Our Material Future

At AeX, we value simplicity. Across our businesses, we strive to distill complex problems into their clearest, most essential components so we can build prescient, actionable solutions. With that in mind, this memo provides—in plain terms—an overview of what we believe is one of the most severe and pressing threats to America's future: the massive import dependency for the critical minerals that are the base inputs to our industries, economy, and defense readiness.

We explain the problem as we see it, quantify the risks to our economy, capital markets, and national security, and describe why we are uniquely positioned to address it over the near and longer term. What follows is Part I: the problem. Part II lays out the AeX solution.

Introduction

Our world runs on natural resources. From the food we eat and the energy we harness to the satellites we deploy in space, human progress has always traced back to our ability to extract, transform, and transport the materials of the natural world. And as societies advance, our resource demand doesn't just grow—it evolves.

Over the last several decades, we have entered an era of unprecedented technological innovation. Ideas that once lived at the edges of our imaginations—artificial intelligence, electric cars, gene editing, renewable energy, and reusable rockets—are increasingly embedded in our way of life. The modern economy is no longer just industrial, but computational, electrified, and deeply technology-enabled.

The sheer pace and scale of this transformation is astonishing, rapidly accelerating across functionally all domains of science and technology. Breakthroughs that once took generations now scale in years. Entire industries are being rebuilt in a single decade. And this is just the beginning.

But the paradox of modern progress is that as technology becomes more sophisticated, it becomes more dependent on a smaller, more constrained set of natural resources. Our resource demand has rapidly evolved beyond traditional bulk commodities—like grain, coal, and crude oil—toward a narrow group of highly-specialized materials with unique physical and chemical properties: magnetic strength, electrical conductivity, thermal stability, and energy density, with few, if any, viable substitutes. These are critical minerals.

These sixty elements are indispensable inputs to—and in many cases single points of failure across—the advanced technologies and modern infrastructure that now sit at the base of multi-trillion-dollar industrial and economic ecosystems. They have, in essence, become the fundamental building blocks of our modern 21st-century world. And like all resource evolutions before it, the extraction, processing, and distribution of these materials is at the center of an intense global competition. The winner will determine the trajectory of our collective future.

We are building AeX so that America wins this race.

The State of Play

We believe the United States requires resilient, uninterrupted access to the critical minerals that underpin its industrial base, economic output, and defense readiness. But that is not how it works today. Instead, the U.S. is alarmingly dependent on foreign—often adversary-controlled—supply chains for more than 80 percent of its critical mineral needs. For 13 of 60 critical minerals (roughly 22 percent), the U.S. is 100 percent import dependent, while exceeding 50 percent import reliance for an additional 29.

While this imbalance developed over the past five decades, it is only now becoming widely examined by U.S. policymakers and the companies that depend on these materials. Over the last year alone the U.S. government has committed to more than $30 billion in letters of interest, investments, loans, and other support in partnership with the private sector. Yet despite these efforts, the U.S. is projected to account for less than 2 percent of global volume-weighted mining capacity through 2030—with an even smaller share of the midstream processing where raw ores are refined into usable forms.

By contrast, China has pursued a coordinated, multi-decade "whole-of-government" strategy to secure control over critical nodes across the entire value chain. Through subsidies, industrial clustering, state-backed overseas investment, domestic technological development, and export controls that protect key processing technologies, China has erected substantial barriers to competition and entrenched a dominant market position.

The scale of the effort has been extraordinary. Since 2000, China has invested an estimated $523 billion in mining and related infrastructure worldwide. More than $120 billion of that total has been directed toward international mining and upstream processing projects since 2023 alone—and the trendline continues to accelerate.

China now commands approximately 68 percent of worldwide critical mineral production and 85 percent of global processing. It is the top producer of 30 of 60 minerals and holds near-full control of rare earth elements—15 elements essential to permanent magnets, defense, electronics, and renewable energy—with a 91 percent global processing share. This amounts to de facto control not just over mining, but over the midstream processing and export capacity that gate the entire chain.

The U.S. would never design such a fragmented, competitor-controlled supply chain today. But as demand grew in the 1980s, the appeal of low labor costs, loose permitting, and the ability to offshore the most environmentally sensitive activities eclipsed concerns about supply-chain resilience and national security. In retrospect, it was a poor trade-off.

Enduring Systemic Barriers

Critical minerals are now so deeply woven into our 21st-century world that right-sizing this imbalance is the defining industrial, economic, and national security challenge of the next decade.

To be successful, the U.S. needs to overcome four enduring, systemic barriers that are accelerating the supply imbalance.

Barrier 1 · Demand Super-Cycle

As economic and industrial growth accelerates, critical mineral demand is decoupling from historic norms. Under modest 3 percent annual GDP growth scenarios, global demand is projected to triple by 2030 and quadruple by 2040—and for certain materials like lithium, demand expectations scale fivefold or more. These forecasts may prove conservative: they only partially account for AI hyperscale data centers, grid modernization, new energy supply, and next-generation defense platforms. Including those, projections indicate aggregate demand increases another two-and-a-half fold over the same period.

Copper—often called the "King of Minerals"—is a harbinger. To sustain just 3 percent annual global GDP growth, the world will need to mine more copper over the next 15 years than has been extracted throughout all of recorded human history. For anyone familiar with the extractives business, it is clear this will be remarkably difficult to pull off.

Barrier 2 · Mining Additionality Constraints

Every critical mineral must be extracted, and here the arithmetic of time works against us. The average mineral discovery-to-production timeline now exceeds 15 years globally and over 29 years in the U.S., owing to lengthy permitting, regulatory uncertainty, high litigation risk, and in-depth environmental reviews. To meet 2035 mandates, the global economy requires roughly 293 new major mines (including over 60 for copper alone), yet only 110 are currently in development. Compounding the challenge, ore grades and deposit sizes are declining at major mines worldwide, making raw materials more expensive, energy-intensive, and time-consuming to extract.

Even under dramatically improved permitting and financing conditions, a mining mobilization initiated today would solve for shortages emerging in the 2040s rather than the 2030s—leaving a 15-plus-year exposure to growing supply constraints, whether they arise organically or strategically.

Barrier 3 · Global Processing Chokehold

Mineral deposits are geographically dispersed, but the true locus of control resides in the heavily concentrated midstream processing layer where raw ores are transformed into application-ready forms. Today, China holds over 70 percent of global refining capacity and in excess of 95 percent of rare earth processing—fortified by integrated industrial clusters, state-subsidized costing, and unfair trade practices that create preclusive barriers to entry. Even when raw ores are sourced elsewhere, China's integrated midstream ecosystem makes it the primary agent for global distribution.

The U.S., by contrast, has functionally zero domestic high-purity processing capacity—and cannot simply build new processing to satisfy growing demand. Barriers include stringent environmental regulations, fragmented permitting, litigation risk, local opposition, and shortages of specialized engineering expertise. China has further moved to preserve its dominance by classifying critical separation and refining technologies as state secrets and prohibiting their export.

Barrier 4 · Weaponization of Trade

As demand surges and vulnerabilities deepen, governments are increasingly leveraging trade policy to secure supply and, for incumbents, to expand strategic advantage. Export measures on critical minerals—licensing requirements, export taxes, and outright bans—have increased fivefold since 2009, with nearly 100 export-related measures introduced between 2020 and mid-2026 alone.

China has been particularly aggressive, implementing export controls on more than 20 critical minerals—including antimony, gallium, germanium, graphite, and yttrium. These restrictions had two nearly instantaneous effects: prices for export-controlled minerals skyrocketed—in some cases over 14,000 percent in a year's time—and U.S. industrial firms warned that, barring swift intervention, production decreases loom. Extrapolated and unmitigated, this is an effective veto power over American industrial capacity.

Negative Asymmetry, Quantified

The future of American competitiveness is now tethered to the trade and industrial policies of our most significant strategic competitors. This gives China—and other foreign entities of concern—powerful levers that, when exercised, threaten to reshape global economic and power dynamics to the direct detriment of long-term U.S. prosperity.

Efforts to model the downstream effects of supply constraints are constrained by limited data, market opacity, and rapidly changing demand. At best they are rough estimates. Even so—and even if grossly underestimated—they should alarm everyone.

1 · Industrial Domino Effect

According to USGS risk modeling, a 30 percent disruption across just five critical minerals is projected to cause a 12.5 percent decline in U.S. GDP—nearly three times the peak-to-trough decline of the 2007–2009 global financial crisis. Making matters worse, China controls in excess of 95 percent of global processing for three of those five minerals, and more than 60 percent for the rest.

Extended across all sixty critical minerals and mapped across 182 industries, the projections grow considerably more dire. AeX estimates an economic output decline ranging between $5.5 and $6.2 trillion—approximately 15 percent of U.S. GDP—which would rank among the greatest GDP declines in U.S. history. To be clear, it would be more severe than the Great Financial Crisis.

2 · Capital Market Devaluation

Because critical minerals sit at the very beginning of the value chain, constraints at the source create a "bullwhip effect" producing deep shortages in downstream finished goods. The more mineral-intensive firms—the "Magnificent Seven," representing roughly $23.5 trillion in market capitalization, along with defense, energy, healthcare, manufacturing, and utilities—would be hit hardest. But given the indispensability of these materials, supply constraints would affect functionally every listed company, from cost-of-goods increases to outright production stoppages.

An AeX meta-analysis indicates that a one-year, 30 percent disruption across listed U.S. equities would trigger a cascading physical-limit event across equity and corporate credit markets: total market-cap losses could exceed $20 trillion—roughly a quarter of total U.S. market cap. Even isolating the thirteen minerals for which the U.S. is 100 percent import-reliant, a 30 percent shock exposes $5.2 trillion in "structural" stock value to immediate liquidation. Because equity and corporate credit are deeply intertwined, those losses would bleed into the $10 trillion corporate credit market—raising default probabilities, breaching covenants, and forcing restructurings until the Federal Reserve, as lender of last resort, is compelled to intervene.

3 · Erosion of National Defense

Beyond the balance sheet, supply constraints would fundamentally compromise our national security apparatus. A 2025 Govini study revealed that 77.7 percent of all U.S. Department of Defense weapon systems—over 1,900 distinct platforms comprising more than 80,000 parts—rely on just five critical minerals disproportionately processed by China. In total, over 43,000 defense supply chains have some level of Chinese dependence extending down six tiers of suppliers, with 88 percent of DoD supply chains containing at least one Chinese vendor.

This dependence means our primary strategic competitor can exert a functional veto over American operational capacity:

The Cost of Dependence

This combination of factors presents a stark reality, and the quantitative trend is becoming increasingly difficult to ignore. Even under the best-case scenario, critical mineral prices are likely to rise sharply in the near term. We have already seen the evidence: China's export restrictions over the past year drove prices for dysprosium and terbium up roughly four to fivefold, while yttrium surged by as much as 14,000 percent in certain non-Chinese markets. Copper has risen about sevenfold since 2001, and lesser-known materials have climbed substantially.

The worst-case scenario—one that extends beyond the 30 percent modeling assumptions used by the USGS—could prove catastrophic for the United States, affecting industrial output, capital markets, and national security alike. It is impossible to predict how far China may go, but it would be historically naïve and strategically unsound to assume that China—or other competitive or adversarial nations—will refrain from using their dominant position during a period of heightened geopolitical competition. Failing to protect against that possibility would carry dire consequences.

The operative question becomes: what is it worth to reduce this exposure?

The AeX Solution

Part II of Our Material Future answers that question. It sets out a three-part solution to rightsize the critical minerals imbalance—through Advanced Exploration & Production, Physical Trading, and the formation of a one-of-a-kind Strategic Mineral Reserve. Our model is simple but unique, distilling decades of experience in finance, physical commodities trading, and global logistics into a comprehensive solution.

Whether you are a prospective investor, seeking to join our team, or a market observer, we invite you to review our central thesis and tell us if you see an angle we don't. We are always looking for better ways to understand—and ultimately solve—the problem.

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