The New Oil (Part 5): Friend-Shoring, Supply Chain Fragmentation and the Cost of Resilience

For three decades, globalisation ran on a simple assumption: supply chains are pipelines, and pipelines are permanent.

That illusion is now broken.

From rare earth magnets to lithium refining, the most important raw materials of the 21st century no longer move through the cheapest route. They move through the safest route — or at least the route governments believe is safest.

That pivot is reshaping the entire system. It has a name: friend-shoring.

But friend-shoring doesn’t just change where minerals are mined, processed, or turned into components. It changes who wins, who pays, and how power is distributed in the new resource economy.

Welcome to the next phase of the critical minerals era — not a shortage, not a boom, but a fragmented future.

From Globalisation to “Two Supply Chains”

The first shock in the critical minerals story wasn’t that China had leverage.

It was that everyone suddenly remembered how much leverage China had.

Rare earths exposed a harsh truth: even when the world mines minerals outside China, it often processes them inside China — or relies on Chinese technology, equipment, reagents, and expertise.

The result is that governments now increasingly assume supply chains must be built on alignment, not efficiency.

In practice, this means:

• The world is moving toward two competing supply networks
• Each with its own preferred suppliers, subsidies, standards, and restrictions
• Each trying to reduce dependency — while simultaneously increasing costs

This isn’t decoupling in the old Cold War sense. It’s worse.

It’s partial decoupling, where industries still depend on the same materials but can no longer trust the same suppliers.

That creates friction — and friction creates inflation.

Friend-Shoring: What It Really Means

The friend-shoring model sounds simple:

“Source from allies and trusted partners.”

But in critical minerals, nothing is simple.

Because even “friendly” supply chains have three problems:

1) Geology does not vote

Minerals are where they are.
You can sign MOUs with allies, but you can’t negotiate with the Earth.

2) Processing is the real choke point

Even when mining is diversified, refining is not.

The world can build mines faster than it can build:

• refineries
• separation facilities
• anode/cathode supply chains
• magnet production
• chemical processing ecosystems

3) Cost is not optional

Friend-shoring demands redundancy.
Redundancy demands money.

And money has to come from somewhere: consumers, taxpayers, or shareholders.

The Cost of Resilience: A New Inflation Premium

In the old system, efficiency was the goal.
In the new system, resilience is the goal.

Resilience is expensive because it requires:

• inventory buffers (stockpiles)
• multiple suppliers for the same input
• national security screening
• “trusted” supply certifications
• local environmental compliance
• domestic processing subsidies
• political insurance

This is the new invisible line on your invoice: a resilience premium embedded into everything from EVs to smartphones.

Not because materials are rarer — but because supply chains are being re-engineered under geopolitical pressure.

For investors, this changes valuation math.

The cheapest producer won’t always win.
The politically safe producer may win.

The Resilience Premium (Illustrative 2026 Estimates)

The table below provides illustrative estimates of the cost increase (“resilience premium”) required to shift supply chains from Global/Unrestricted to Friend-Shoring/Resilient models.

Note: Ranges are directional estimates based on policy compliance requirements, diversification costs, and supply-chain redundancy. Actual premium depends on region, supplier mix, and implementation speed.

The Great Sorting: Who Wins and Who Loses

Fragmentation doesn’t affect everyone equally.

In fact, the critical minerals reset is creating a major reshuffle — not just among companies, but among entire countries.

Winners: Resource-rich democracies with processing ambition

Countries with:

• stable regulations
• access to capital
• industrial policy discipline
• energy capacity
• environmental permitting systems that can actually deliver projects

Potential winners include:

• Australia and Canada (mining powerhouses)
• parts of the Middle East (capital + energy + industrial zones)
• select Latin American producers (if policy stabilises)
• Southeast Asian processors (if infrastructure scales)

Winners: Industrial superpowers that control downstream

The biggest winners aren’t always those who mine.

They are those who control:

• battery manufacturing
• magnets
• high-end components
• automotive scale
• grid storage deployment

Meaning: refining and manufacturing economies can win even without mining dominance.

Losers: Countries stuck in the “raw export trap”

The “old commodity curse” is being upgraded.

Countries that:

• export raw materials
• import processed components
• lack infrastructure for refining
• have political instability or policy unpredictability

…risk being trapped as suppliers without pricing power.

In a fragmented system, pricing power belongs downstream.

Losers: Consumers (at least in the short term)

The green transition was sold as inevitable.
It is inevitable.

But fragmentation makes it more expensive:

• EV affordability becomes harder
• grid upgrades cost more
• energy transition timelines stretch
• subsidies rise

This is the new political tension: voters want clean energy, but they don’t want higher prices.

A World of “Mineral Alliances”

The old order had OPEC and IEA as global frameworks.

The new order will have:

• critical minerals alliances
• strategic stockpiles
• bilateral supply pacts
• export controls as bargaining tools
• sanctions risk embedded into procurement

We are already seeing the outlines:

• supply security MOUs
• joint processing initiatives
• financing packages tied to sourcing rules
• “buy local” or “buy allied” clauses

This is how minerals become weapons — not by scarcity, but by rulemaking.

Why the Next Crisis Will Be… Bureaucratic

Here’s the irony.

The world is not running out of minerals.
It is running out of:

• permits
• processing sites
• water rights
• power capacity
• social licence
• skilled labour
• environmental approvals
• compliant supply chains

The next disruption won’t look like a mine collapse.

It will look like:

• a legal injunction
• a permitting delay
• a community protest
• an export licensing requirement
• an ESG scandal
• a sanctions risk

In other words, the chokepoints are becoming administrative.

The New Strategic Question: Who Controls the Middle?

In Parts 1–4, we learned:

• mining alone doesn’t matter
• processing matters more
• technology can reduce dependency, but not fast enough

Now comes the central question of the fragmented future:

Who controls the middle layer — refining, separation, chemicals, and components?

Because whoever controls the middle controls:

• pricing power
• availability
• trade leverage
• industrial competitiveness

In oil, power belonged to those who controlled the wells.

In critical minerals, power belongs to those who control the conversion.

Conclusion: The New Oil Isn’t One Mineral — It’s the System

• There will be more mines.
• There will be more supply deals.
• There will be more announcements.

But the defining story of the next decade is not supply.

It’s structure.

In the fragmented future, strategic resources will not be globally traded commodities.
They will be geopolitical instruments.

And the winners will not simply be those with the biggest reserves.

They will be those who can build:

• processing capacity
• trusted supply chains
• resilient trade networks
• and domestic manufacturing ecosystems

The world is not going back to “just-in-time.”

It is moving to just-in-case.

And that changes everything.

Executive Summary

The global race for critical minerals is entering a new phase — not defined by a lack of resources, but by a restructuring of the system. As governments shift from lowest-cost sourcing to “friend-shoring” and strategic resilience, supply chains for rare earths, lithium, graphite and advanced materials are becoming more fragmented, more redundant, and more expensive.

This transition creates a clear “resilience premium” across industries, raising input costs for EVs, renewable energy, semiconductors and defense manufacturing. The premium is not a temporary shock — it reflects the permanent cost of duplication, compliance, secure logistics, stockpiling and non-China processing capacity.

In the fragmented future, competitive advantage shifts away from countries that simply extract raw minerals and toward those that control the middle and downstream layers — refining, separation, chemicals, components and advanced manufacturing. The likely winners are industrial powers and resource-rich nations capable of building trusted processing ecosystems at scale, while the losers risk being trapped as raw exporters or consumers paying higher clean-tech prices.

The era of “just-in-time” supply chains is fading. A strategic resource world built on “just-in-case” resilience is emerging — and it will shape industrial power, inflation dynamics and geopolitical alignment for the next decade.

Also Read (Series):

• Part 1: Rare Earths — The First Shock
• Part 2: Lithium & Graphite — The EV Bottleneck
• Part 3: Inside the Processing Gap
• Part 4: Can Technology Break the Dependency?