A new report by the Foundation for Defense of Democracies (FDD) reveals that China holds over 80% of the world’s critical battery materials essential for U.S. defense systems, raising urgent national security concerns. Researchers highlight how China’s lax regulatory environment, state-backed investments, and strategic foreign policy have enabled it to dominate the global supply chain for graphite, cobalt, manganese, and vital anode and cathode materials used in advanced military technologies such as drones, handheld radios, and emerging directed-energy weapons.
The report outlines how China’s state-backed financial institutions have invested approximately $57 billion over the past two decades in mining and processing operations across Africa, Latin America, and other resource-rich regions. These investments, often structured through joint ventures and special-purpose vehicles, have given Chinese firms significant control over mineral extraction and processing. Through the Belt and Road Initiative, China has further secured critical mineral deposits in developing nations, allowing it to control 65% of the global lithium supply, 85% of graphite, and a staggering 97% of anode active materials.
China’s tightening of export controls on critical materials like graphite, gallium, and germanium since 2023 has further signaled a shift toward strategic economic leverage over the U.S. These export restrictions, coupled with the Chinese Communist Party’s use of state subsidies, forced intellectual property transfers, and predatory pricing, demonstrate a targeted effort to control global battery infrastructure. Both lithium and graphite are essential for modern nuclear weapons, while cobalt is used in jet engines, naval turbines, and electronic components capable of withstanding extreme conditions.
Although U.S. firms are accelerating investments in domestic lithium production, including new projects in North and South Carolina, the report warns that U.S. mineral mining and processing capabilities are not advancing fast enough to meet defense demands. Permitting delays and processing constraints are significant barriers, while Chinese subsidies are far more generous, offering tax exemptions, direct manufacturing grants, and ultra-low-interest loans. However, the Trump administration’s initiatives and industry forecasts indicate a growing U.S. push to build domestic processing capacity, with Piedmont Lithium’s North Carolina facility and Albemarle’s South Carolina plant leading the charge.
The report calls for a more aggressive U.S. strategy, including increased private-sector investment incentives, faster federal permitting, and the creation of national critical minerals stockpiles. It also emphasizes the importance of diplomatic coordination with allies to construct resilient supply chains beyond China’s reach. The report concludes that while China maintains significant influence in the battery supply chain, the U.S. and its core allies retain strength, urging a unified international response to counter China’s economic strategies and build supply chains independent of its coercive practices.