Critical minerals in an age of geopolitical rivalry: stockpiling, refining constraints, and the limits of friend-shoring

Abstract US–China geopolitical tensions pose significant risks to global critical-mineral supply chains, particularly because refining capacity for most critical minerals, including aluminium, copper, nickel, tin, and zinc, is overwhelmingly concentrated in China. Using monthly data from 1995 to 2025 and a structural VAR-local projection framework, we estimate the dynamic effects of exogenous shocks to the US–China Political Relations Index (PRI) on mineral markets. We find that geopolitical deterioration systematically induces significant precautionary stockpiling. We then construct a multidimensional friend-shoring index incorporating reserves, alignment, regime type, and distance, showing that only a narrow set of United States partners, primarily Australia and Canada, offer feasible pathways for refining diversification. The policy recommendation stemming from our findings is that the United States should make strategic stockpiling of refined critical minerals, rather than raw ores, the centrepiece of its strategy to build supply chain resilience, while negotiating long-term bilateral packages for the supply of refined critical minerals with Australia and Canada.