The U.S. Army will build rare earth refineries on its own bases. Canada and Japan are stockpiling graphite and gallium together. China has cut off dysprosium shipments to Tokyo for six months and counting.
Welcome to 2026, where critical minerals have become the new currency of geopolitical leverage—and the old rules of resource diplomacy no longer apply. The Pentagon announced Thursday it selected Canadian miner Titan Mining and U.S.-based REalloys to develop processing facilities for critical minerals on military bases, part of a broader push to secure defense supply chains and reduce reliance on China , Reuters reported. REalloys will construct a rare earth separation facility at the Tooele Army Depot in Utah, with production stockpiled on-site for military use , according to the U.S. Army. Construction could begin as early as 2027.
It's a first-of-its-kind arrangement—and a signal that Washington has stopped waiting for the market to solve its China problem.
Can Allies Outbid Beijing's Processing Dominance?
China has effectively cut off Japan's access to some of the most strategically important materials on Earth. Shipments of heavy rare earths to Japan have been halted since January 2026, with minimal to zero distribution continuing into May. The materials in question—dysprosium, terbium, and gallium—are embedded in virtually everything that matters: electric vehicles, smartphones, wind turbines, missile guidance systems, and the permanent magnets that make modern electronics possible. China controls over 90% of global rare earth magnet production and refining , according to industry analysis.
Nomura Research Institute estimates a three-month export curb could cost Japanese businesses roughly 660 billion yen, or about $4.2 billion—enough to dent Japan's annual GDP by an estimated 0.11% , analysts told reporters.
Tokyo's response has been methodical. Canada and Japan are considering cooperation in critical mineral projects and a potential plan of joint stockpiling of key metals as the two G7 economies look to reduce China's outsized dominance in the market. Ottawa and Tokyo are in talks on options for cooperation including joint mining projects, off-take agreements and stockpiling arrangements for minerals such as graphite and gallium, International Trade Minister Maninder Sidhu said. Japanese and Canadian companies signed more than C$1 billion, or US$705 million, in commercial deals during the visit , Reuters reported Friday.
The EU is taking a different tack. The European Union is turning to Brazil as a strategic partner in its push to diversify its critical mineral supplies, offering a deal that it says will be beneficial to Brazil's development goals, EU Commissioner for International Partnerships Jozef Sikela told Reuters. The commissioner visited the rare earth research and processing center of Australian mining company Viridis Mining and Minerals, in Poços de Caldas, in the southeastern state of Minas Gerais, one of four priority projects selected to accelerate collaboration between the EU and Brazil . Viridis plans to invest $360 million in a commercial plant capable of producing 15,000 tons of mixed rare earth carbonate per year from 2028 , the company said.
Brazil holds the world's second-largest rare earth reserves. More importantly, it wants to process them domestically—a preference that aligns precisely with Europe's need for refined intermediate products rather than raw ore.
Why Are Copper Smelters Paying Miners to Process Ore?
While rare earths grab headlines, copper is staging a quieter crisis. Smelter fees for processing copper concentrate, known as treatment and refining charges (TC/RCs), have hit all-time lows. The annual TC/RC benchmark settled at USD 0 per tonne in January 2026, the lowest level ever agreed in annual negotiations. Meanwhile, spot TC/RCs have been negative since 2024 and fallen to all-time lows , the IEA reported.
Read that again: smelters are now paying miners for the privilege of processing their ore. Treatment charges reached -$66.40 per tonne in Q1 2026, meaning smelters now pay miners for concentrate access rather than receiving payment for processing services , according to market data.
These dynamics have been driven by a surge in smelter capacity additions from China, which has significantly outstripped growth in copper concentrate production. As a result, competition among smelters for concentrate has ramped up, sharply weighing on smelter fees. Since 2005, China has accounted for over 90% of growth in global copper smelter output, lifting its share from around 15% to half of global supply in 2025 , the IEA noted.
The paradox: copper prices remain near record highs—$71.50/bbl per barrel for oil, $4,071.58 per ounce for gold—but the midstream processors are bleeding. Despite the sharp decline in TC/RCs, some smelters remain profitable for now. This is largely due to revenues from selling by-products, such as gold, silver and sulphuric acid. With prices for these by-products recently at record highs, smelters that have access to by-product-rich concentrate are still generating robust profits, offsetting losses from low TC/RCs , analysts said.
That lifeline won't last. When gold and silver normalize, the structural collapse in processing margins will be laid bare.
