What is Resource Nationalism and Why is it Surging

Key Takeaways

• Resource nationalism is a structural shift, elevating critical minerals to national security assets, driven by geopolitical tensions and the energy transition.
• Governments globally are actively intervening through stockpiling, strategic partnerships, and domestic processing mandates, creating both opportunities and risks for investors.
• Investors should focus on metals vital for electrification and defense, particularly copper, lithium, nickel, cobalt, and rare earths, while carefully assessing geopolitical risk and supply chain resilience.

What is Resource Nationalism and Why is it Surging?

Resource nationalism is rapidly emerging as a defining theme of the global economy, marking a profound structural shift in commodity policy where governments prioritize securing critical minerals as national security assets. This isn't merely a cyclical response to supply-demand imbalances; it's a strategic pivot driven by geopolitical fragmentation, the accelerating energy transition, and the insatiable demands of advanced technologies like AI. Nations are no longer content to rely on globalized, "just-in-time" supply chains, which have proven vulnerable to disruptions and weaponized trade policies.

Historically, strategic stockpiles served as emergency buffers against temporary price spikes or natural disasters. Today, the motivation is far more explicit: to insulate national industries and defense sectors from concentrated supply chains and potential export controls by rival powers. Patrick Schröder of Chatham House highlights that this "newest wave of stockpiling is most visible" in metals and minerals, reflecting a shift from crisis management to proactive industrial strategy. The goal is to build resilience against geopolitical factors, not just market fluctuations.

Consider the U.S. "Project Vault," a proposed $12 billion strategic mineral reserve aimed at bolstering supply-chain resilience for American industry. This initiative, alongside the "Forum on Resource Geostrategic Engagement (FORGE)" and "Pax Silica" (safeguarding AI supply chains), underscores Washington's commitment. Other nations are following suit: Australia announced an $800 million critical minerals reserve, the EU is advancing its RESourceEU strategy for a joint reserve, and South Korea rolled out a $172 million comprehensive strategy. Even India and Brazil are deepening cooperation to diversify supply and reduce reliance on dominant players. This global scramble signifies a new era where access to these materials is a matter of national sovereignty.

Which Critical Minerals Are Most Impacted by This Trend?

The impact of resource nationalism is most acutely felt across a specific basket of critical minerals essential for the energy transition, advanced manufacturing, and defense. Lithium, nickel, cobalt, graphite, and rare earths are at the forefront, as they are indispensable components for electric vehicles (EVs), grid-scale energy storage systems (ESS), wind turbines, and solar batteries. J.P. Morgan Global Research forecasts global demand for lithium to grow 16% year-over-year in 2026, with 58% of this incremental demand coming from EVs and 30% from ESS, projected to rise to 36% by 2030. This surging demand, coupled with long lead times for new mines, creates a persistent market deficit.

Copper, often called "Dr. Copper" for its economic bellwether status, has also been elevated to a critical mineral. The U.S. Department of Energy recently added copper to its Critical Materials Assessment, making it eligible for tax credits under the Inflation Reduction Act. Its current price of $5.96 per pound, up 2.06% today, reflects strong demand, with its 52-week range spanning from $4.10 to $6.51. The 50-day moving average of $5.74 and 200-day average of $5.11 suggest a bullish trend, driven by electrification and infrastructure needs. Bringing a new copper mine from discovery to production can take an average of 17 years, exacerbating supply deficits even with high prices.

Beyond these, minerals like antimony, gallium, platinum-group metals (PGMs), aluminum, and tungsten are also gaining strategic importance. The focus is broadening beyond just rare earths, as the national security narrative hardens across a wider spectrum of materials. The processing stage, rather than just extraction, has become the "center of gravity" in this contest, with China holding significant advantages in midstream refining and separation. This means that even countries with abundant raw resources are pushing for in-country processing mandates, as seen in Indonesia's nickel export ban or Namibia's restrictions on lithium, graphite, and cobalt exports.

How Are Governments Responding and What Are the Geopolitical Stakes?

Governments worldwide are deploying a multi-pronged strategy to secure critical minerals, moving beyond mere rhetoric to concrete policy actions and significant capital allocation. The U.S. has mobilized over $30 billion in letters of interest, investments, and loans over the past six months, including a $10 billion Export-Import Bank financing for Project Vault. A landmark $7.4 billion deal with Korea Zinc, backed by $2.15 billion in direct U.S. government equity, aims to build the largest zinc smelter in the country, which will also produce 12 other critical minerals for defense manufacturing. This demonstrates a clear focus on reshoring and diversifying processing capabilities.

The geopolitical stakes are immense, as this scramble for resources is reshaping global trade and diplomatic alliances. The Critical Minerals Ministerial, hosted by the U.S. State Department, brought together 54 nations and the EU (excluding China) to discuss a "preferential trading area" for critical minerals with adjustable tariffs. This initiative, driven by "America First values," aims to reduce dependence on China, which has long used strategic stockpiling and export controls as economic levers. However, divisions within the EU and the reluctance of some producing countries with close economic ties to China highlight the complexity of forming a unified front.

Resource nationalism also manifests in developing nations, particularly in Africa and Latin America, where governments are rewriting the terms of engagement for mining projects. Licenses are increasingly tied to mandatory in-country processing, higher state equity, and the option to reopen fiscal terms when prices or politics shift. This "more muscular approach" is evident in countries like the Democratic Republic of Congo (DRC), where Ivanhoe Resources and Zijin Mining Group are required to build in-country smelters for copper, or Nigeria, which rejected Tesla's lithium mining request without a domestic battery facility. These measures aim to maximize local value retention, but they also add layers of political and fiscal risk for international investors.

What Does This Mean for Investors? Opportunities and Risks.

For investors, the era of resource nationalism presents a complex landscape of both significant opportunities and heightened risks. The overarching theme is a bullish bias for metals tied to national security strategies and the energy transition, as governments are willing to absorb higher prices and provide policy support to ensure supply. This creates a "security premium" that can structurally shift market dynamics beyond traditional supply-demand fundamentals.

Opportunities:

• Non-Chinese Rare Earths & Strategic Metals: Companies operating in allied nations, particularly those focused on rare earths, lithium, nickel, and cobalt outside of China, are well-positioned to benefit from policy support and capital allocation aimed at diversifying supply chains. The Pentagon's move to become the largest shareholder in MP Materials, the only fully integrated rare earth magnets producer in the U.S., serves as a blueprint for future government-backed investments.
• Copper Miners: With copper's elevated status and persistent supply deficits, copper miners with high-quality projects are likely to see healthy margins. The long lead times for new mines mean that even with strong prices, supply elasticity remains constrained, reinforcing confidence in long-term fundamentals.
• Processing & Recycling Technologies: As the focus shifts to midstream processing and reducing dependence on external sources, companies involved in refining, separation, and advanced recycling technologies for critical minerals will see increased investment and strategic importance. Europe, for instance, is likely to focus on improving its recycling and reprocessing capability.

Risks:

• Geopolitical Volatility & Trade Friction: The weaponization of trade through tariffs and export controls will continue to cause volatility and regional price divergence. Investors must navigate the delicate balance of US-China relations, as policy shifts can rapidly impact procurement strategies and project economics.
• Resource Nationalism in Producing Countries: The increasing demands from resource-rich nations for in-country processing, higher state equity, and renegotiable fiscal terms introduce political and fiscal risks. Projects in "frontier markets" may face higher operational costs and regulatory uncertainty, requiring careful due diligence and strong local engagement.
• Permitting & Environmental Challenges: Even with policy support, new mining and processing projects face significant hurdles, including local opposition and lengthy permitting processes, particularly in Western countries. This can delay supply responses and increase capital expenditures, challenging the ability to meet future demand.

Navigating the New Commodity Paradigm: Investment Strategies

Navigating this new commodity paradigm requires a strategic approach, focusing on resilience, diversification, and a deep understanding of geopolitical currents. The traditional global metal inventory system, built on open trade and efficient arbitrage, is fragmenting, leading to less efficient global rebalancing and localized price action. Investors must adapt to a world where policy and security of supply are as influential as pure market fundamentals.

One key strategy is to identify companies with robust ESG (Environmental, Social, and Governance) frameworks and strong community relations, particularly in resource-rich developing nations. As governments demand more value retention and local benefits, companies that can demonstrate a commitment to sustainable practices and equitable partnerships will be better positioned to secure and maintain operating licenses. This proactive engagement can mitigate the risks associated with deepening resource nationalism and ensure long-term project viability.

Furthermore, consider the "debasement trade" — a secular shift toward hard assets as fiat currencies potentially lose purchasing power due to fiscal dominance and persistent inflation. With the U.S. inflation rate at 2.26% and the 10-year Treasury yield at 4.04%, the backdrop suggests continued fiscal stimulus and an inflationary bias. This environment reinforces the strategic case for physical metals and mining equities in institutional portfolios, offering an "insurance-type demand" against economic uncertainty. Diversifying across different critical minerals and geographies, while prioritizing companies with strong balance sheets and proven operational capabilities, will be crucial for capitalizing on this structural shift.

The Road Ahead for Critical Minerals

The road ahead for critical minerals is one of sustained strategic importance and heightened geopolitical competition. The current environment, characterized by an inflation rate of 2.26% and a normal 2s/10s Treasury spread of +0.61%, suggests a complex economic backdrop where hard assets continue to offer a hedge against uncertainty. This isn't a temporary blip; it's a fundamental reordering of global trade and resource allocation.

Investors should anticipate persistent volatility and regional price divergence, driven by ongoing trade friction and sudden policy shifts. The long-term demand drivers — electrification, AI, defense modernization — remain robust, ensuring that critical minerals will stay at the top of national agendas. Success in this new era will hinge on a nuanced understanding of both market fundamentals and the evolving geopolitical landscape.

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