Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
Can AI’s Growth Outrun Highly Concentrated Critical Mineral Supply Chains?
Highlights:
AI Boom Puts Critical Minerals Under the Spotlight
Artificial intelligence may be associated with advanced chips, hyperscale data centres and powerful computing systems, but the physical foundations of the technology extend much deeper into global mining and mineral-processing supply chains.
Gallium, rare earth elements and tantalum are among the materials becoming increasingly important as investment in AI infrastructure accelerates worldwide. Recent data indicates that production of these minerals remains highly concentrated, with only a small group of countries accounting for a dominant share of global supply.
That concentration is turning mineral security into a strategic issue for technology companies and governments seeking reliable access to semiconductor, server and power-system components.
China Holds a Powerful Position in Gallium and Rare Earths
China accounted for about 99% of global primary low-purity gallium production in 2025. Gallium compounds such as gallium nitride are valued for their ability to operate efficiently under high-power and high-temperature conditions, making them increasingly relevant to advanced electronics and data-centre power systems.
China also represented approximately 69.2% of global rare earth mine production. Other significant producers included:
Rare earths support multiple areas of modern computing. Elements including neodymium and praseodymium are used in high-strength permanent magnets, while other members of the group contribute to electronics, optics, displays and data-storage technologies.
Importantly, China’s influence extends beyond mining. Its dominance across several refining and processing stages creates an additional supply-chain dependency even where raw materials are extracted elsewhere.
Tantalum Creates a Different Supply Challenge
Tantalum presents another form of geographical concentration.
The Democratic Republic of the Congo generated about 52% of estimated global tantalum mine production, followed by Rwanda at 16% and Nigeria at 15.6%. Combined, the three African producers represented approximately 83.6% of global output.
Tantalum is widely used in compact, high-performance capacitors capable of delivering stable electrical characteristics. As AI servers become increasingly power-intensive, reliable power-management components are expected to remain important across next-generation computing systems.
Export Controls Raise the Stakes
The broader concern is not simply whether enough minerals exist underground, but whether manufacturers can access processed materials when they are needed.
The International Energy Agency has warned that concentrated supply chains and export restrictions can translate into economic and strategic risks. Restrictions affecting several critical minerals have also contributed to substantial price differences between Chinese and overseas markets.
At the same time, investment in new supply remains uneven, raising questions over how quickly alternative mining, refining and processing capacity can be developed.
Australia Emerges as a Strategic Alternative
Australia is increasingly positioned as a potential alternative supplier as governments seek to diversify critical-mineral supply chains.
The country already holds a meaningful share of global rare earth production and is investing in domestic processing and refining capacity. Government support for gallium, rare earths and other strategic minerals could also help Australia move further downstream rather than relying primarily on raw-material exports.
For AI supply chains, this creates an opportunity for Australia to strengthen its role in supplying the materials needed for semiconductors, data centres and advanced electronics.
Outlook: AI Supply Chains May Become a Mineral Race
The AI infrastructure race is increasingly becoming a supply-chain race.
New mines can broaden raw-material availability, but mining alone will not solve the problem. Refining capacity, specialist equipment, technical expertise and downstream manufacturing must also expand outside dominant production centres.
Critical mineral consumption is likely to stay elevated as global industries expand electrification, digital technologies and automation. Gallium, magnet rare earths and several other strategic materials remain particularly exposed because production is concentrated and substitutes can be limited.
For the AI industry, computing capacity may increasingly depend not only on who can design the fastest chips, but also on who can secure the minerals needed to manufacture, power and scale them.
Note- All data presented is based on information available at the time of writing.
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