The age of AI and its new currency
A critical new resource is subtly redefining international relations—minerals, specifically rare earths, lithium, cobalt, and nickel. These minerals are the driving force behind technologies powering electric vehicles, artificial intelligence, and advanced weaponry, making them indispensable to the new global order. Thus, a consequential shift has emerged: critical minerals now dictate global realignments, with nickel, cobalt, lithium, and rare earths forming the new geopolitical currency.
China wisely anticipated this transition decades ago. Beijing now processes almost 90 percent of the world's rare-earth elements (REE), controlling nearly three-quarters of global cobalt refining. China also leads global lithium production chains. Securing strategic agreements from Latin America's 'Lithium Triangle' to cobalt mines in the Democratic Republic of Congo, China has positioned itself securely ahead in a geopolitical race reminiscent of OPEC's dominance over oil markets.
The US, in an effort to counterbalance this strategic deficit, seeks to reverse China's dominant position. Trump issued new executive orders to ramp up US domestic production immediately after taking oath, explicitly to limit dependency on Chinese imports; he also aimed to augment economic diplomacy to secure vital minerals abroad. Under President Trump's revived administration, America comes with a renewed international relations doctrine—it is demanding mineral access openly, using executive orders and bilateral agreements to push transactional diplomacy; a stark departure from his predecessors' approach.
On 30 April 2025, the US and Ukraine formally signed their anticipated deal centered around minerals. In this minerals-for-investment agreement, the US gained priority access to Ukraine's critical minerals in exchange for capital and reconstruction support. Despite Kyiv's initial demand for security guarantees, the finalized pact provided none. The Ukrainian parliament unanimously ratified the deal, wishfully thinking higher US commercial stakes would bolster lasting peace and deter Russian aggression; none of that has happened so far.
The deal, nevertheless, symbolizes a broader shift in US foreign policy under Trump: strategic support framed as commercial engagement, with direct diplomacy toward adversaries like Russia substituting for traditional alliance obligations. Since then, Ukraine has approved bidding for its major Dobra lithium field, involving US-backed firms such as TechMet and Ronald Lauder.
Yet Ukraine's requests for Patriot air defence systems remain unanswered, with Trump indicating these may be sold rather than donated. At their NATO summit meeting on June 25, Zelensky proposed drone co-production with American companies, but Trump offered no concrete assurances, citing limited Patriot supplies allocated to Israel.
Following Ukraine, Trump has also begun to look eastward, while countries quietly rework their strategies. Some countries are deepening ties with Washington to hedge against China's dominance yet remain skeptical of Trump's reluctance to offer security guarantees. Others are revamping their supply chains to prepare for the AI age.
The Philippines, for example, is emerging as the next frontier for Trump's minerals-first foreign policy. Manila is pursuing approval of a sectoral FTA focused on critical minerals, particularly nickel. Currently, over 90% of its nickel exports go to China.
Japan is deepening its role in the global EV supply chain through domestic investments — such as a US$143 million lithium-sulfide battery facility — and new extraction plans for seabed cobalt and nickel near Minami-Torishima. South Korea, meanwhile, is institutionalizing its mineral diplomacy by backing joint ventures in Africa, including a US$40 million graphite project in Tanzania under the Minerals Security Partnership.
Both countries remain vital to US supply chain goals, yet neither is deemed critical enough to warrant formal US security guarantees—revealing a strategic asymmetry.
Taiwan, the backbone of the global semiconductor supply chain, now faces dual pressure under Trump's second term. Washington is pushing for deeper TSMC-Intel partnerships to relocate chip production to US soil; TSMC has pledged over $100 billion for its Arizona 'Fab 21' facility to avoid tariffs, with Trump hailing it as proof of his reshoring doctrine.
Prior to the latest U.S.-Taiwan Defence Industry Forum—led by former Army Secretary Christine Wormuth and contractors like Lockheed Martin—the Pentagon had notably declined to comment after Taiwan publicly affirmed US defence cooperation. The forum instead emphasized drone co-production, unmanned systems, and calls for Taiwan to increase its own defense spending. This reflects a growing Trump-era pattern: strategic economic integration without military guarantees, and a Ukraine-style push for allied rearmament absent alliance commitments.
Pakistan also finds itself pressed into this uneasy environment; possessing mineral reserves estimated at over $3 billion in Gilgit-Baltistan alone. This figure, however, is just a glimpse of what lies beneath; the country has flaunted its much larger potential—nearly $6 trillion in mineral resources—at international investment forums aimed at attracting global capital.
Weeks before recent Indian escalations along the northern border, Trump's administration explicitly expressed direct interest in Pakistan's minerals, notably in Gilgit-Baltistan and the Reko Diq copper-gold project.
Canadian giant Barrick Gold, with significant US financing, recently finalized a US$440 million deal with Japanese manufacturer Komatsu to deliver mining equipment beginning in 2026—marking Komatsu's first major placement in the region and accompanied by a US$100 million service and maintenance hub in Karachi.
Although Pakistan has yet to sign a formal bilateral mineral agreement with Washington, Trump's approach departs sharply from previous White House administrations. This divergence became pronounced on June 19, when Trump hosted Pakistan's army chief, Field Marshal Asim Munir, for an unprecedented White House lunch.
Trump publicly praised Pakistan's role in defusing tensions with India and for capturing the Abbey Gate bombing suspect, yet stopped short of offering any explicit security guarantees or alliance framework. Privately, critical minerals, crypto initiatives, and tariff incentives reportedly dominated the discussion.
Just days later, both countries agreed to finalize a bilateral trade framework that includes preferential access for Pakistani exports and U.S. participation in mining projects such as Reko Diq — reportedly backed by Ex-Im Bank financing of up to US$1 billion.
Previous American administrations leveraged such overtures into broader security arrangements—deterring India through quiet diplomatic assurances—while Trump is currently seeking economic deals alone. His team continues to advance a Saudi minerals strategy as well.
In May, California-based MP Materials signed a joint venture with Saudi Arabia's Maaden to establish a vertically integrated rare-earth magnet supply chain. Saudi Arabia—eager to diversify away from oil—offers the US a low-regulation environment and refining expertise. Meanwhile, India seizes the opportunity created by American ambiguity. Beyond traditional military aggression, India has weaponized water infrastructure upstream, strategically choking Pakistan's critical rivers.
In this environment, Pakistan urgently needs more than transactional diplomacy — it needs credible partners willing to balance economic access with strategic reliability.
Pakistan must strategically leverage its minerals in this new world without optical delusions. Islamabad must realize America under Trump seeks profitable clients rather than strategic allies. Pakistan's foreign policy should maturely recognize this distinction. Selling mineral rights or permitting investment offers short-term economic gains, but Pakistan must rely on more than economic transactions alone for security guarantees against aggressive neighbors.
Pakistan faces two strategic choices. It can engage cautiously with Trump's transactional America — accepting investments, securing market access, and hedging against security risks. Alternatively, Islamabad's stance could revolve around deeper multilateral integration, drawing Pakistan closer to Western-led initiatives involving governance reforms, transparency standards, and broader strategic commitments, thus balancing existing ties with China. Both paths carry risks, yet indecision carries the greatest peril.
Minerals have become the oil of the 21st century, and Pakistan, by virtue of its strategic location, sits squarely in the middle of this race. Its reaffirmation of CPEC, recent coordination with Beijing ahead of the SCO summit, and outreach to both Washington and Riyadh all reflect an uneasy calculus: how to remain indispensable without becoming dispensable.
Pakistan's strategic ambiguity may have worked in an era of oil diplomacy, but today's mineral politics demand decisive clarity. Islamabad must understand this new game clearly—transactional diplomacy without security guarantees leaves nations susceptible. A resource-rich country can quickly find itself isolated, economically exploited, and strategically stranded.
In a world increasingly shaped by minerals rather than oil, Pakistan's path forward must be defined by wise alignments, carefully chosen partners, and clear-eyed realism. The future demands no less.
Copyright Business Recorder, 2025
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