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In a striking report, researchers reveal that China now controls over 80% of essential battery materials needed for defense technology, raising significant national security concerns.
Due to lax permitting processes and weak environmental regulations, along with aggressive state-led interventions, China has established a stronghold on global supplies of critical components such as graphite, cobalt, and manganese. These materials are vital for the anodes and cathodes that power advanced defense systems.
According to the report’s authors, batteries are poised to be pivotal in future conflicts. The authors note that their importance extends to drones, handheld radios, autonomous submarines, and emerging technologies, including lasers and directed energy weapons.
Research from the Foundation for Defense of Democracies highlights how the Chinese Communist Party has effectively weaponized the global battery supply chain through a combination of state subsidies, enforced transfer of intellectual property, and predatory pricing strategies.
Financial strategies have also played a significant role. Over the last two decades, at least 26 state-backed Chinese banks have invested approximately $57 billion in mining and processing projects across Africa, Latin America, and other regions. This financial backing, typically structured through joint ventures and specialized vehicles, allows Chinese companies to gain controlling interests in mineral extraction operations.
Through its Belt and Road Initiative, China has extended its influence over resource-rich developing nations, securing significant control over essential mineral deposits. Currently, China processes about 65% of the world’s lithium, 85% of graphite, 70% of battery cathodes, 85% of battery anodes, and an astounding 97% of anode active materials.
Lithium plays a pivotal role not only in the civilian sector but also in military applications. Lithium-ion batteries are critical for infrastructure support at military bases and for advanced systems such as directed energy weapons.
In a concerning trend, Beijing has also begun utilizing export controls as a geopolitical tool. Since 2023, it has imposed stricter regulations on processed graphite, gallium, germanium, and has included antimony, tungsten, and rare earth elements in these restrictions. This new regime hampers exports through licensing requirements and extensive bans targeting the United States, indicating a strategy to exert geopolitical leverage.
Both lithium and graphite are indispensable for modern nuclear arsenals. Furthermore, cobalt alloys are extensively used in various military applications, including jet engines, naval turbines, and specialized electronics capable of withstanding extreme environmental conditions.
While American reserves of lithium are being tapped, new mining projects are emerging, particularly in North and South Carolina, which aim to minimize reliance on foreign lithium sources. However, the report suggests that the pace of U.S. mineral mining and processing is insufficient to meet pressing national security requirements.
Permitting issues reportedly contribute to about 40% of delays in mining operations. Moreover, processing facilities face numerous regulatory challenges that further complicate efforts to increase domestic production.
Chinese financial support for its firms vastly outpaces what is available to U.S. companies. This includes benefits ranging from tax exemptions and direct manufacturing grants to low-interest loans, which puts U.S. companies at a competitive disadvantage.
In response, American businesses are ramping up investments in domestic solutions to reduce dependency on Chinese lithium. Driven by new initiatives from the Trump administration aimed at enhancing critical mineral production, forecasts indicate the U.S. lithium market could expand by about 500% over the next five years, prompting American firms to establish processing capabilities domestically.
Major companies like Piedmont Lithium are developing facilities in North Carolina to process spodumene concentrate from U.S. deposits. At the same time, Albemarle is initiating projects for new lithium processing plants in South Carolina. These initiatives are intended to nurture a robust domestic battery ecosystem and diminish reliance on Chinese supply chains.
However, the report emphasizes that for the U.S. to enhance its global competitiveness, a proactive strategy is essential. This strategy should include incentivizing private investment, simplifying federal permitting processes, creating a national critical minerals stockpile, establishing technical talent pipelines, forming special economic zones, and developing strong domestic processing infrastructure.
The importance of ally-shoring also emerged in the discussions, with recommendations for greater diplomatic coordination with reliable partners. Lessons from past U.S. efforts involving Ukraine, Greenland, and the Democratic Republic of the Congo in rare-earth sourcing offer a path toward constructing resilient supply chains that are insulated from Chinese influence.
Despite China’s overwhelming dominance in the battery supply chain, the researchers assert that the current geopolitical landscape presents a unique opportunity. The report concludes that now is the time for the United States and its allies to develop strategic measures against non-market manipulation. By creating critical supply chains independent of China’s coercive economic strategies, free-market nations can foster collaboration and resilience against Beijing’s economic ambitions.
