More than forty years ago, Madonna claimed in her massive, generation-defining hit that ‘we are living in a material world’. Today, as the global scramble for critical minerals intensifies – driven by their recognition as essential to national security, industrial strategy, and the energy transition – those lyrics carry an unexpected weight. Lithium, cobalt, rare earths, copper and many others have moved from industrial inputs to objects of geopolitical contest, strategic rivalry, and development aspiration.
For the countries that hold them, this moment appears to offer something rare: leverage. The world needs what they have, and it needs it urgently. But whether that leverage translates into lasting development gains, rather than simply a new cycle of extraction on terms set by others, is far from guaranteed. Can they write a different script this time?
For decades, the global mining sector has been governed not primarily by the logic of physical production, but by the logic of hyper-finance. Shareholder-value maximisation, commodity-market pricing, and short-term capital allocation have systematically suppressed long-cycle, high-risk investments in frontier exploration and extraction.
Western mining multinationals, once the pioneers of global resource extraction in the global South, have spent the past twenty years returning record dividends and buying back shares, while their actual mineral reserve life and capital expenditure steadily shrank. Meanwhile, China’s industrial capital has filled the resulting vacuum. Driven by the world’s largest manufacturing base, Chinese firms have become the most active investors in overseas mining, particularly in the high-risk jurisdictions of Africa and Latin America that Western shareholders have shunned.
Can resource-rich countries overcome structural exclusion?
Yet despite record levels of mining investment flowing into resource-rich countries across Latin America, Africa, and Asia, resource-rich countries remain locked into low value-added segments of global mineral chains. They remain locked in by a combination of internal and external forces that reinforce each other: domestic political settlements in which elites whose interests are tied to controlling access to mining revenues have little incentive for industrial upgrading or technological learning; and an international architecture of investment treaties, trade rules, and financing structures that systematically narrows the policy space available to pursue that better path. Together, these dynamics reproduce specialisation and dependency, in new forms, with new actors, but with a familiar logic.
So, the current critical mineral landscape is best understood as an interlocked structural impasse. The West faces the challenge of re-industrialisation after decades of financialisation have hollowed out its mining and processing capabilities. China faces the challenge of chronic overcapacity, where razor-thin margins and cut-throat competition leave little room for higher labour, environmental and social standards. Resource-rich countries in Latin America, Africa, and Asia face the challenge of again being prevented from accumulating industrial knowledge, skills, and institutional capacity. These predicaments reinforce each other. While each party is desperately trying to solve its own problems, none will succeed if actions are taken in isolation.
Mineral rich developing countries need capacity addition
Can this critical mineral boom be different? Perhaps. But only if we take the materiality of mining seriously. The word ‘material’ matters. It reminds us that producing minerals is not a matter of making profits or extracting rents. It demands capital that is patient, skills that are scarce, and learning that is slow. The most valuable resource a developing country can derive from its mineral endowment is not royalty revenue, nor even the physical infrastructures accompanied by mining investments. It is the accumulated knowledge of how to explore, map, extract, process, and regulate: knowledge that, once acquired, cannot be taken away.
This is why the buzzword ‘value addition’ completely misses the point. What resource-rich countries need is not simply to move a few steps downstream in a value chain that still controlled by others. What they need is capacity addition: the painstaking, long-term process of building the human, organisational, and institutional capabilities, both at the level of the state and at the level of firms, to participate in the mining industry on their own terms. This means domestic firms that know how to extract, that can move from subcontracting to genuine technological mastery; supplier companies that develop engineering and problem-solving capabilities of their own; and state institutions with the technical knowledge to regulate, negotiate, and direct the sector.
Confronting a knowledge gap
Reframing the challenge forces us to confront a tremendous knowledge gap. Where does expertise come from? How to train a generation of engineering and managerial professionals? What productive and technological capabilities exist at the national level, in firms, universities, and research institutions, and how can these be connected to the opportunities created by the mineral boom? Which kind of institutional innovations are needed not just to regulate extraction but to drive industrial and technological upgrading? How can most affected communities help drive positive transformation, rather than be excluded or exploited? These questions remain strikingly under-explored in mainstream development research.
Critical minerals and development
At IDS, our new stream of work on critical minerals and development will explore these tensions in depth. We start from the conviction that the global scramble for minerals is not only a story of great-power rivalry, but a development challenge of the highest order. Whether resource-rich countries can use this window to build lasting capabilities, rather than simply enduring another commodity boom, is one of the defining questions of our time. Madonna knew what she wanted from her (male-dominated) material world:
Some boys kiss me, some boys hug me
I think they’re okay
If they don’t give me proper credit,
I just walk away
Will resource-rich countries learn to make their material world work for them in the same way?
To learn more about these issues, attend the IDS event on Critical minerals and development: Breaking the structural impasse on 16 July.
