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The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Finley Grimble – founder and CEO of Knightsbridge Strategic Group (KSG), a geopolitical intelligence, scenario planning, AI, and wargaming advisory in London – is the 485th in “The Trans-Pacific View Insight Series.” Identify three key takeaways from KSG’s September exercise “Wargaming Strategic Solutions to China’s Dominance in Rare Earths and Critical Minerals (2026-2036).” China’s dominance in refining and processing proved extremely difficult to challenge; even aggressive Western strategies struggled to dislodge it. The risk of confrontation increased over time as the United States faced a narrowing window to avoid strategic subordination. Markets and corporations were repeatedly caught off guard, with minerals repriced as permanently strategic and systemic assets, reshaping investment across technology, defense, and energy. Describe the wargame’s key components: countries and industries represented, materials affected, structure, and timeframe. The exercise brought together participants from the United States, Europe, India, Japan, Australia, as well as Gulf, African, and South American producers, alongside finance, mining, defense, and technology industries. China’s moves were controlled by KSG and designed to be realistic yet deliberately aggressive to test resilience. We modeled ten categories of critical minerals, from rare earth oxides to permanent magnets and semiconductor inputs. The game unfolded over 2.5 days, covering ten “wargame years” (2026–2036) in five turns, each beginning with Chinese actions followed by state and industry responses. Encapsulate responses from stakeholder countries. The United States sought to rally allies, build strategic stockpiles, and fund alternative projects. But without matching China’s scale of investment or integrating private sector resources, Washington remained reactive. As Chinese dominance deepened, the U.S. faced a narrowing window to prevent long-term strategic subordination. Fragmented between member states, Europe launched initiatives like the Critical Raw Materials Act and investments in African mining. Yet projects suffered long lead times, coordination failures, and reliance on Chinese technology. Europe gained some resilience but could not materially alter its dependency. India was initially courted by the West, but steadily leaned eastward. Its preference for strategic autonomy, closer ties with China in certain sectors, and reluctance to align with U.S. or European agendas made it an unreliable partner for Western supply chain diversification. Highlight illustrative private sector responses. Financial institutions repriced critical minerals with permanent risk premiums, treating them as systemic assets. Mining companies faced political pressure to expand but were constrained by Chinese control over equipment and expertise. Technology and defense manufacturers suffered shortages of inputs such as high-performance magnets and semiconductor chemicals. Automotive and renewable energy firms struggled with disrupted supply chains, delaying climate transition timelines. Across sectors, Western private actors were consistently reactive and vulnerable to Chinese leverage. Assess China’s ability to maintain industry dominance, the absence of U.S. grand strategy, Europe’s lack of leverage, and technology and finance trendlines by 2036. China’s dominance: By 2036, Beijing retained decisive control of refining and processing, reinforced by upstream investments, export restrictions, and dominance of specialist equipment. China not only dictated access to materials but also used its leverage to set terms for industries ranging from semiconductors to defense. U.S. strategy: Washington never articulated a coherent grand strategy. Initiatives such as stockpiling, subsidies, and defense authorizations were pursued in isolation, with insufficient scale or coordination with the private sector. Without mobilizing finance, technology, and industry in tandem, the U.S. was left reactive and constrained. Europe’s lack of leverage: Europe entered structurally dependent on Chinese processing. Brussels launched joint industrial strategies, a Critical Raw Materials Act, and sought upstream projects in Africa and South America. Yet national fragmentation, long lead times, and dependence on Chinese refining technology meant these efforts fell short. Even where concessions were won, ores often had to be exported back to China for processing. Europe marginally improved resilience but failed to overturn Beijing’s advantage. Technology trends: As the decade advanced, China selectively restricted exports of inputs vital to semiconductors, AI, and defense. This widened the gap between Chinese and Western capabilities, forcing cycles of shortage, substitution, and delay in Western industries. By 2036, China was no longer just a supplier but a rule-setter in advanced technology. Financial trends: Global markets permanently repriced critical minerals with a geopolitical risk premium. Western capital increasingly flowed into projects aligned with Chinese supply chains, whether in Africa, Latin America, or joint ventures. Rather than diluting Beijing’s influence, financial flows often reinforced China’s central position at the heart of global supply.
