China Dominates Electrification Metals; Supply Shocks Could Drive Global Inflation Higher
0xBroomberg
China refines 72% of the world's copper, lithium, and cobalt. A new NBER paper warns that any supply disruption would push consumer prices up on a cumulative, staircase basis — the inflation cost of the green transition is taking shape.
What does a 72% refining share actually mean?
The IEA's latest forecast: the top refining country for copper, lithium, and cobalt — China in every case except nickel — held an average 72% global share in 2025, up from 70% in 2023.
This means → for every 10 tonnes of electrification metals the world uses, more than 7 tonnes pass through Chinese plants. That ratio is projected to hold for the next thirty years.
In plain terms = the core materials for the green transition are monopolised at the refining stage — not because the ore is in China, but because the smelters are.
China has little ore — so how did it capture refining?
An NBER working paper found that China used strategic financing to build a "hub-and-spoke" supply chain — China as the hub, resource-exporting nations as the spokes.
Co-author Evgenia Passari told the Financial Times: "This concentration was deliberately constructed through strategic choices and strategic financing in major metal-exporting countries."
This reflects a critical contrast: fossil-fuel supply is dispersed and buffered by strategic reserves; electrification-metal refining is concentrated with no backup.
If supply breaks, how does inflation spread?
The NBER team scanned over 8 million news articles to identify supply-and-demand shocks, then modelled the inflation impact. Result: a one-standard-deviation drop in electrification-metal supply produces a cumulative rise in consumer prices.
This means → prices do not spike and return — they ratchet up, staircase-style, and stay there after the shock fades.
The IEA has separately warned that Chinese export controls could put up to $6.5 trillion a year of downstream production outside China at risk. For battery-grade graphite alone, more than $300 billion in downstream output is directly exposed.
Can the US fill the gap on its own?
USGS geophysicist Colin Williams noted that the US does not have enough domestic refining capacity to process even the copper it mines itself — external dependence is already at a "critical" level.
Wood Mackenzie's head of base metals, Natalie Biggs, added: "As renewable power generation rises, we depend on these metals even for our electricity supply."
In plain terms = this is not just about EVs and batteries — wind, solar, and grid expansion all require these metals, and the US cannot even complete the step of turning ore into refined metal domestically.
How does the Belt and Road lock in this structure?
In the first half of 2026, Belt and Road financing rose to $126.3 billion, of which $20.1 billion went to green energy.
Indonesia leveraged BRI financing to become a major global nickel exporter; 98% of its ferro-nickel exports in the first five months of this year went to China.
This means → China is not only building smelters at home — it is using financing to bind resource nations into its supply chain. Breaking this structure requires the West to rebuild not just mines, but an entire refining and trade network.
Content is for reference only, not financial advice.