Saving the West: A Marshall Plan for Minerals (Part II)

Last week, we drew parallels between today’s push to rebuild supply chains and America’s bid to re-erect Europe after World War II.

This was known as the Marshall Plan.

By the late 1940s, the European continent lay in rubble: factories in ruins, transport disrupted, food and fuel shortages, and a severe lack of dollars to pay for imports.

Washington feared that hunger and unemployment would feed the explosion of communism, especially in France and Italy. But just as importantly, it needed Europe back on its feet as a major trading partner.

This was America’s Post-World War II fight to keep democracy alive and ensure its most important trading partners remained aligned.

And a key part of that strategy was rebuilding the link between American and European supply chains.

Today’s Marshall Plan

Western governments are pledging similar amounts to another ambitious task. Specifically, breaking China’s grip on processed materials and critical minerals.

According to some sources, Western governments have already pledged around $135 billion to mining, processing, and manufacturing critical minerals outside China.

But those numbers grow far larger when we consider the West’s other ambitious task: reshoring manufacturing.

A report by the McKinsey Global Institute found that of the approximately $3 trillion in manufactured goods the United States imports annually, about 25% are vulnerable due to national security concerns, supply concentration, and geography.

Building enough domestic capacity to replace imports of these critical, trade-exposed products and their upstream inputs was estimated to cost about $2 trillion, according to the report.

But will it actually happen?

Well, that depends…

Either the West chooses to build. Or it permanently forfeits its role as the leading political and financial power to those who have steadily taken away its supply chain dominance.

Right now, either path is possible.

But if it chooses to rebuild, we may be looking at an infrastructure story not seen since the rebuilding of post-World War II Europe.

Here’s another thing to consider: if the West is serious about breaking China’s grip, usual market forces may no longer apply. And there’s evidence of that playing out already.

For 25 years, the lowest-cost producer typically won market share.

Often, that meant extracting ore from the ground in Australia or Africa and shipping it to China for processing.

But that framework is breaking down

Today, Western governments are picking the winners, and they’re doing so in three ways:

Stakes. The Pentagon is taking direct equity stakes in mining firms, such as last year’s $400 million investment in US rare-earth producer MP Materials.

Floors. Governments are effectively saying that if the market won’t pay enough to make a project economic, they will. Offering guaranteed price floors on minerals processed outside China.

Customers. Through long-term offtake agreements, governments promise to buy what gets produced. Australia is committing AU$1.2 billion to a strategic reserve. America has launched the US$12 billion Project Vault. In May 2026, Canberra made a non-binding commitment to buy up to 500 tonnes of rare earths a year for five years from Arafura Rare Earths. That gave Arafura the confidence to commit to building its Nolans processing facility.

These are important signals and trends to watch.

The West is Meddling with Markets

China’s rise to controlling the global mineral supply chains didn’t happen by chance. It was a deliberate policy of sponsoring its mining companies and ensuring that what they extracted remained within its borders.

Latin America, Africa, or Australia, it didn’t matter where the ore came from. As long as it was refined, processed and value-added inside China.

The usual market forces of supply and demand that apply in the West wouldn’t have put China in its current dominant position. This involved years of strategic planning and investment across key global mineral provinces. 

But 25 years after China began this strategy, the West is finally catching on.

The examples I showed you above demonstrate how the US government is copying the Chinese playbook: instilling its own ‘state-sponsored’ strategies to rein in China’s dominance.

And that means the way future mining projects are funded could change materially over the coming years.

If you’re interested in seeing how this could continue to evolve and where the money’s likely to shift, I’ve put together a short presentation on who stands to benefit.

You can check that out here.

Until next time.