CSIS: Morocco, Biggest Winner from U.S.-China Competition for Critical Minerals and Their Supply Chains

Morocco has emerged as the major winner from the competition engaged between the United States and China for control of the supply chain of critical minerals, used in clean energy transition and electric vehicle (EV) batteries, says the U.S. Center for Strategic and International Studies.
In August 2022, the U.S. passed the Inflation Reduction Act (IRA) to decarbonize the U.S. economy, re-shore supply chains of critical minerals, and break dependence on China. The legislation contains a series of economic measures designed to incentivize U.S. companies to invest in those supply chains within U.S. borders.
The goal is to secure, develop, and diversify supply chains as Washington and its Western allies see dependence on Chinese supply chains a threat to their national security.
Besides tax credits, the IRA relies on “friend-shoring” where the United States relies on minerals and a supply chain developed in U.S.-friendly countries and those with free trade agreements (FTAs) with the United States.
By leveraging both FTAs sealed between the U.S. and other countries, Chinese companies have found a way to maintain access not only to the U.S. market & Europe but also to avoid the IRA, says the Washington-based think-tank.
In an analysis titled: “Morocco, an Unexpected Winner of China’s Strategy to Circumvent the IRA”, the U.S. center says China chooses Morocco because of its geographical and economic proximity to EU countries and the United States.
Just a few miles away from Europe, Morocco has also the advantage of having free trade agreements with the European Union and the United States, which makes it an ideal hotspot for Chinese and Western/U.S. allies’ companies’ joint ventures in the critical minerals space.
In September 2023, South Korea’s largest chemical company LG Chem and China’s Youshan—a subsidiary of Zhejiang Huayou Cobalt—announced a partnership to build in Morocco a lithium-phosphate-iron (LFP) cathode plant, scheduled to come online by 2026 and produce up to 50,000 metric tons of LFP cathodes.
One key element of China’s overall strategy success is the willingness of U.S. allied countries’ private companies to engage with Chinese companies on different supply chain segments, says the American research center.
Canadian, South Korean and Australian companies are developing joint ventures with Chinese companies in lithium processing projects in Africa. Canada, Australia, and South Korea are all members of the Minerals Security Partnership, a U.S. initiative launched in June 2022 that aims to catalyze public and private investment in responsible critical minerals supply chains globally.
According to CSIS, Morocco comes out as the biggest winner from China’s latest strategic move thanks to its solid industrial landscape, stable political and economic environment, geographical proximity to Europe, FTAs with Europe and the U.S. and finally, its cheap labor cost compared to developed countries such as South Korea and Canada.
Morocco and those other countries thus find themselves as the “collateral beneficiaries” of the Sino-American rivalry in the supply chain of critical minerals, says the U.S. Center for Strategic and International Studies.