When China tightened export licenses for seven rare earth elements in April 2025, Western governments responded in the same way they have to every other critical minerals crisis of the past five years. The European Union accelerated the issuance of extraction permits under the Critical Raw Materials Act. The United States expanded subsidies for domestic mineral refining under the Inflation Reduction Act. The Mineral Safety Partnership, an initiative launched in 2022 by 14 economies, attracted more producing partner countries.

Each response was based on the same diagnosis: that the mineral supply problem is geological and geographical, and that the solution is to extract more, refine more and source supplies from more places. That diagnosis is only half correct. What is now the binding limitation is ignored: intellectual property.

How the rush for critical minerals is neglecting human needs

For the most strategically important materials (heavy rare earth elements, gallium, germanium, silicon, lithium and graphite), the supply chain choke point is no longer at the mine, or even at the refinery. It is intellectual property that governs how raw materials are transformed into something useful.¹.

The raw mineral and the patent to process it often belong to different parties, frequently in different jurisdictions and increasingly in nations with trading relationships that have gone from competitive to adversarial.

For example, a handful of Chinese, Japanese, South Korean and American companies hold patents for key processes: magnetic separation of rare earth oxides; graphite processing for battery anodes; iron, nickel, manganese, cobalt and lithium phosphate cathode chemistries; processes for growing gallium nitride crystals for electronics; and purify semiconductor grade silicon.

The result of such a concentrated patent holding structure is a market failure that geographic diversification cannot solve. Australia can mine all the heavy rare earth elements it wants, but without access to magnetic separation intellectual property, the country cannot produce a usable permanent magnet. And Indonesia can refine as much nickel as it wants, but without cathodic chemistry patents, it can’t produce a battery cell.

A refinery built without access to intellectual property produces an input that the host country cannot use or sell. This is why the EU’s main targets under the Critical Raw Materials Act (10% domestic extraction and 40% domestic processing by 2030) are necessary but insufficient. The Inflation Reduction Law; the US government-led Project Vault, a partnership to establish a strategic reserve of critical minerals; the Mineral Safety Association; and the storage programs of Japan and South Korea have the same defect.

The policy response (subsidizing parts of the supply chain that are not protected by intellectual property) produces refineries that cannot deliver finished products, but at a considerable fiscal cost.

Economics was expounded in 1962 by American economist Kenneth Arrow, who showed that technological knowledge is a partial public good that is expensive to produce but cheap to copy.². Patent law corrects this imbalance by granting exclusive use rights for a limited time.³. The unintended consequence is that when two assets are essential to production and are held by different parties under different legal regimes, markets cannot combine them without assistance.⁴.

Three policy instruments, used together, would address this shortcoming. They are not theoretical proposals. Each has an institutional precedent and a developed economic logic. What is missing is the political will to combine them.

The patent pool

The first is a multilateral patent pool. The Medicines Patent Pool, created in 2010 with the support of the global health initiative Unitaid and based in Geneva (Switzerland), is a precedent.⁵. This organization has expanded access to antiretroviral and anti-tuberculosis therapies in low- and middle-income countries by aggregating patents from multiple pharmaceutical companies into a single clearinghouse, rather than leaving agreements on use to fragmented private negotiations. Its institutional model (voluntary license agreements between patent holders and a neutral administrator, with defined geographic and product scope) is transferable to other sectors.

For critical minerals, a similar patent pool could pool process patents from willing licensees; For starters, these could include laboratories and companies from geopolitically aligned nations, such as Japan, South Korea, the United States, and Europe. The consortium would make the patents available to refiners outside the dominant jurisdiction under defined terms, including pricing and exclusion clauses related to the markets for which the final product is intended.

Climate change is a devastating mining of the minerals necessary to combat it

This would build on bilateral collaborations that are beginning to emerge. For example, in October 2025, the American company REalloys and the Japanese Organization for Safety of Metals and Energy, a government agency, signed a memorandum of understanding. Supports the licensing and transfer of Japanese magnet manufacturing technologies to REalloys facilities in North America, for defense, electric vehicle and semiconductor applications.

The main objection to patent pools is more political than economic. Historically, failures in negotiations among their members have brought these groups to an end. For example, despite extensive institutional support, the World Health Organization’s COVID-19 Technology Access Fund⁶ It did not attract vaccine patent contributions from major pharmaceutical companies after each anticipated that the others would not participate – a classic lack of coordination.

But the principles of game theory can be applied to overcome these problems. In 1953, American economist Lloyd Shapley proposed a cooperative gaming framework (for which he won a Nobel Prize in 2012 with fellow economist Alvin Roth) that established a mathematically fair way to distribute the total payoff or cost of a collaborative effort among participants.^7,8. Allocations are distributed according to the value that each individual adds to each possible group of players.

The methodology is sound: According to the theory, no subset of consortium members can improve their position by defecting, and the more high-value patents the consortium adds, the more stable it becomes because the cost of deviating from the agreement is high. The result is a virtuous dynamic: early participation creates incentives for further participation.

Versions of the Shapley framework have been implemented in the real world: to match people for kidney exchange programs, allocate parts of the electromagnetic spectrum for telecommunications, share infrastructure costs, and match resident doctors with hospitals. It should now be applied to the intellectual property of critical minerals, as a solution to the objection that players do not know how to share the profits.

The legal support

The second instrument is the granting of compulsory licenses as a credible threat. Article 31 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) allows for compulsory licensing of patented technologies under specific conditions, including national emergencies and dependence on imports controlled by a foreign jurisdiction, the conduct of which affects the licensing market.

The 2001 Doha Declaration on the TRIPS Agreement and Public Health clarified that public health emergencies (such as outbreaks of HIV and tuberculosis) qualify as the type of crisis that Article 31 was designed to address. For example, in 2006, Thailand invoked the mechanism to override a patent held by pharmaceutical company Merck for the drug efavirenz and imported a generic version from India at half the price to treat 20,000 more people with HIV.⁹. In response, Merck offered voluntary price reductions.

Metals are key to the global economy, but three challenges threaten supply chains

There is no comparable clarification for industrial security of supply, despite the structural parallel. But a coordinated declaration by major consuming economies (analogous to the Doha Declaration in scope, but to address dependence on critical minerals) could establish the basis for compulsory licensing when the patent holder refuses to participate in the consortium. As with the Doha clarification, a sovereign state could issue a compulsory license under national law to circumvent the consent of the patent owner.

However, this is not a step that should be taken lightly. Any clarification would require careful drafting and criteria for invoking it. But its availability would give the voluntary patent pool its negotiating leverage.

Without support, patent holders could refuse to join and continue to profit from the blocked market. With support, the choice is: participate on the terms determined by the Shapley framework, or face a compulsory license on the terms determined by the national emergency regulation. This asymmetry can turn a stagnant negotiation into a productive negotiation.

The demand commitment

The third instrument is for governments to impose conditions on procurement, requiring suppliers to work with the patent pool. Governments are among the largest buyers of advanced technologies that rely on critical minerals, through defense programs, electrification, grid-scale energy storage and industrial strategies. Ensuring that materials procurement is managed through the patent pool would help bring private licensees to the negotiating table voluntarily.