The $23.6 Trillion Question

The West needs $23.6 trillion to build critical minerals supply chains that can compete with China. That figure, released this week by EY, dwarfs the annual GDP of most nations and underscores the scale of the challenge facing mining executives, policymakers, and investors who spent the past decade talking about supply chain resilience without writing the checks to build it.

EY's analysis warns that the West faces a $23.6 trillion investment challenge to build critical minerals supply chains , according to Mining.com. The number is so large it risks becoming meaningless—until you consider what happens if the money doesn't materialize. Demand for minerals used in defense, the energy transition, data centers and semiconductors has created supply gaps with both security and economic implications , EY noted. The firm's research comes as the mining industry confronts a paradox: soaring demand for critical minerals alongside a financing environment that remains deeply skeptical of upstream projects.

Meanwhile, the ground is shifting beneath the industry. Lithium mines that shuttered during the price collapse of 2024 are flickering back to life. Copper smelters, despite record metal prices, are bleeding cash as processing fees turn negative. And the U.S. Army is doing something it has never done before: leasing military land to private companies to build mineral processing plants on American soil.

Can Lithium Producers Bet on a Rebound?

After eighteen months on care and maintenance, Mineral Resources restarted its Bald Hill lithium mine in Western Australia in May 2026, betting that a rebound in prices would support renewed production, with crushing and mining operations starting in June and first production of spodumene concentrate expected in July , Bloomberg reported. The move reflects cautious optimism spreading through the lithium sector after prices climbed above 200,000 yuan per ton earlier this year.

But the restart wave comes with a twist. China's CATL obtained a safety production permit for its flagship Jianxiawo lithium mine on June 29, clearing a key regulatory hurdle to restart production following a suspension that lasted nearly a year, with the permit effective until February 27, 2028 , according to Mining.com. The mine has an annual production capacity of roughly 46,000 metric tons of lithium carbonate equivalent, equal to about 3% of total global output in 2025 , Australian government data show. Its return adds fresh supply to a market that had only just begun to tighten.

Global lithium markets are on track for a tightly balanced 2026, with CITIC Futures projecting worldwide supply will climb 23% to 2.106 million tons LCE this year, while demand rises 30% to 2.099 million tons—leaving a modest surplus of just 7,000 tons under its base-case scenario. That razor-thin margin means every restart matters. Producers who mothballed operations during the downturn now face a delicate calculus: restart too early and risk flooding a fragile market; wait too long and miss the window entirely.

North American producers are moving more cautiously. LibertyStream Infrastructure Partners announced a private placement to issue 25 million units at C$0.80 for aggregate gross proceeds of up to C$20 million on July 13 , Mining Weekly reported. The company is developing direct lithium extraction technology to pull lithium from oilfield brine in Texas—a bet that unconventional sources can compete with hard-rock mining in Australia and South America.

Why Are Copper Smelters Losing Money at Record Prices?

Copper hit all-time highs this year. Smelters, paradoxically, are struggling to stay solvent. Treatment and refining charges for processing copper concentrate hit all-time lows, with the annual TC/RC benchmark settling at $0 per tonne in January 2026, the lowest level ever agreed in annual negotiations , the IEA reported. Spot TC/RCs have been negative since 2024 and fallen to all-time lows , meaning smelters now pay miners for the privilege of processing their ore.

The culprit is overcapacity. China has accounted for over 90% of growth in global copper smelter output since 2005, lifting its share from around 15% to half of global supply in 2025, as a surge in smelter capacity additions significantly outstripped growth in copper concentrate production . The result: a bidding war for concentrate that has pushed processing fees into negative territory and forced smelters to depend on by-products—gold, silver, sulfuric acid—for survival.

Analysts at consultancy CRU estimate that processing fees accounted for 39% of total smelter income in 2018, but last year, the biggest revenue generators were "free metal" and by-product credits at 50-53% and 25-27% respectively , Reuters reported. The business model has flipped. Smelters that once earned steady margins from refining copper now operate as precious metals recovery operations that happen to produce copper as a side product.

China's top smelters agreed to cut production by over 10% in 2026, and the government halted around 2 million tonnes of planned new smelting capacity to address the issue , the IEA noted. But actual production grew by another 7.4% year-on-year between January and April 2026 , according to China's National Bureau of Statistics. The disconnect between announced cuts and actual output suggests the crisis will persist. Even China—whose smelters operate at half the cost of Western competitors—is reacting in this way, showing that the TC/RC challenge is not a temporary but a structural problem requiring immediate government intervention , Columbia University's Center on Global Energy Policy warned.

What Happens When the Pentagon Becomes a Landlord?

In late June, the U.S. Army did something unprecedented: it awarded conditional leases to four companies to build critical minerals processing plants on military bases. The US Army struck deals with REalloys Inc., Titan Mining Corp., ioneer Ltd. and Energy X to build facilities for processing rare earth minerals, graphite, lithium and boron on military bases around the country , Bloomberg reported.

Leveraging underutilized land at Anniston Army Depot in Alabama, Pine Bluff Arsenal in Arkansas, Red River Army Depot in Texas, and Tooele Army Depot in Utah, the Army is engaging with industry leaders to establish domestic processing capacity for minerals foundational to the warfighting capability of the Joint Force , the Army said in a statement. These awards are the first time the Army has sited commercial mineral processing facilities on American military installations, a direct execution of President Trump's Executive Order 14241 .

The arrangement is elegant in its simplicity. The agreements are intended to give the Army direct access to the minerals, with the lessee directly funding and executing infrastructure improvements on the host installation in lieu of cash payments . The companies are expected to start building the plants as early as 2027, with mineral production expected to begin by 2028 .

The move reflects a broader shift in how Western governments approach critical minerals. Critical minerals are often presented as a mining challenge, but increasingly they are a processing challenge, with strategic bottlenecks no longer located primarily in the ground but found between the mine and the factory , InvestorNews observed. The U.S. has abundant mineral resources. What it lacks is the refining capacity to turn ore into battery-grade materials—a gap China spent two decades filling while the West slept.

China isn't standing still. A new, Beijing-backed mining investment vehicle is aimed at bolstering China's grip on overseas resources, as the country pushes back against US and European efforts to curb its dominance of the mineral supply chain, with Chinese companies having been aggressive buyers and builders of overseas mining assets for more than a decade , Mining.com reported. China Mineral Resources Group, established in 2022 to centralize China's purchasing power in global iron ore markets, now appears poised to play a broader role across strategic mineral supply chains, with Beijing pursuing a more disciplined approach to securing critical mineral resources abroad .

What Changed This Week

The critical minerals landscape shifted from theoretical to urgent. EY's $23.6 trillion figure put a number on what industry insiders have known for years: building Western supply chains will require capital deployment at a scale the mining industry has never seen. Simultaneously, lithium restarts in Australia and China signaled that producers believe the worst of the price collapse is over, even as copper smelters demonstrated that high commodity prices don't guarantee profitability when the midstream is broken. The U.S. Army's decision to lease military land for processing plants marked a new phase in the critical minerals race—one where national security concerns override traditional market mechanisms.

What to Watch

CATL's Jianxiawo mine is expected to ramp up production through Q3 2026, with market participants watching closely to see whether the additional supply pressures lithium prices or whether demand absorbs it seamlessly. Copper smelters face a critical test in Q4 as by-product markets—particularly sulfuric acid—normalize after the Hormuz disruption; if precious metals and acid prices retreat, smelter economics could deteriorate rapidly. The U.S. Army's formal lease agreements with REalloys, Titan Mining, ioneer, and Energy X are expected to be finalized in the coming months, with construction timelines and offtake terms providing a template for future military-industrial partnerships. And EY's investment gap analysis will likely inform policy discussions at the G7 and beyond, as Western governments grapple with whether to deploy public capital at the scale required—or accept continued dependence on Chinese processing.