Sprott: Governments Weaponize Critical Minerals

Sprott Asset Management says government export controls and industrial policy are reshaping global commodity markets and elevating critical minerals to instruments of state policy. Justin Tolman, a senior portfolio manager and economic geologist at Sprott, made the remarks on a recent podcast.

For decades mining decisions were guided by geology, ore grade and cost curves. Tolman argued those market signals are losing force as quotas, export bans and licensing requirements steer production and processing locations. He said, “price is no longer the dominant driver.”

Several producing countries have tightened controls in recent months. The Democratic Republic of the Congo has imposed stricter quotas and export limits on cobalt. Indonesia and Zimbabwe have enacted measures to require mineral processing inside their borders. Those policies aim to capture more value locally and reduce reliance on foreign smelters and refiners. Rare earth elements have become supply choke points for wind turbines, semiconductors and defense hardware, prompting buyers to prioritize redundancy and security in supply chains.

Market volatility remains. Prices for some physical commodities, including silver and lithium carbonate, fell sharply earlier this year. Tolman warned that short-term price corrections can obscure longer-term structural scarcity and cautioned investors against equating volatility with shifts in fundamental value.

Sprott recommends that investors focus on project quality and jurisdictional risk. Tolman emphasized that in a capital-intensive sector the investment edge lies in long-life, high-quality assets in stable jurisdictions and in management teams that can bring projects into production on schedule.

Policy choices affect where value is realized along the supply chain and can change winners and losers across mining, refining and downstream manufacturing over multi-year timelines. Consuming countries are expanding stockpiles, pursuing trade pacts and supporting domestic processing, while producing countries are using export controls to increase revenue and develop local industry.