US Startups Challenge China’s Critical Mineral Control

HOST

From DailyListen, I'm Alex. Today: the scramble to break China's grip on the minerals that power our phones, cars, and weapons. To help us understand what’s actually happening on the ground, we’re joined by Marcus, our economics analyst, who has been covering this for us. Marcus, thanks for being here.

MARCUS

Thanks for having me, Alex. It’s a massive topic. When we talk about critical minerals, we’re talking about the building blocks of modern technology. Think cobalt for batteries, or rare earth elements for magnets in electric motors and defense systems. Right now, the global supply chain is heavily centralized. According to the IEA’s 2025 Global Critical Minerals Outlook, China is the dominant refiner for 19 out of 20 minerals they analyzed. That’s not just a statistic; it’s a structural reality. China effectively controls roughly 70% of the global processing capacity. This creates a chokehold because, even if a country mines the raw ore, they often have to ship it to China to get it refined into a usable product. It’s like owning a wheat farm but having to send your grain to one specific, foreign-owned mill to turn it into flour. If that mill shuts down or raises prices, you’re stuck.

HOST

Wow, that’s a pretty stark comparison. So, it’s not really about the mining itself, but the processing—the middle step—where the real power lies. But before we get into the startups trying to change this, how much are we actually producing here in the U.S. right now? Are we making any headway?

MARCUS

We are making moves, but it’s a slow climb. The USGS reported that total U.S. domestic nonfuel mineral production hit $112 billion in 2025. That’s a 6% increase from the previous year, which sounds good, but we have to keep that in perspective. Industrial minerals, like sand and gravel, make up the bulk of that value—about $73.7 billion. When you look at the really critical, high-tech stuff, the numbers are much smaller. Take antimony, for example, which is vital for flame retardants and ammunition. We barely had any domestic mine production for decades, and it only resumed late in 2025. We’re relying on a mix of domestic efforts and imports, but the structural dependency remains. We’ve seen some progress, but the sheer scale of the infrastructure required to challenge a dominant player like China is immense. It’s not something you fix in a single fiscal year; it’s a multi-decade industrial project.

HOST

That makes sense. It’s like trying to build a factory from scratch while the competition is already operating at full speed. You mentioned the U.S. is pushing for more production, but I’ve read about federal financing being a bit of a mixed bag. What’s the actual plan to fund this?

MARCUS

The federal government is definitely throwing money at the problem, but it’s complex. Under the "One, Big, Beautiful Bill," we’re seeing roughly $2 billion aimed at the National Defense Stockpile to buffer against supply shocks, plus another $500 million in Defense Credit Programmes for the industry. But here’s the catch: these efforts are being partially offset by the phasing out of older subsidies from the Inflation Reduction Act. It’s a balancing act. The government wants to encourage domestic capacity, but they’re also trying to manage the fiscal impact. Plus, we’re seeing a shift toward international partnerships. The U.S. is signing bilateral agreements with countries like Australia and the Democratic Republic of the Congo to secure supply chains outside of China. It’s a two-pronged strategy: try to build it at home while simultaneously diversifying where we buy from abroad. It’s a necessary hedge, but it doesn't solve the processing gap overnight.

HOST

So, it’s a bit of a tug-of-war between domestic investment and international reliance. I want to zoom in on the companies actually doing the work. You’ve been looking at startups like Phoenix Tailings in New Hampshire. They’re getting a lot of attention for trying to disrupt this. What are they actually doing?

MARCUS

Phoenix Tailings is a great example of the "innovation" side of this story. Led by CEO Nick Myers, they’re trying to tackle the supply chain from a different angle: reclaiming minerals that have been left behind. Instead of digging new, massive open-pit mines, they’re looking at existing mining waste—the "tailings"—to see if they can extract valuable minerals that were discarded decades ago. If they can make that process commercially viable, it would be a game-changer because it bypasses the need for traditional, environmentally intensive mining. They’ve been featured on shows like Wall Street Week, which shows there’s real investor interest. But we have to be realistic here. While the concept is promising, we don't yet have a detailed breakdown of their specific, proprietary methods or their long-term impact on the market. It’s still early days, and scaling a laboratory process into a global supply chain is a massive, expensive hurdle.

HOST

That sounds like a smart way to avoid the environmental headaches of new mining, but you’re right to be skeptical about the scale. Even if these startups succeed, are we just ignoring the bigger picture? Is there a risk that this "derisking" is actually just a geopolitical game?

MARCUS

That’s a very fair question. There’s a lot of debate among analysts about whether we’re over-politicizing the supply chain. Some experts argue that China’s dominance isn't just about weaponizing resources, but a result of long-term planning and massive investment. We’re talking about their 15th Five-Year Plan—they’ve been at this for decades. If the West wants to catch up, some analysis from the University of Technology Sydney suggests it’s not just a matter of money; it’s a matter of technical expertise and economies of scale. We face structural challenges that aren't going to disappear just because we’re worried about geopolitics. Some suggest that instead of viewing China solely as a "risk," we should focus on inclusive cooperation to fix systemic vulnerabilities. It’s a nuanced view, but it’s important because if we misdiagnose the problem, we’ll end up with solutions that don't actually make our supply chains more resilient.

HOST

That’s a really helpful distinction. It sounds like the "threat" might be more about our own lack of capacity than just China’s actions. But let’s look at the other side of that coin. If we are trying to build these new chains, who are we partnering with? You mentioned the EU earlier.

MARCUS

Right, the EU is playing a significant role here. At the 2026 Future Minerals Forum, they co-convened the first EU-Saudi Arabia Business and Investment Dialogue. That’s a clear signal that the West is looking to broaden its financing partnerships beyond the usual suspects. It’s not just the U.S. going it alone; it’s a global scramble. They’re all trying to find new, reliable sources of capital and raw materials. But again, the challenge is that China is already deeply entrenched. We have entities like IXM, which is the trading arm of China Molybdenum. They’re a massive player in the cobalt and copper markets, deeply embedded in the very supply chains we’re trying to diversify away from. So, even when a Western company thinks they’re buying from a neutral party, there’s often a complex web of Chinese state-linked interests sitting right in the middle of it. It makes "derisking" incredibly difficult to execute in practice.

HOST

That’s a bit unsettling. It’s like trying to untangle a knot where every thread is connected to the same source. You’ve mentioned that this is a long game—10 to 15 years, by some estimates. For the professionals listening who are worried about their own supply chains, what’s the takeaway?

MARCUS

The takeaway is patience and diversification. We’re in a transition period that’s going to be bumpy. If you’re a business leader relying on these minerals, you can’t expect a quick fix. The U.S. and its partners are building the foundation, but it’s a slow process. We’re seeing a shift from a "just-in-time" model to a "just-in-case" model, where security of supply is becoming as important as price. You have to look at your entire value chain, not just your direct suppliers. Are you exposed to those Chinese state-linked traders? Are you tracking the progress of new, smaller players like Phoenix Tailings? The market is going to be volatile for a long time as these new, non-Chinese supply chains try to find their footing. It’s not a sprint; it’s a marathon, and the structural dependencies we’ve built over the last few decades aren't going to be unwound overnight. [CLIP_START]

HOST

It really sounds like we’re in for a long, complicated period of adjustment. But before we wrap up, I have to ask: are there any specific criticisms or risks we should be aware of regarding these startups like Phoenix Tailings? You mentioned they’re promising, but is there a downside?

MARCUS

Absolutely. The primary risk is the "valley of death" for startups. While Phoenix Tailings has a compelling pitch, they face massive technical and financial hurdles. Transforming an innovative lab process into an industrial-scale operation is incredibly difficult. Plus, there’s a lack of transparency regarding their specific methods and the actual, long-term costs of their production. We don’t have a clear, independent verification of their efficiency compared to traditional methods. If they fail to reach that scale, or if their costs remain higher than the global market price, they won’t be able to compete with the established, subsidized, and highly efficient Chinese processing infrastructure. It’s a high-risk, high-reward bet, and we shouldn't assume that these startups are a magic bullet for a problem that is, at its core, a massive structural and industrial challenge. [CLIP_END]

HOST

So, basically, we should be excited about the innovation, but keep our expectations in check regarding how quickly they can actually move the needle. That’s a sobering reality check. Before we go, what’s one thing our listeners should watch for in the coming months as this unfolds?

MARCUS

Watch the 15th Five-Year Plan from China. It’s going to signal their next move in this space, and it will almost certainly trigger a response from the G7. Also, keep an eye on the actual output numbers from these new domestic projects. We’ve seen the $112 billion figure for 2025, but we need to see that number grow, especially in the refined, high-value minerals. If we don’t see a shift in the processing capacity—not just the mining—then we aren't really moving the needle on the chokehold. It’s all about the refining. If you want to know if we’re winning, look at where the processing happens. If that map starts to change, even by a few percentage points, then we’ll know the strategy is finally starting to work. But until then, stay cautious.

HOST

That was Marcus, our economics analyst. The big takeaway here is that breaking this chokehold isn't just about mining more ore; it’s about rebuilding the entire mid-stream processing infrastructure, a process that will take years, if not decades, of sustained investment and international coordination. Startups are part of the answer, but they face a steep climb against a deeply entrenched system. I’m Alex. Thanks for listening to DailyListen.