Western governments pouring tens of billions into critical minerals to cut reliance on China may find history shows well-intentioned efforts to bolster commodity sectors can backfire.
As efforts to build stockpiles and combat China's dominance gather pace, a dozen industry executives, investors and analysts point to the risk of a repeat glut scenario.
"There needs to be some coordination between Western governments as they seek to incentivize new production," said Brett Beatty, a partner at Resource Capital Funds, a mining-focused private equity firm that supplies the U.S. government with niobium and tantalum via its holdings in Global Advanced Metals.
"The biggest risk is we all do our own thing," Beatty added. "We all generate multiples of volumes the world needs and then you just crush everything, because you've got an oversupply."
The U.S. has allocated upwards of $20 billion to support its critical minerals sector across multiple programs and financing tools, including $10 billion for its stockpile, Project Vault. Australia has earmarked at least AU$13 billion ($9.42 billion) to support critical minerals development across at least five programs, including its own reserve.
