerable to black swan events.
Still, we’re making progress. Rio Tinto is developing integrated lithium operations; MP Materials is building rare earth separation in California; and Tesla has launched its own lithium refinery in Texas.
Additionally, while still limited in impact today, recycling offers a parallel path to domestic processing — using similar technology that refines virgin material, but starting with what are effectively higher-grade inputs. The key constraint is feedstock: most EVs and batteries are still in use, and collection infrastructure remains fragmented. As end-of-life volumes grow and reverse logistics improve, recycling firms could emerge as a significant domestic source of high-grade critical mineral products.
Manufacturing
The final stage is the manufacturing of advanced materials — battery precursors and active materials, magnets, and specialty alloys — that feed directly into end-use industries. Here, processed metals are transformed into engineered forms with unique chemical, structural, and magnetic properties. It’s the most specialized link in the chain, and perhaps the most strategically critical.
For countries aiming to reshore supply chains, the manufacturing stage is surprisingly difficult to replicate. It’s compact in footprint, but dense in know-how and risk. While policy often focuses upstream — what’s mined or refined — true independence depends on mastering this final stretch. Without it, the chokepoint simply moves downstream.
This isn’t assembly-line work, but precision materials engineering. Processes like heat treatment, doping, sintering, and nanostructuring push performance limits. Minor deviations in particle size or crystal structure can affect battery cycle life or magnet strength. Specs are tight, recipes proprietary, and tolerances unforgiving.
Manufacturing follows a different logic than mining or refining: it prioritizes consistency, qualification, and yield over sheer volume. This is especially true for defense-critical components like high-temperature magnets — strategically vital but smaller markets with strict regulatory regimes, long product cycles, and little tolerance for disruption. OEMs tend to value reliability and traceability over novelty.
Incumbents like Umicore (cathodes) and Vacuumschmelze (magnets) have spent decades mastering complex processes and earning deep customer trust. Their edge in materials science, process control, and compliance makes it difficult for new entrants to compete. Even Tesla relies on partners like Panasonic for key elements of active material synthesis and cell production. Market entry is slow, capital-intensive, and often depends on OEM support — as also seen in GM’s partnership with MP Materials to build domestic magnet capacity.
The future of critical minerals
In theory, the critical mineral supply chain is segmented: explorers find resources, miners extract them, chemists refine them, and manufacturers turn metals into industrial goods. In practice, the lines blur: junior explorers become developers, miners move into processing, and manufacturers integrate upstream to secure feedstock and capture value. Even so, these integrations aren’t primarily driven by alignment in risk, capital, or expertise; they happen in spite of it, as firms chase control, diversification, and margin for survival.
Nearly every company in this sector wants exposure to the cash flows and mineral outputs of producing assets. Juniors aim to retain project equity post-sale; majors like Rio Tinto and BHP scale by accumulating diversified mine portfolios. Increasingly, processors, too, are seeking control over feedstock supply. Yet despite this desire for expansion, few firms are willing to trial new technologies in live operations, and even fewer have the software depth or technical talent to deploy AI, automation, or next-gen processes at scale.
Critically, we believe vertical integration is no longer optional. The companies best positioned to win won’t operate at a single point in the chain; they’ll control multiple stages of it. That requires more than policy declarations or singular technological solutions; it demands serious capital and an entirely new industrial model. We’ve backed KoBold Metals to help reinvent exploration, but the United States needs more companies that build and operate scaled assets, extending across the value chain with technology embedded at the core of their operations.
Processing, in particular, has become the critical chokepoint both technologically and financially. When co-located with extraction, it also creates feedback loops that improve recovery, quality control, and overall operations. Moreover, it helps form a durable moat in a challenging commodity market.
Of course, we’ve seen this playbook before. SpaceX didn’t sell rocket engines to Lockheed Martin; it launched payloads. Hadrian didn’t sell software to aerospace suppliers; it made parts. Mining is no different. The winning model won’t be a technology vendor, but a vertically-integrated operator.
The real challenge is architectural: what parts of the chain must be owned to unlock strategic advantage — and where should that reinvention begin?
Building the American mining champion
What America needs is a mining champion: a software-native, product-driven company that treats mining and metals as a systems engineering challenge. For this company, processing is not a bottleneck, but the heart of the business. It must absorb risk, deploy unproven tools early, and architect an integrated platform with long-term customer agreements from day one. In doing so, it doesn’t just build a better mining company, but an industrial flywheel. One capable of compounding technology, scale, and operational learnings into durable advantage across multiple commodities. And one that can grow into the technology-enabled, integrated major needed to challenge China’s lead.
Presently, though, most major mining firms are industrial relics — fifty, even a hundred years old. Decades of operation have bred competence, but also inertia. There’s a deep resistance to reinvention and risk. In the last twenty years, in fact, only China has produced new mining giants.
Among them, Ganfeng Lithium stands out not just for its rapid scale, but its strategy. Ganfeng didn’t start as a miner. It began as a downstream processor, specializing in the production of high-purity lithium products. From that foundation, it moved upstream into extraction to secure feedstock.
Its edge wasn’t capital or government alignment, but a technology-first mindset. Ganfeng was an early adopter of advanced refining techniques and direct lithium extraction (DLE), favoring scaled deployment over prolonged piloting. Critically, it treated technology not as a support function, but as the product itself. This tight integration — spanning resource access, chemical conversion, and broader system-level engineering — enabled faster iteration and helped Ganfeng quickly reach global dominance in lithium markets.
Although, even Ganfeng had limits. Rapid expansion across far-flung assets created operational complexity, and its unprotected exposure to lithium markets left it vulnerable. As prices fell, so did its market cap — by over 75%. But the lesson isn’t to abandon the Ganfeng model. Instead, we should build off it.
“The factory is the product”
– Elon Musk
The United States can’t afford to pursue domestic critical mineral revival through piecemeal innovation. We can’t patch legacy systems with isolated, bespoke technologies and hope they cohere into a scalable, durable industry. That model breeds fragile businesses — structurally weak, exposed to commodity whiplash, and dependent on volatile capital markets. It doesn’t scale, it doesn’t compound, and it won’t beat a Chinese Communist Party armed with state-owned enterprises and guidance funds. The only credible answer is an American mining champion — vertically-integrated, technology-enabled, and built to win.
Of course, the United States government, too, has a critical role to play:
- Streamline permitting and clarify regulations: Accelerate project timelines by reforming NEPA and CEQA processes, reducing uncertainty, and creating clearer pathways for development.
- Provide non-dilutive financing and demand-side support: Use tools like grants, loan guarantees, offtake agreements, and tax credits to de-risk early-stage projects, attract private capital, and build long-term market confidence.
- Coordinate with allies on supply chain strategy: Ore bodies and processing capabilities span borders. By aligning standards, pooling resources, and sharing data, allied nations can reduce strategic dependencies and strengthen collective resilience.
- Align federal support for critical minerals: Align priorities across agencies by streamlining mandates, reconciling inconsistent mineral lists, and clarifying roles to deliver more cohesive, effective policy (see chart below).
Today’s technologies, from electric vehicles to fighter jets, rely on mineral supply chains that are fragile and strategically contested. China saw this early and mobilized its entire industrial base to dominate the field. “The Middle East has oil; China has rare earths,” Chairman Deng Xiaoping declared in 1992.
The United States can’t and shouldn’t replicate that top-down model, but it can build something better: a critical minerals champion powered by innovation, resilience, and speed, driven by the ingenuity and resolve of American builders.
It’s time to mine.
