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GEOPOLITICS OF

THE ENERGY TRANSITION

CRITICAL

MATERIALS

co-operation

climate

standards

trade

global

value creation

resilient

responsible

transparent

mining

supply chain

innovation

change

economy stockpiling

markets

efciency

risk

minerals

metals

labour

resource

rights

risk

labour

inclusion

corporations

human security

future

lithium

cobalt

nickel

supply

demand

copper

innovation

MNC

demand

ABOUT IRENA

The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that

supports countries in their transition to a sustainable energy future. It serves as the principal platform for

international co-operation, a centre of excellence, and a repository of policy, technology, resource and

financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable

use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and

wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon

economic growth and prosperity. www.irena.org

Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printed

and/or stored, provided that appropriate acknowledgement is given of IRENA as the source and copyright

holder. Material in this publication that is attributed to third parties may be subject to separate terms of use

and restrictions, and appropriate permissions from these third parties may need to be secured before any

use of such material.

ISBN: 978-92-9260-539-1

CITATION: IRENA (2023), Geopolitics of the energy transition: Critical materials, International Renewable

Energy Agency, Abu Dhabi.

For further information or to provide feedback: publications@irena.org

This report is available for download: www.irena.org/publications

DISCLAIMER

This publication and the material herein are provided “as is”. All reasonable precautions have been taken

by IRENA to verify the reliability of the material in this publication. However, neither IRENA nor any of

its officials, agents, data or other third-party content providers provides a warranty of any kind, either

expressed or implied, and they accept no responsibility or liability for any consequence of use of the

publication or material herein.

The information contained herein does not necessarily represent the views of all Members of IRENA. The

mention of specific companies or certain projects or products does not imply that they are endorsed or

recommended by IRENA in preference to others of a similar nature that are not mentioned. The designations

employed and the presentation of material herein do not imply the expression of any opinion on the part

of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, or

concerning the delimitation of frontiers or boundaries.

This publication was supported by voluntary contributions from the Governments of the Netherlands and

Norway.

All photos of minerals and metals without own credit are used under licence from Shutterstock.

CRITICAL MATERIALS

ACKNOWLEDGEMENTS

This report was authored under the supervision and guidance of Elizabeth Press (Director, IRENA Planning

and Programme Support) by Thijs Van de Graaf (IRENA consultant and lead author), Martina Lyons, Isaac

Elizondo Garcia, Ellipse Rath (IRENA) and Benjamin Gibson (ex-IRENA).

The authors are grateful for the reviews, inputs and support provided by IRENA colleagues Roland Roesch,

Rabia Ferroukhi, Anastasia Kefalidou, Claire Kiss (ex-IRENA), Deepti Siddhanti, Divyam Nagpal, Francis Field,

Francisco Boshell, Griffin Thompson (IRENA consultant), Kathleen Daniel, Kelly Rigg (IRENA consultant),

Michael Renner, Mirjam Reiner, Paul Komor, Sophie Sauerteig (ex-IRENA), Stephanie Clarke, Ute Collier and

Zhaoyu ‘Lewis’ Wu.

Other valuable inputs were provided by Sara Geeraerts (IMEP); André Månberger, Dastan Bekmuratov,

Gavkharkhon Mamadzhanova, Ida Dokk Smith, Indra Overland, Julia Loginova, Mari Tønnessen, Philip

Swanson, Roman Vakulchuk and Tatjana Stankovic (NUPI).

Peer review was provided by Henry Sanderson (Benchmark Mineral Intelligence); Jan Morrill, Paulina Personius,

Payal Sampat and Vuyisile Ncube (Earthworks); Sebastian Sahla (EITI); Yana Popkostova (European Centre

for Energy and Geopolitical Analysis); Irina Patrahau (HCSS); Karsten Sach (IRENA consultant); Patrícia

Alves Dias and Vangelis Tzimas (JRC); Hans Olav Ibrekk and Jonas Volden Weltan (MFA, Norway); Jean-

Philippe Bernier and Jeffrey Akomah (Natural Resources Canada); David Manley (NRGI); Clarisse Legendre,

Louis Marechal, Luca Maiotti and Przemyslaw Kowalski (OECD); Jim Krane (Rice University's Baker Institute);

Kathryn Sturman (Sustainable Minerals Institute); Leonardo Buizza (SYSTEMIQ Ltd, ETC); Ligia Noronha

and Maria Jose Baptista (UNEP); Matthew David Wittenstein (UN ESCAP); Virginie Nachbaur (University

of Rouen Normandy); Aaron NG, Anna Wendt, Dennis Mesina and, Salim Bhabhrawala (US Department of

Energy); and Dolf Gielen (World Bank).

IRENA is grateful to the following national representatives for their responses to the survey: Nirod Chandra

Mondal (Bangladesh); Robbie Frank (Canada); Moussa Ousman (Central African Republic); Jarkko Vesa

(Finland); Nicolas Leconte (France); Stefano Raimondi (Italy); Brian Richardson (Jamaica); Paul Mbuthi

(Kenya); Harold Madriz (Nicaragua); Rosilena Lindo (Panama); Marco Antonio Santiváñez Pimentel (Peru);

Josephine Bahr Ljungdell (Sweden); Brian Isabirye (Uganda); Mahek Mehta (United Kingdom); Aaron Ng

(United States); and Sosten Ziuku (Zimbabwe).

IRENA also thanks the following expert survey respondents for their valuable inputs: Phung Quoc Huy (Asia

Pacific Energy Research Centre); Paul Huggins (Carbon Trust); Coby van der Linde (Clingendael International

Energy Programme); Sebastian Sahla (EITI); Leonardo Buizza (Energy Transitions Commission/Systemiq

Ltd.); Yana Popkostova (European Centre for Energy and Geopolitical Analysis); Reed Blakemore (Global

Energy Center; Atlantic Council); Elrika Hamdi (IEEFA); Veronica Navas Ospina (IFC); Christian Breyer

(LUT University); Sohbet karbuz (OME); Mostefa Ouki (Oxford Institute for Energy Studies); James Bowen

(Perth USAsia Centre); Ramona Liberoff (Platform for Accelerating the Circular Economy); Michael Reckordt

(PowerShift e.V.); Jim Krane (Rice University's Baker Institute); Kingsmill Bond (RMI); Dirk Uwe Sauer (RWTH

Aachen University); Rainer Quitzow (SWP); Irina Patrahau (The Hague Centre for Strategic Studies); Matthew

Wittenstein (UN ESCAP); Rudiger Tscherning (University of Calgary); Karla Cervantes Barron (University of

Cambridge); Dolf Gielen (World Bank); and Mirza Sadaqat Huda (Yusof Ishak Institute).

Editing was provided by Steven Kennedy, and design by weeks.de Werbeagentur GmbH.

Geopolitics of the Energy Transformation

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GEOPOLITICSOFTHEENERGYTRANSITIONCRITICALMATERIALSlabourdemandtransparentresourcesupplychainnickelclimateriskresilientsupplydemandMNCminingfutureinnovationco-operationmetalsinclusionmineralshumansecuritychangelithiumvaluecreationcobaltresponsibleefficiencyeconomystockpilingrightslabourstandardscoppertradeglobalmarketscorporationschangeriskinnovationrights©IRENA2023Unlessotherwisestated,materialinthispublicationmaybefreelyused,shared,copied,reproduced,printedand/orstored,providedthatappropriateacknowledgementisgivenofIRENAasthesourceandcopyrightholder.Materialinthispublicationthatisattributedtothirdpartiesmaybesubjecttoseparatetermsofuseandrestrictions,andappropriatepermissionsfromthesethirdpartiesmayneedtobesecuredbeforeanyuseofsuchmaterial.ISBN:978-92-9260-539-1CITATION:IRENA(2023),Geopoliticsoftheenergytransition:Criticalmaterials,InternationalRenewableEnergyAgency,AbuDhabi.Forfurtherinformationortoprovidefeedback:publications@irena.orgThisreportisavailablefordownload:www.irena.org/publicationsABOUTIRENATheInternationalRenewableEnergyAgency(IRENA)isanintergovernmentalorganisationthatsupportscountriesintheirtransitiontoasustainableenergyfuture.Itservesastheprincipalplatformforinternationalco-operation,acentreofexcellence,andarepositoryofpolicy,technology,resourceandfinancialknowledgeonrenewableenergy.IRENApromotesthewidespreadadoptionandsustainableuseofallformsofrenewableenergy,includingbioenergy,geothermal,hydropower,ocean,solarandwindenergy,inthepursuitofsustainabledevelopment,energyaccess,energysecurityandlow-carboneconomicgrowthandprosperity.www.irena.orgThispublicationwassupportedbyvoluntarycontributionsfromtheGovernmentsoftheNetherlandsandNorway.DISCLAIMERThispublicationandthematerialhereinareprovided“asis”.AllreasonableprecautionshavebeentakenbyIRENAtoverifythereliabilityofthematerialinthispublication.However,neitherIRENAnoranyofitsofficials,agents,dataorotherthird-partycontentprovidersprovidesawarrantyofanykind,eitherexpressedorimplied,andtheyacceptnoresponsibilityorliabilityforanyconsequenceofuseofthepublicationormaterialherein.TheinformationcontainedhereindoesnotnecessarilyrepresenttheviewsofallMembersofIRENA.ThementionofspecificcompaniesorcertainprojectsorproductsdoesnotimplythattheyareendorsedorrecommendedbyIRENAinpreferencetoothersofasimilarnaturethatarenotmentioned.ThedesignationsemployedandthepresentationofmaterialhereindonotimplytheexpressionofanyopiniononthepartofIRENAconcerningthelegalstatusofanyregion,country,territory,cityorareaorofitsauthorities,orconcerningthedelimitationoffrontiersorboundaries.AllphotosofmineralsandmetalswithoutowncreditareusedunderlicencefromShutterstock.GeopoliticsoftheEnergyTransformationCRITICALMATERIALSACKNOWLEDGEMENTSThisreportwasauthoredunderthesupervisionandguidanceofElizabethPress(Director,IRENAPlanningandProgrammeSupport)byThijsVandeGraaf(IRENAconsultantandleadauthor),MartinaLyons,IsaacElizondoGarcia,EllipseRath(IRENA)andBenjaminGibson(ex-IRENA).Theauthorsaregratefulforthereviews,inputsandsupportprovidedbyIRENAcolleaguesRolandRoesch,RabiaFerroukhi,AnastasiaKefalidou,ClaireKiss(ex-IRENA),DeeptiSiddhanti,DivyamNagpal,FrancisField,FranciscoBoshell,GriffinThompson(IRENAconsultant),KathleenDaniel,KellyRigg(IRENAconsultant),MichaelRenner,MirjamReiner,PaulKomor,SophieSauerteig(ex-IRENA),StephanieClarke,UteCollierandZhaoyu‘Lewis’Wu.OthervaluableinputswereprovidedbySaraGeeraerts(IMEP);AndréMånberger,DastanBekmuratov,GavkharkhonMamadzhanova,IdaDokkSmith,IndraOverland,JuliaLoginova,MariTønnessen,PhilipSwanson,RomanVakulchukandTatjanaStankovic(NUPI).PeerreviewwasprovidedbyHenrySanderson(BenchmarkMineralIntelligence);JanMorrill,PaulinaPersonius,PayalSampatandVuyisileNcube(Earthworks);SebastianSahla(EITI);YanaPopkostova(EuropeanCentreforEnergyandGeopoliticalAnalysis);IrinaPatrahau(HCSS);KarstenSach(IRENAconsultant);PatríciaAlvesDiasandVangelisTzimas(JRC);HansOlavIbrekkandJonasVoldenWeltan(MFA,Norway);Jean-PhilippeBernierandJeffreyAkomah(NaturalResourcesCanada);DavidManley(NRGI);ClarisseLegendre,LouisMarechal,LucaMaiottiandPrzemyslawKowalski(OECD);JimKrane(RiceUniversity'sBakerInstitute);KathrynSturman(SustainableMineralsInstitute);LeonardoBuizza(SYSTEMIQLtd,ETC);LigiaNoronhaandMariaJoseBaptista(UNEP);MatthewDavidWittenstein(UNESCAP);VirginieNachbaur(UniversityofRouenNormandy);AaronNG,AnnaWendt,DennisMesinaand,SalimBhabhrawala(USDepartmentofEnergy);andDolfGielen(WorldBank).IRENAisgratefultothefollowingnationalrepresentativesfortheirresponsestothesurvey:NirodChandraMondal(Bangladesh);RobbieFrank(Canada);MoussaOusman(CentralAfricanRepublic);JarkkoVesa(Finland);NicolasLeconte(France);StefanoRaimondi(Italy);BrianRichardson(Jamaica);PaulMbuthi(Kenya);HaroldMadriz(Nicaragua);RosilenaLindo(Panama);MarcoAntonioSantiváñezPimentel(Peru);JosephineBahrLjungdell(Sweden);BrianIsabirye(Uganda);MahekMehta(UnitedKingdom);AaronNg(UnitedStates);andSostenZiuku(Zimbabwe).IRENAalsothanksthefollowingexpertsurveyrespondentsfortheirvaluableinputs:PhungQuocHuy(AsiaPacificEnergyResearchCentre);PaulHuggins(CarbonTrust);CobyvanderLinde(ClingendaelInternationalEnergyProgramme);SebastianSahla(EITI);LeonardoBuizza(EnergyTransitionsCommission/SystemiqLtd.);YanaPopkostova(EuropeanCentreforEnergyandGeopoliticalAnalysis);ReedBlakemore(GlobalEnergyCenter;AtlanticCouncil);ElrikaHamdi(IEEFA);VeronicaNavasOspina(IFC);ChristianBreyer(LUTUniversity);Sohbetkarbuz(OME);MostefaOuki(OxfordInstituteforEnergyStudies);JamesBowen(PerthUSAsiaCentre);RamonaLiberoff(PlatformforAcceleratingtheCircularEconomy);MichaelReckordt(PowerShifte.V.);JimKrane(RiceUniversity'sBakerInstitute);KingsmillBond(RMI);DirkUweSauer(RWTHAachenUniversity);RainerQuitzow(SWP);IrinaPatrahau(TheHagueCentreforStrategicStudies);MatthewWittenstein(UNESCAP);RudigerTscherning(UniversityofCalgary);KarlaCervantesBarron(UniversityofCambridge);DolfGielen(WorldBank);andMirzaSadaqatHuda(YusofIshakInstitute).EditingwasprovidedbyStevenKennedy,anddesignbyweeks.deWerbeagenturGmbH.3GeopoliticsoftheEnergyTransformationABBREVIATIONSAPEFAssociationofIronOreExportingITSCIInternationalTinSupplyChainInitiativeCountriesIUCNInternationalUnionforConservationofASIAluminiumStewardshipInitiativeNatureASMartisanalandsmall-scaleminingJPYJapaneseyenATPCAssociationofTin-ProducingCountriesLMELondonMetalExchangeBRICSBrazil,Russia,India,ChinaandSouthAfricaLNGliquefiednaturalgasCCScarboncaptureandstorageLPFlithiumironphosphateCIPECIntergovernmentalCouncilofCopper-LPGliquefiedpetroleumgasExportingCountriesLMELondonMetalExchangeCMMICriticalMineralsMappingInitiativeMACMiningAssociationofCanadaDOEUSDepartmentofEnergyMSPMineralsSecurityPartnershipEITEuropeanInstituteofTechnologyMWmegawattsEITIExtractiveIndustriesTransparencyNCAnickelcobaltaluminiumInitiativeNMCnickelmanganesecobaltERGIEnergyResourceGovernanceInitiativeNUPINorwegianInstituteofInternationalAffairsERMAEuropeanRawMaterialsAllianceOECDOrganisationforEconomicCo-operationEUEuropeanUnionandDevelopmentEVelectricvehicleOPECOrganizationofthePetroleumExportingFARCRevolutionaryArmedForcesofColombiaCountriesFDIforeigndirectinvestmentPGMplatinumgroupmetalsGBAGlobalBatteryAlliancePTAPrimaryTungstenAssociationGDPgrossdomesticproductRMIResponsibleMineralsInitiativeGISgeographicalinformationsystemSACStandardsAdministrationofChinaGRIGlobalReportingInitiativeSRBStateReserveBureauGWgigawattSQMSociedadQuimicaYMineradeChileHPALhigh-pressureacidleachingSOEsstate-owned/controlledenterprisesIBAInternationalBauxiteAssociationTSMTowardsSustainableMiningICMMInternationalCouncilonMiningandMetalsUKUnitedKingdomIEAInternationalEnergyAgencyUNUnitedNationsIFCInternationalFinanceCorporationUNDPUnitedNationsDevelopmentProgrammeIMFInternationalMonetaryFundUNEPUnitedNationsEnvironmentProgrammeIPCCIntergovernmentalPanelonClimateChangeUSUnitedStatesIRAInflationReductionActUSDUSdollarIRENAInternationalRenewableEnergyAgencyUSGSUSGeologicalSurveyIRMAInitiativeforResponsibleMiningAssuranceWETOWorldEnergyTransitionsOutlookISAInternationalSeabedAuthorityWTOWorldTradeOrganizationISOInternationalStandardsOrganisation4CRITICALMATERIALSFOREWORDMoresothananyothersectororindustry,energyisacoredriverofsocio-economicoutcomesandgeopoliticallandscapes.Astheworldtransitionstowardmoreresilient,inclusiveandcleanenergysystems,theessentialroleofrenewableenergyisclearerthaneverbefore.Thistransitionissettoinducefar-reachingandtransformativechanges,andrecentyearshavedemonstratedyetagainhowtheglobalenergysystemisintricatelyintertwinedwithgeopolitics.IRENA’sanalyticalworkongeopoliticsbeganin2018withtheformationoftheGlobalCommissionontheGeopoliticsofEnergyTransformation,whichculminatedinasweepingoverviewofthegeopoliticalimplicationsofaglobalshifttorenewablesinthe2019report,ANewWorld:TheGeopoliticsoftheEnergyTransformation.In2020,IRENAcreatedtheCollaborativeFrameworkontheGeopoliticsofEnergyTransformationasaforumfordialogueonthegeopoliticalimplicationsofthisshift.InresponsetoprioritiesvoicedbyIRENA’smembersduringthosediscussions,IRENAundertookadetailedstudyonthefutureofhydrogeninthe2022report,GeopoliticsoftheEnergyTransformation:TheHydrogenFactor.InGeopoliticsoftheEnergyTransition:CriticalMaterials,thefocuspivotstoathemethatembodiesboththefutureandthepast.Today,itisabundantlyclearthattheenergytransitionwillrequireadramaticincreaseinthesupplyofcriticalmaterials.Projectionsforrapidlygrowingmaterialsdemandcreatebothopportunitiesandthespectreofgeopoliticalrisks.Yettherushforrawmineralsandmetalsisnotanewphenomenon;beitcoal,goldoranyotherextractivecommodityinhumanhistory,thisis,inmanyways,afamiliarparadigm.Mininghasalltoooftenplayedoutasataleofextremes–simultaneouslycharacterisedbythenewfoundcomfortsandprosperities,andalegacyofpoorlabourrecords,displacements,pollutedwaterwaysanddegradedlandinthecommunitieswhereminesoperate.Arenewables-basedenergytransitionprovidesachancetorewritethescriptforextractivecommoditiesandensuretheirvaluechainsaremoreinclusive,ethicalandsustainable.Thereportdrawsonawiderangeofsourcestoprovideabalancedandnuancedperspectiveonthemanycomplexissuesatplay.Itisintendedasaresourceforpolicymakers,industryleaders,researchersandcivilsocietyactorswhoseektounderstandandaddressthegeopoliticalchallengesofarenewables-basedenergytransition.IwouldliketoexpressmythankstoIRENA’smembershipforsupportingthisworkandtothemanyexpertreviewerswhoprovidedvaluableinputandfeedbackthroughoutitsproduction.Ihopethatthisreportwillcontributetoamoreinformedandconstructivedialogueoncriticalmaterialsandhelptheworldadvancetowardsamoresustainableandequitablefuture.FrancescoLaCameraDirector-General,IRENA5GeopoliticsoftheEnergyTransformationTABLEOFAcknowledgements................................03CONTENTSAbbreviations.....................................04Foreword.........................................05SUMMARYFORPOLICYMAKERS...................12POLICYCONSIDERATIONSANDTHEWAYFORWARD........................125References......................................128Annex............................................1476CRITICALMATERIALSCHAPTER112INTRODUCTION.......................................22341.1Criticalmaterialsandenergytransition..............................231.2Physicalconstraints................................................271.3Disruptiveinnovation...............................................291.4Reportscope......................................................33CHAPTER2TRADE,SECURITYANDINTERDEPENDENCE................................342.1Keyplayersinmineralandmetaltrading.............................372.2Supplyrisksandvulnerabilities......................................512.3Theraceforcriticalmaterialsandthepotentialforconflict............67CHAPTER3HUMANSECURITYANDGEOPOLITICALINSTABILITY.................723.1Economicandsocialtensions.......................................763.2Climate,landandwatersecurity.....................................833.3Anewdevelopmentpath...........................................89CHAPTER4RISKREDUCTIONANDOPPORTUNITYEXPANSIONSTRATEGIES.......................944.1Mitigatingsupplychainvulnerability.................................974.2Increasingdomesticbenefitsindevelopingcountries.................1124.3Promotingresponsible,sustainableandtransparentsupplychains......1177GeopoliticsoftheEnergyTransformationLISTOFFIGURESFIGURES1Criticalmaterialsarefundamentallydifferenttofossilfuels...........................13FIGURES2Keyminingcountriesforselectminerals,2022.......................................14FIGURES3Valueofexportsforselectedcommodities(2021)....................................15FIGURES4Keygeopoliticalriskstothesupplyofmaterials......................................16FIGURES5Miningandrefiningsupplyforselectedcriticalmaterials,2022and2030..............18FIGURES6Shareofglobalexplorationbudgetformaterialsbycountry,2012and2022...........20FIGURE1.1Energytransitionmaterialsdefinedascriticalbycountriesandregions(35lists,51materials).............................................................24FIGURE1.2Valueofexportsforselectedcommodities(2021)....................................25FIGURE1.3Criticalmaterialsarefundamentallydifferentfromfossilfuels........................26FIGURE1.4Threedynamicsofcriticalmaterialsdevelopmentforenergytransition................27FIGURE1.5Assessingdisparitybetweencurrentsupplyandanticipateddemandin2030forselectedmaterials.............................................................28FIGURE1.6RapidlychangingglobalEVbatterychemistrymixbetween2015to2022............29FIGURE2.1Schematicrepresentationofamineral-ormetal-dependentvaluechain...............37FIGURE2.2Keyminingcountriesforselectminerals............................................39FIGURE2.3Keyprocessingcountriesforselectedminerals......................................40FIGURE2.4Miningandrefiningsupplyforselectedcriticalmaterials,2022.......................42FIGURE2.5Miningandrefiningsupplyforecastsforselectedcriticalmaterials,2030.............42FIGURE2.6Shareofglobalexplorationbudgetforselectmaterialsbycountry,2012and2022......43FIGURE2.7Shareofglobalexplorationbudgetforselectmaterialsbytypeofinvestment,2012to2022......................................................................44FIGURE2.8Marketshareofmajorminingcompaniesinselectmaterials,2021....................45FIGURE2.9Bilateraltradeflowsbyvalueforselectmaterialsin2022............................50FIGURE2.10Keygeopoliticalriskstothesupplyofmaterials......................................52FIGURE2.11Globalincidenceofexportrestrictionsonrawmaterials,2009-2020.................56FIGURE2.12Shareofglobalexportssubjecttoanexportrestriction,2020.........................57FIGURE2.13Internationalrareearthmetaloxideprices,2007-2016...............................60FIGURE2.14Politicalstabilityofmineralproducingcountries,2020..............................65FIGURE2.15Geographicaldistributionofthethreetypesofmineraldepositstargetedbydeep-seamining...............................................................688CRITICALMATERIALSFIGURE3.1Co-occurrenceofwaterrisk,conflictandfoodinsecurityforcriticalmineralminingprojectslocatedonornearindigenousorruralland...................77FIGURE3.2NumberofpeopleengagedinASM(inmillions)....................................80FIGURE3.3Top10countriesbynumberofpeopleengagedinASM(inmillions)..................81FIGURE3.4Estimatedvolumeoftailings,wasterockandoreproducedin2016...................85FIGURE3.5Themajorityofminingsitesfacehighwaterrisks....................................87FIGURE3.6Shareofglobalmineralproductionandreservesheldbydevelopingcountries(ExcludingChina),2017...........................................................89FIGURE3.7Exportdependenceonmining,2018-2019..........................................90FIGURE3.8Estimatedvalueofthebatterymineralandelectricvehiclevaluechainby2025........93FIGURE4.1Countriesthathaveadoptednationalmineralstrategies,2010to2023...............98FIGURE4.2ThekeyroleofmineralsandmetalsinChina’sgrowingtraderelationswithAfrica.......107FIGURE4.3Foreigninvestment(USDbillion)inIndonesia’snickelproductionfacilities,2022......113FIGURE4.4Indonesia’sexportofrawnickelandnickelproducts(inUSDbillion,2021)............114FIGURE4.5MiningandtheSustainableDevelopmentGoals....................................118FIGUREA1RiskstosuppliesofcriticalmaterialsinthenextdecadeascitedbyIRENAsurveyrespondents......................................................................147©ElenaBionysheva-Abramovagettyimages.com9GeopoliticsoftheEnergyTransformation©MarkAgnorshutterstock.comLISTOFTABLESTABLE1.1Selectedenergy-relatedtechnologyapplications,2023.................................32TABLE2.1KeymaterialsandyearofintroductionontheLondonMetalsExchange.................47TABLE2.2Topcommoditytradinghousesbyrevenue...........................................48TABLE2.3Illustrativeexamplesofincreasedforeigninvestmentscrutinyinthemineralssector.......55TABLE2.4RecentWorldTradeOrganization(WTO)tradedisputesoverexportrestrictionsoncriticalmaterials.................................................................58TABLE2.5Metalproducerclubsinthe1970sto1980s............................................62TABLE3.1Selectedsocial,environmentalandgovernancerisksassociatedwithcriticalmaterials......74TABLE4.1Strategiestoensureareliableandequitablecriticalmaterialsupply....................96TABLE4.2AcomparisonofthecriticalminerallistingsinChina,EUandUS,2023..................102TABLE4.3Internationalcriticalmaterialalliances................................................105TABLE4.4Selectedmulti-stakeholdermineralgovernanceinitiatives..............................122TABLEA1Currentandprojecteddemandandsupplyforcriticalmaterials........................14810CRITICALMATERIALSLISTOFBOXESBOX1.1Uncertaintiesinprojectingthedemandandsupplygapforcriticalmaterials:Theexampleofelectricvehiclebatteries..............................................30BOX2.1Mineralexplorationbudgets.........................................................43BOX2.2Chile’sstrategyforlithium...........................................................54BOX2.3Therareearthcrisisof2010-2011.....................................................59BOX2.4Prospectsforcartelisationintheplatinum,nickelandlithiummarkets...................63BOX2.5Governingdeep-seamining..........................................................68BOX3.1IndigenousrightsandresistanceagainsttheFénixnickelmineinGuatemala.............78BOX3.2Artisanalandsmall-scalemining.....................................................80BOX3.3Thecontroversialpracticeofmarinedisposalofminetailings...........................86BOX3.4Watersecurity,lithiumextractionandindigenouspeoplesinChile’sAtacamadesert.......88BOX4.1Criticalmaterialstrategiesrecentlyupdatedoradopted...............................99BOX4.2TheInflationReductionActandcriticalminerals......................................103BOX4.3TheG7’sfive-pointplanforcriticalmineralsecurity,2023..............................106BOX4.4LessonsfromIndonesia’snickelexportban...........................................113©Terelyukshutterstock.com11GeopoliticsoftheEnergyTransformationSUMMARYFORPOLICYMAKERSTheenergytransitionwillbeamaindriverofdemandforseveralcriticalminerals.Thetransitionwillbemineral-andmetal-intensive.Atpresent,thebulkofthedemandforsuchmaterialsisforusesunrelatedtotheenergytransition;butasthetransitionprogresses,demandformanymaterialsisprojectedtogrow.IRENA’s1.5°Cscenariodocumentsthevastscaleoftheenergytransitioninfrastructure-andcriticalmaterials-neededtoachieveclimatestabilisation.Thiswillinclude33000GWofrenewablepowerandtheelectrificationof90%ofroadtransportin2050.Already,amismatchbetweensupplyanddemandforseveralmineralsisevident,withparticularlyhighlevelsobservedforlithium.Assessmentofthecriticalityofmaterialsisdynamicandcontinuouslychangingowingtoeconomic,geopoliticalandtechnologicalfactors.Presentlythereisnouniversallyaccepteddefinitionofcriticalmaterials.Manycountriesandregionsmaintainlistsofcriticalmaterials,whichtypicallymirrorcurrenttechnologies,theprevailingglobaldynamicsofsupplyanddemand,andthecontextinwhichtheassessmentsareconducted.Thefactorsfordeterminingcriticalitythereforeremainsubjectiveandlocation-specific.IRENA’sreviewof35listsofcriticalmaterialsrevealsthat51materialsusedfortherenewables-basedenergytransitionappearedonatleastonelist.Criticalmaterialsupplydisruptionshaveminimalimpactsonenergysecurity,butoutsizedimpactsontheenergytransition.Thecurrentnotionofenergysecurityrevolvesaroundthecontinuousaccessibilityofenergysources,primarilyrootedinconcernsoverfossilfuelsupply.Bycontrast,renewableenergytechnologiesthatarealreadybuiltcouldcontinuetooperatefordecades,evenifsuppliesofcriticalmaterialinputsweredisrupted.Therefore,theriskassociatedwithdisruptionsinthesupplyofcriticalmaterialsislessaboutenergysecurityandmoreaboutthepotentialslowdownofenergytransitions.Dependencyrisksandsupplydynamicsofcriticalmaterialsfundamentallydifferfromthoseoffossilfuels,givenvastlydifferentcharacteristicsandpatterns.Aprominentconcernisthatenergytransitionswillentailtradingdependencyonfossilfuelsfordependencyoncriticalmaterials.However,significantdifferencesintheirproduction,tradeandusedonotwarrantsuchanassumption(FigureS1).Moreover,projectionsofcriticalmaterialdemandandusearefraughtwithuncertaintiesacrossdistanttimehorizons,soacarefulassessmentofassociatedrisksisrequiredtounderstandandproactivelymanagethem.Thereisnoscarcityofreservesforenergytransitionminerals,butcapabilitiesforminingandrefiningthemarelimited.Intheshorttomediumterm,marketconstraintsarelikelytoemerge,partlyduetounder-investmentinupstreamactivities.ItisunlikelythataworldwideshortfallofanyonemineralwillhindertheCRITICALMATERIALSFIGURES1CriticalmaterialsarefundamentallydifferenttofossilfuelsFOSSILFUELSCRITICALMATERIALSLargeminingquantitiesLowminingquantitiesIn2021,15billiontonnesoffossilSome10milliontonnesenergyfuelswereextracted.1transitionmineralswereproducedin2022forlow-carbontechnologies.2GeneratehugerentsGeneratesmallerproﬁtsOilandgasexportsaloneExportsofcopper,nickel,lithium,representedavalueofcobaltandrareearthsgeneratedUSD2trillionin2021.396billionin2021.4CombustedasfuelInputtomanufacturingFossilfuelsareprimarilyburnedasCriticalmaterialsarehousedfuel,accountingforapproximatelywithinenergyassetsthattypically94%oftheirusage.5havea10–30yearlifespan.EnergysecurityriskEnergytransitionriskAdisruptioninthesupplyoffossilDisruptionsinthesupplyofcriticalfuelscanleadtoimmediateenergymineralscandelaytheconstructionofshortagesandpricespikes.newcleanenergyassets,butdonotaectcurrentenergypricesorsupply.NotrecyclableFossilfuelsareprimarilyconsumedReusableandrecyclablethroughcombustionandcannotHighpotentialforreducinguse,berecoveredorrepurposed.reusingandrecycling.Notes:[1]Figureisfor2021andtakenfromBP’sStatisticalReviewofWorldEnergy.Oilandcoalfigureswereavailableintonnes;gasdatawereconvertedfrombillioncubicmetres(bcm)tobilliontonnesusingtheformula(1m3=0.712kg),basedonBP’smethodology,whichisalsousedbyHannahRitchie:https://hannahritchie.substack.com/p/mining-low-carbon-vs-fossil[2]BasedonIRENAcalculations,productionofmaterials(copper,lithiumgraphite,nickel,cobalt,manganese,rareearthelementsandplatinumgroupmetals)forrenewableenergy–relatedtechnologiesin2022amountedtosome10milliontonnes(megatonnes)(seeChapter2formoredetails).[3]in2021,exportsofcrudepetroleum(HS2709)generatedUSD951billion;refinedpetroleum(HS2710)generatedUSD746billion;liquefiednaturalgas(HS27111100)generatedUSD162billion;andnaturalgasingaseousstate(HS271121)generatedUSD173billion.[4]In2021,exportsofcopperoresandconcentrates(HS2603)generatedUSD91.1billion;nickeloresandconcentrates(HS2604)generatedUSD4.24billion;cobaltoresandconcentrates(HS2605)generatedUSD118million.Withrespecttorare-earthmetals,scandiumandyttrium(HS280530)generatedUSD586million.[5]CalculatedfromIEA’sWorldEnergyBalance(2020),availablefrom:www.iea.org/Sankey.energytransition.Productionhassurgedformanyenergytransitionminerals,andreservesminedfromeconomicallyviablesourceshavegrown.Moreover,disruptiveinnovation-suchasefficiencyimprovementsandmaterialsubstitutions-arealreadyreshapingdemand.Theminingandprocessinglandscapeofcriticalmaterialsisgeographicallyconcentrated,withaselectgroupofcountriesplayingadominantrole.Intheminingofcriticalmaterials,dominantpositionsareheldbyAustralia(lithium),Chile(copperandlithium),China(graphite,rareearths),theDemocraticRepublicofCongo(cobalt),Indonesia(nickel)andSouthAfrica(platinum,iridium).Thisconcentrationbecomesevenmorepronouncedintheprocessingstage,withChinacurrentlyaccountingfor100%oftherefinedsupplyofnaturalgraphiteanddysprosium(arareearthelement),70%ofcobalt,andalmost60%oflithiumandmanganese(FigureS2).13GeopoliticsoftheEnergyTransformationFIGURES2KeyminingcountriesforselectmineralsCobalt%Dysprosium%Manganese%Nickel%70.0%DemocraticChina48.7%SouthAfrica35.8%Indonesia48.8%Republicof5.4%theCongo4.8%Myanmar23.1%Gabon22.9%Philippines10.1%Indonesia3.2%Australia7.6%Australia16.4%Russian6.7%2.1%FederationRussian2.0%Federation2.0%UnitedStates2.9%China4.9%10.5%AustraliaFrance(New5.8%Caledonia)CanadaCanada2.7%Ghana4.7%CubaOthers15.0%India2.4%Australia4.9%PhilippinesBrazil2.0%Canada4.0%OthersGraphite%Ukraine2.0%China3.3%China64.6%Côted’Ivoire1.8%Brazil2.5%Mozambique12.9%Malaysia1.8%Others13.9%Madagascar8.4%Others5.3%Copper%Brazil6.6%Chile23.6%Others7.5%Neodymium%Peru10.0%Platinum%China45.8%Democratic10.0%SouthAfrica73.6%RepublicoftheCongoAustralia23.1%Iridium%Russian10.5%FederationGreenland8.2%China8.6%SouthAfrica88.9%Zimbabwe7.8%Myanmar7.4%UnitedStates5.9%Zimbabwe8.1%Brazil4.4%Canada3.1%Russian4.5%Russian2.9%UnitedStates1.7%FederationFederationIndia2.1%Indonesia4.1%Others0.1%Others9.0%Others3.3%Australia3.7%KingdomofDenmarkZambia3.5%Lithium%Australia46.9%Mexico3.3%Chile30.0%China14.6%Kazakhstan2.6%ArgentinaBrazil4.7%Canada2.4%Others1.6%2.2%Poland1.7%Others16.1%latestdataavailableasof2023Source:(USGeologicalSurveyandUSDepartmentoftheInterior,2023;JRC,2020;USGS,2023b).14CRITICALMATERIALSTheminingindustryisdominatedbyafewmajorcompanies,yieldingsmallandoftenoligopolisticmarkets.Theselargemultinationalcorporationsandstate-ownedor-controlledenterprisesoperateacrossmultiplecountriesandpossesstheresourcesandskillsneededtodevelopcomplexmines.Asaresult,theindustryishighlyconcentrated,withafewcompaniescontrollingasignificantportionofglobalproductionandtrade.Thetopfiveminingcompaniescontrol61%oflithiumoutputand56%ofcobaltoutput.Tradeincriticalmaterialsismanyordersofmagnitudesmallerbyvaluethantradeinfossilfuels.Unlikeoil,mostcriticalmaterialsarenotwidelytradedonexchanges.Whilethislimitsopportunitiestohedgeagainstpricevolatility,itallowscommoditytraderstoplayakeyroleinmatchingproducersandconsumers.FIGURES3Valueofexportsforselectedcommodities(2021)NaturalgasUSD335bnCopperUSD91bnPetroleumUSD951bnLithiumNickelUSD1.5bnUSD4.2bnCobaltREERareearthelementsUSD0.12bnUSD0.59bnSource:(UNCOMTRADEdatabase).Note:Numbersrepresenttradeinraw,unprocessedfuelsandoresonly.15GeopoliticsoftheEnergyTransformationThefullextentofrelianceandexposuretodisruptionsisnotalwaysobvious.Mineralcommoditiessourcedfromdifferentcountriescanbeembeddedinimportedfinishedandsemi-finishedproducts,thusobscuringpotentiallinksandvulnerabilities.Moreover,importtransactionsaresometimesattributedonlytothecountryofthelastshipment,nottothecountryinwhichthematerialwasoriginallyminedormanufactured.Eachcriticalmaterialhasauniquegeographyoftradewhich,onanaggregatelevel,entanglescountriesinabroaderwebofinterdependence.Allcountriesrelyonafunctioningglobalmarketforcriticalmaterialsandrelatedtechnologies,giventhattheyeitherimportthesecommoditiesorrelyonasteadydemandfortheirmaterials,componentsorfinishedproducts.Tradepatternsvaryenormouslyacrosscountries,sectorsandtechnologies,andrevealthetrueinterdependenceofcountriesintermsofmineralsupplyanddemand.Supplychainsarecurrentlyvulnerabletodiversegeopoliticalrisks(FigureS4).Interruptionsinthesupplyofmineralscanaffectmultipleindustriesandreverberatethroughouttheeconomy.Supplyshortagesandrelatedriskscouldarise,particularlyintheshorttomediumterm,asdemandforselectedmaterialsincreases,andminingandprocessesremainconcentrated.Inthemediumtolongterm,tradeflowsforcriticalmaterialsareunlikelytolendthemselvesaseasilytogeopoliticalinfluenceasoilandgas.Thisisbecausereservesofsuchmaterialsareabundant,geographicallywidespreadandcanbeprocessedinmanylocations.FIGURES4Keygeopoliticalriskstothesupplyofmaterials1ExternalshocksNaturaldisasters,pandemics,wars,mineaccidents,etc.2ResourceTaxdisputes,expropriation,foreigninvestmentscreening,etc.nationalismExportquotas,exporttaxes,obligatoryminimumexportprices,licensing,etc.3ExportCo-ordinationofproduction,pricing,marketallocation,etc.restrictionsLabourstrikes,violence,corruption,etc.4MineralcartelsShortsqueezing,marketcornering,spooﬁng,insidertrading,etc.5Politicalinstabilityandsocialunrest6Marketmanipulation16CRITICALMATERIALS©NataliNekrasovashutterstock.com©kaskipshutterstock.comCriticalmaterialstradeflowsarenotlikelytobecartelised.Mineralsupplyisconcentratedgeographically,andcorporationswithlargemarketsharesinkeysegmentsofmineralvaluechainsdominatetheirminingandrefinement.Thisconcentrationofproductioncouldpotentiallyleadtotheformationofcommoditycartels.However,previousattemptstoestablishsuchcartelshavemostlyfailed,servingasasignificantdeterrentformanyproducercountries.Geopoliticalconsiderationsshouldconsiderstructuraltrendsthatcouldhavelong-termimplicationsfortheavailabilityof,anddemandfor,mineralcommodities.Thesetrendsincludenotonlythegeographicalconcentrationofminingandprocessingbutalsothedeclineinmineraloregrades,thesubstitutionpossibilitiesforcertainmaterials,andend-of-lifemanagement,amongothers.Thesefactorshavethepotentialtomagnifytheimpact-andinsomeinstancestheprobability-ofgeopoliticalrisks.Thecentralisedsupplychainsformanymaterialsarelikelytoremainastheyarefortheforeseeablefuture.Manycountriesaretryingtorestructuresupplychains,butnewminingandprocessingfacilitieshavelongleadtimes,makingitdifficulttorebalancesupplyanddemanddynamics(FigureS5).Moreover,adjustingthesesupplychainsnecessitatescarefulbalancingofeconomicfactors,environmentalimpactsandthewell-beingoflocalpopulations.17GeopoliticsoftheEnergyTransformationFIGURES5Miningandrefiningsupplyforselectedcriticalmaterials,2022and20302022LithiumCobaltNickelMiningReﬁning2030LithiumCobaltNickelMiningReﬁningSource:(BloombergNEF,2023).Disclaimer:Thesemapsareprovidedforillustrationpurposes18only.BoundariesandnamesshownonthemapsdonotimplyanyendorsementoracceptancebyIRENA.CRITICALMATERIALSInnovationsintechnologycaninfluencedemandbyintroducingsubstitutes,enhancingefficiency,optimisingdesignsandincorporatingnewmaterials.Disruptiveinnovationisaddingtotheuncertaintyoffuturedemand.Forexample,changesinelectricvehiclebatterychemistryoverthepasteightyearshavesignificantlyreshapedthedemandforspecificmaterials.Asnewtechnologiescontinuetoemerge,themarketislikelytoexperiencefurthershiftsbeforeeventuallyconsolidatingaroundalimitednumberofdominantmaterialsandtechnologies.Consequently,predictingfuturedemandforcertainmaterialscanbequitedifficult,particularlyinthelongterm.Stockpilingofcriticalmaterialsisnotarobustsolutionformitigatingsupplyrisks.Criticalmaterialsareindispensableformanufacturingandconstructingenergyassets.Thisbringsintoquestiontheefficacyofstockpilingtransitionmineralsfortheenergysectorcomparedtoothersectors,suchasdefence.Ifnothandledjudiciously,stockpilingcanexacerbatemarketlimitations,driveupprices,andleadtoanunevenenergytransitionthatexcludespoorercountriesanddelaysclimateaction.Criticalmaterialreservesarewidelydistributed,openingopportunitiestodiversifytheminingandprocessingofmaterials.Developingcountriescurrentlyaccountformuchoftheglobalproductionofthematerialsneededfortheenergytransition,andtheirshareinreservesisevengreater,butnotfullyexplored(FigureS6).Forexample,Boliviahas21milliontonnesoflithiumreserves-morethananyothercountry-butitproducedlessthan1%ofworldsupplyin2021.Countriescanutilisetheirmineralresourcestodrawinindustriesinvolvedinthemiddlestagesofproduction(processing)orevenintheendstages(batteryandelectricvehiclemanufacturing).©RHJPhtotosshutterstock.com©chuyussshutterstock.com19GeopoliticsoftheEnergyTransformationFIGURES6Shareofglobalexplorationbudgetformaterialsbycountry,2012and2022NickelCobaltCopperLithium100%Australia80%CanadaChile60%UnitedStatesRestof40%theworld20%0%20122022201220222012202220122022KeynewGabonBosniaandAfghanistanCôted'IvoireplayersPeruHerzegovinaCubaIndiain2022PolandChileCyprusMoroccoSolomonGreenlandEritreaSwedenIslandsSpainTanzaniaUnitedKingdomTanzaniaTanzaniaKingdomofDenmarkBasedon:(S&P,2023).20CRITICALMATERIALSAnestimated54%ofenergytransitionmineralsarelocatedonornearindigenouspeoples’land,underscoringtheneedforrobustandearlycommunityengagement.Over80%oflithiumprojectsandmorethanhalfofnickel,copperandzincprojectsarelocatedintheterritoriesofindigenouspeoples.Morethanathirdofmineralprojectsrelevanttotheenergytransitionareon,ornear,indigenousterritoryorfarmers’landthatfacesacombinationofwaterrisk,conflictandfoodinsecurity.Over90%ofplatinumreservesandresources,forexample,areon,ornear,indigenouspeoples’orrurallandfacingthesethreerisks,followedbymolybdenum(76%)andgraphite(74%).Thepursuitofcriticalmaterialscouldsparkgeopoliticalcompetitioninareasknowntocontainsignificantdeposits,suchastheArctic,outerspaceandthedeepsea.TheArcticisknowntohavevastreservesofcriticalmaterialssuchasnickel,zincandrareearths,andtheregion’smineralabundancecontributestoitsstrategicimportance.Giventhepresenceofampleterrestrialreserves,acautiousapproachiswarrantedinthecaseofouterspaceandthedeepsea,duetouncertaintiessurroundingpotentialenvironmentalimpactsandregulatoryframeworks.Helpingdevelopingcountriestorealisenewopportunitiesinsupplychainscouldimproveresiliencewhilenarrowingtheglobaldecarbonisationdivide.Akeyquestioniswhethertheenergytransitionsupportsdevelopingcountriestonotjustincreasetheirexportsofprimaryoresbuttoalsomoveupthevaluechainandattracthigher-marginactivitiessuchasmineralprocessing.Processedmaterialslikesteelandaluminadonotjustcommandsignificantpricepremiaoverunrefinedores;theyalsoreducetheinputcostofinfrastructuralandindustrialprojects,spurringlocaleconomicdevelopment.Regionalco-operationcouldhelpcountriescaptureagreatershareofthevalueofproducingminerals.Ratherthanpursuingone-on-onedealswith-often-foreigncompanies,co-ordinatedregionalapproachescouldbemoreeffectiveinensuringthatconditionsattachedtoforeigninvestmentarefavourableformineral-richcountries.Co-ordinationacrossregionsisalsoimportant,asmostcountrieswouldbenefitfrompoolingrespectivemineralsuppliesiftheyintendtobuilddownstreamindustries.Thepatchworkofinternationalandtransnationalinitiativesrequiresgreatercoherencetobringaboutmoreresponsible,sustainableandtransparentsupplychains.Thegrowingrecognitionofchallengesassociatedwiththecriticalmaterialssupplychainhasspurredthedevelopmentofanarrayofinitiativesandregulatoryframeworksbygovernments,businessesandcivilsocietygroups.Mostofthesearevoluntary.Theresultisapatchworkofstandardsthatriskssowingconfusionforstakeholdersandhighlightstheneedforgreatervisibilityandcoherence.Arenewables-basedenergytransition,ifwell-plannedandexecuted,canrewritethelegacyofextractiveindustries.Ashasbeenthecasewithextractiveindustriesforcenturies-andevenwithtoday’sawarenessandstandards-miningactivitiesandprocessescarryrisksforlocalcommunitiessuchaslabourandotherhumanrightsabuses,landdegradation,waterresourcedepletionandcontamination,andairpollution.Strongerinternationalco-operationtoraiseandenforcestandardsandlonger-termcorporateviewswillbeessentialforsustainabledevelopmentandsociallicense.21GeopoliticsoftheEnergyTransformationCHAPTER1INTRODUCTIONlabourtradeflowsrareearthelementsmetalsprocessingnickelrefiningsupplyriskstradeoverviewlabourdependencyminingregulationsmineralsresponsiblevaluecreationcollaborationlabourCRITICALMATERIALS1.1CRITICALMATERIALSANDTHEENERGYTRANSITIONDemandforcriticalmaterialsisprojectedtogrowrapidlywiththerenewables-basedenergytransition.IRENA’s1.5°CScenariopositsthatrenewableswillconstitute91%oftheenergymixby2050,ashiftthatwouldincreaserenewables-basedinstalledcapacityfrom3300gigawatts(GW)in2022to33000GWin2050.Underthisscenario,90%ofallroadvehicleswillbeelectricby2050andhydrogenwillaccountfor14%oftotalfinalenergyconsumption.Theseshiftswouldrequireannualtriplingofnewrenewables,toanaveragedeploymentof1000GW(IRENA,2022a,2023a).Suchabuildoutofcleanenergytechnologyandinfrastructurewillgreatlyincreasedemandforcertainmineralsandmetals,groupedinthisreportundertheterm“criticalmaterials”.Criticalmaterialsaretodaythefocusofmuchinternationaldialogueanddiplomacy.Theirproductionandprocessingarehighlyconcentratedgeographically,posingchallengesrelatedtoresourcesecurityandgeopoliticaldynamics.Strategiestodiversifythesupplyandproductionchainsforthesematerialsarestartingtoemerge,reflectingmultipleeconomic,politicalandsocialconsiderations.Presentlythereisnouniversallyaccepteddefinitionofcriticalmaterials(Figure1.1).Thefactorsfordeterminingcriticalityremainsubjectiveandlocation-specific.Corecriteriatypicallyincludeeconomicimportance(foraspecificeconomyofinterest)andlevelofsupplyrisk,asinfluencedbyfactorssuchasscarcityandproximityofsupply,complexityofextractionandrefiningprocesses,concentrationofsupplyacrossdifferentpartsofthevaluechain,andlackofviablesubstitutes(IRENA,2022a).Forthepurposesofthisreport,“criticalmaterials”referstomineralsandmetalsgenerallyviewedashighlyimportantasinputsforarenewables-basedenergytransition,includingbutnotlimitedtocobalt,copper,graphite,iridium,lithium,manganese,nickel,platinum,andselectedrareearthelements.Variousothermaterialsarementionedinthisreportinreferencetoreal-worldenergytechnologyaswellaspolicyexamplesandcasestudieswithgeopoliticalrelevance.23GeopoliticsoftheEnergyTransformationFIGURE1.1Energytransitionmaterialsdefinedascriticalbycountriesandregions(35lists,51materials),2023Cobalt29Lithium26Neodymium23Nickel23Indium23Dysprosium22Gallium21Copper19Tellurium18Praseodymium17Manganese16Graphite16Silver14Aluminum12Chromium12Molybdenum12Germanium11Platinum10Silicon10Cadmium10Selenium10Tin9REE9Zinc8Lanthanum8Cerium7Vanadium7Terbium6Titanium6Samarium6Yttrium5Iron4Palladium4Lead3PGM3Phosphorus2Rhodium2Magnesium2Tungsten2Steel2Iridium2Strontium2Borate2Tantalum2Niobium1Zirconium1Gadolinium1Ruthenium1Beryllium1Europium1Potassium1Boron1Rhenium1051015202530Source:(IRENAandNUPI,forthcoming).DistinctCountofPublicationIDNotes:REE=rareearthelements;PGM=platinumgroupmetals.24CRITICALMATERIALSCriticalmaterialsarevaluablecommodities,buttheireconomicvalueisnotassignificantasthatoffossilfuels,whichtodayaccountfor2%ofglobalGDP(IRENA,2022b).Withtheexceptionofcopper,themostvaluablebasemetalintermsofmarketsize,thevalueoftradeflowsforothermineralsandmetalsismanyordersofmagnitudesmallerthanoilandgasmarkets(seeFigure1.2).Thesectorwillgrowincomingyears,butvolumesandvalueswillnotbecomparabletofossilfuelstoday.Withsupplybottleneckrisksandlongdevelopmentcyclesforminingprojects,aprominentconcernisthattherenewables-basedenergytransitionwillentailtradingthedependencyonimportedfossilfuelsfordependencyonimportedcriticalmaterials.However,thedependencyrisksandsupplydynamicsofcriticalmaterialsdifferfundamentallyfromthosepertainingtofossilfuels.Fossilfuelsareconsumablesprimarilyusedforenergyproduction,whereascriticalmaterialsareessentialinputsforenergytransitioncomponents,equipmentanddevices.FIGURE1.2Valueofexportsforselectedcommodities(2021)NaturalgasUSD335bnCopperUSD91bnPetroleumUSD951bnLithiumNickelUSD1.5bnUSD4.2bnCobaltREERareearthelementsUSD0.12bnUSD0.59bnSource:(UNCOMTRADEdatabase).Note:Numbersrepresenttradeinraw,unprocessedfuelsandoresonly.25GeopoliticsoftheEnergyTransformationIncaseofasupplydisruption,theoperationofenergyinfrastructureandmachinerythatrunoncoal,gasoroilwouldcometoahalt.Suchdisruptionswouldhaveanimmediateimpactonconsumersandhouseholds,triggeringagamutofsocial,politicalandfinancialchallenges.Incontrast,disruptionsincriticalmaterialswouldnothaveanimpactontheexistingenergyinfrastructureandequipment,thoughtheywouldpotentiallyslowthespeedandincreasethecostofdecarbonisation.Theriskofdisruptionsinthesupplyofcriticalmaterialsisthereforelessanenergysecurityriskthanarisktothespeedoftheenergytransition(seeFigure1.3).FIGURE1.3CriticalmaterialsarefundamentallydifferentfromfossilfuelsFOSSILFUELSCRITICALMATERIALSLargeminingquantitiesLowminingquantitiesIn2021,15billiontonnesoffossilSome10milliontonnesenergyfuelswereextracted.1transitionmineralswereproducedin2022forlow-carbontechnologies.2GeneratehugerentsGeneratesmallerproﬁtsOilandgasexportsaloneExportsofcopper,nickel,lithium,representedavalueofcobaltandrareearthsgeneratedUSD2trillionin2021.396billionin2021.4CombustedasfuelInputtomanufacturingFossilfuelsareprimarilyburnedasCriticalmaterialsarehousedfuel,accountingforapproximatelywithinenergyassetsthattypically94%oftheirusage.5havea10–30yearlifespan.EnergysecurityriskEnergytransitionriskAdisruptioninthesupplyoffossilDisruptionsinthesupplyofcriticalfuelscanleadtoimmediateenergymineralscandelaytheconstructionofshortagesandpricespikes.newcleanenergyassets,butdonotaectcurrentenergypricesorsupply.NotrecyclableFossilfuelsareprimarilyconsumedReusableandrecyclablethroughcombustionandcannotHighpotentialforreducinguse,berecoveredorrepurposed.reusingandrecycling.Notes:R[1]Figureisfor2021andtakenfromBP’sStatisticalReviewofWorldEnergy.Oilandcoalfigureswereavailableintonnes;gasdatawereconvertedfrombillioncubicmetres(bcm)tobilliontonnesusingtheformula(1m3=0.712kg),basedonBP’smethodology,whichisalsousedbyHannahRitchie:https://hannahritchie.substack.com/p/mining-low-carbon-vs-fossil[2]BasedonIRENAcalculations,productionofmaterials(copper,lithiumgraphite,nickel,cobalt,manganese,rareearthelementsandplatinumgroupmetals)forrenewableenergy–relatedtechnologiesin2022amountedtosome10milliontonnes(megatonnes)(seeChapter2formoredetails).[3]In2021,exportsofcrudepetroleum(HS2709)generatedUSD951billion;refinedpetroleum(HS2710)generatedUSD746billion;liquefiednaturalgas(HS27111100)generatedUSD162billion;andnaturalgasingaseousstate(HS271121)generatedUSD173billion.[4]In2021,exportsofcopperoresandconcentrates(HS2603)generatedUSD91.1billion;nickeloresandconcentrates(HS2604)generatedUSD4.24billion;cobaltoresandconcentrates(HS2605)generatedUSD118million.Withrespecttorare-earthmetals,scandiumandyttrium(HS280530)generatedUSD586million.[5]CalculatedfromIEA’sWorldEnergyBalance(2020),availablefrom:www.iea.org/Sankey.26CRITICALMATERIALSIRENAexpectsthetechnicalevolutionofcriticalmaterialstobeshapedbythreeshiftingandoverlappingdynamics.Thefirstdynamic,mostdominantintheshorttomediumterm,willbemarkedbyphysicalconstraintsandchallengesinkeepingupwithrisingdemandforcertaincriticalmaterials.Thesecond–whichisalreadyoccurringatscale–willbringdisruptiveinnovation,withnewideasandexperimentstoreducematerialsconsumption.Thethirddynamic–stillnascent–willusherinalargerroleforcirculareconomy,includingmoreadvancedandwidelyadoptedmethodsofreducing,reusingandrecyclingcriticalmaterials.FIGURE1.4ThreedynamicsofcriticalmaterialsdevelopmentforenergytransitionPhysicalDisruptiveCircularconstraintsinnovationeconomy1.2PHYSICALCONSTRAINTSPotentialundersupplyintheshorttomediumtermisaresultofthelackofinvestmentinupstreamactivities.Thisisduetonumerousfactorsincludinglongleadtimesinopeningnewminesandprocessingofmanufacturingplants,uncertaintyregardingfuturedemand,pricevolatility,alackofdownstreamtransparency,andlocalopposition,amongothers(IRENA,forthcoming).Moreover,theminingandprocessingofcriticalmaterialsareheavilyconcentratedinahandfulofcountries(seeChapter2).Marketdemandforcriticalmaterialsin2022predominantlyoriginatedfromnon-energytransitionuses,exceptforlithium.Forexample,over90%ofnickelwasusedinironandsteelproduction;over80%ofgraphitewasusedforsteel,aluminiumandceramics;andover80%ofmanganesewasusedinsteelandchemicalproduction,andfoundryandwelding(IRENA,forthcoming).However,energytransitiontechnologiesareincreasinglyrequiringcriticalmaterials,andmayexceedthedemandfromnon-energyusesinsomecases(IRENA,forthcoming).Thistrendisespeciallynotableforlithium,cobalt,graphiteanddysprosium.IRENA’sshort-termscarcityratio(seeFigure1.5)comparesthesupplyofmaterialsin2022withthedemandexpectedin2030.11Supplyin2022includeseitherprimarysupplyonly(mining)orbothprimaryandsecondarysupply(recycling),thelatterbeingapplicableonlyforcopper,cobaltandplatinum,whererecycling/refiningratesareknown.SeeAnnexfordetails.27GeopoliticsoftheEnergyTransformationFIGURE1.5Assessingdisparitybetweencurrentsupplyandanticipateddemandin2030forselectedmaterialsCobalt25%63%Copper17%Dysprosium43%72%80%Graphite818%40%Iridium68%Lithiumi66%84%Manganese2%15%42%49%23%Neodymium53%NickelPlatinum24%020406080100Short-termscarcityratio(%)8Sources:(USGS,2023a;Eurometaux,2022;IRENA,forthcoming;McKinsey,2023;WSJ,2023;Mining.com,2021;MitchellandDeady,2021;NVM,2021;QYResearch,2023;Garvey,2021;MineralsCouncilofAustralia,2022;NickelAsia,2022;Systemiq,2023;CobaltBlueHoldings,2022;Darbar,2022;Fu,2020;Albemarle,2023;Lazzaro,2022;McKinsey,2022;S&PGlobalIQ,2022).Note:Ashort-termscarcityratiocomparesthemineproductionofselectedmaterialin2022withthedemandexpectedin2030;seeAnnexforcalculationmethodology.Toavoidademand-supplygapformaterialswithahighscarcityratio,increasingtheminingandprocessingcapacitiesisessential.Thereisnoscarcityofgeologicalreservesandtheyaregeographicallywidespread.Asthefocusoncriticalmaterialsincreases,soarenewdiscoveries.Forinstance,NorgeMiningrecentlyannouncedthatthephosphate,titaniumandvanadiumdepositsfoundinNorwaycouldsupplythecurrentglobaldemandforatleast50years(TheEconomist,8June2023).Apartfromboostingminingandprocessing,bridgingthegaprequiresimprovingmaterialrecoveryfromtailingsandrecyclingtechnologies.Suchadvancementsrequiregovernmentinvestmentininfrastructure,thedesignofenablinglegalframeworks,includingmandatesthroughpublicpolicy,andresearchandinnovationinrecyclingtechnologies.28CRITICALMATERIALS1.3DISRUPTIVEINNOVATIONTechnologicalinnovationaffectsthedemandformaterialsthroughfactorssuchassubstitution,efficiencyimprovement,designoptimisationandtheintroductionofnewmaterials.Therearemultipleuncertaintiesinprojectingandassessingthedemand-supplygapforcriticalmaterialsinenergytransitiontechnologies.Aprimeexampleiselectricvehicle(EV)batteries.SignificantshiftsintheEVbatterychemistrymixoccurredsince2015(Figure1.6).Marketshare(%)FIGURE1.6RapidlychangingglobalEVbatterychemistrymixbetween2015to2022Others100LFP80LMO60NCA9240NCA9020NMC(811)NMC(622)NMC(532)NMC(111)020152016201720182019202020212022Source:(BNEF,2022b).Note:ThenumbersfollowingNCAindicatenickel'sproportionintheNCAbatterychemistry,whereasthenumbersfollowingNMCindicatenickel'sproportionintheNMCbatterychemistry;forexample,NMC(622)means6partsofnickel,2partsofmanganeseand2partsofcobalt.LFP=lithiumironphosphate;LMO=lithiummanganeseoxide;NCA=nickelcobaltandaluminium;NMC=nickelmanganeseandcobalt.29GeopoliticsoftheEnergyTransformationToday,theEVbatteryindustryisdominatedbylithium-ionbatteries,atechnologythathasundergonemultipleadvancementsinkeycomponentsthatsignificantlyinfluencematerialdemand.Graphite-basedanodechemistryholdsa70%marketshareduetoitshighperformance.However,emerginganodechemistries,suchas100%silicon-basedanodes,lithiummetalanodesandaluminiumoraluminiumalloyanodes,havethepotentialtoreduceoreliminatethedemandforgraphite,dependingonthespeedofresearchanddevelopment(IRENA,forthcoming).Forcathodes,themostcommonlyusedchemistriesincludenickelmanganesecobaltoxides(NMC),nickelcobaltaluminiumoxides(NCA)andlithiumironphosphate(LFP).NMCandLFPareexpectedtoremainthemostprevalentbatteriesinthisdecade,althoughwhichtechnologywillultimatelyprevailremainsaquestion(seeBox1.1).Emergingbatterytechnologies,suchassodium-ionbatteries,havethepotentialtodisrupttheEVbatterymarketbyreplacingcriticalmaterialssuchaslithiumandcobaltwithlessexpensiveormoreabundantoptions,suchassodium(IRENA,forthcoming).BOX1.1Uncertaintiesinprojectingthedemandandsupplygapforcriticalmaterials:TheexampleofelectricvehiclebatteriesLithiumironphosphate(LFP)batteriesemergedinthe1990sfromthelaboratoryofJohnGoodenough,whohadwontheNobelPrizeforlithium-ionbatteries,attheUniversityofTexas–Austin.Severalstart-ups(e.g.A123Systems)sawanopportunitytoshiftawayfromcobaltandnickel,butLFP’slowerenergydensitydidnotdrawtheinterestofautomakerssuchasTeslaandGeneralMotorscausingstart-upslikeA123Systemstogobankrupt.(McFarland,2022).However,later,ascobaltandnickelbecamesignificantlymoreexpensive,automakersbeganexploringbatterychemistrieswithfewercriticalmaterials.LFPbatteriesstartedtoreplacenickelmanganesecobalt(NMC)batteriesinentry-level,inexpensivevehicles,whileNMCremainedthechemistryofchoiceforhigh-performancevehicles.Asanindicationofthischange,themarketshareofLFPbatteriesgrewsignificantlyfromasingledigitin2015to40%in2022(BNEF,2022a).RapidexpansionofLFP,however,cannotbelinkedsolelytoinnovation.ChinaisthekeymarketforLFPbatteries,wheretheyareusedinover40%ofEVs,comparedto6%inEuropeand3%intheUnitedStatesandCanada(BMI,2022).China’spreferenceforLFPresultsfromuncertaintiesregardingtheavailabilityofcobaltandnickelataffordableprices.Chinathusconcludedalong-termagreementbetweenthepatentowners–aconsortiumofuniversitiesintheUnitedStates(UniversityofTexas–AustinandMIT)andCanada(UniversityofMontrealandCNRS)–andChinesebatterymanufacturers,BYDandCATL.TheagreementliftedlicensefeesifLFPbatterieswereusedexclusivelyinChina(IRENA,forthcoming).Thesepatentsexpiredin2022.©asharkyushutterstock.com30CRITICALMATERIALS©1stfootageshutterstock.comRareearthelements,namely,neodymiumanddysprosium,areubiquitouslyusedforpermanentmagnetsinelectricgenerators(i.e.windenergy)andelectricmotors(i.e.EVs).Rareearthpermanentmagnetsareusedforonshoreaswellasoffshorewindapplications,andarelikelytobecomemorecommoninturbines.However,significanteffortsarebeingmadetoreplaceneodymiumwithotherrareearthelements,includingpraseodymium,dysprosiumandterbium,ortodeveloprareearthfreepermanentmagnets(electromagnets).Thiscouldpotentiallychangethedemandoutlookforneodymiumanddysprosium(Gielenetal.,2022a).Similarly,innovationinsolarphotovoltaictechnologymayalterthedemandforrawmaterials,promptingashiftawayfromsiliconinconventionalcrystallinesiliconandless-efficientthin-filmsolarpowertechnologies.Forinstance,perovskitesolarcellshavegarneredincreasedresearchanddevelopmentfocus,resultinginrapidefficiencyimprovementsovertheircrystallinesiliconcounterparts(upto25%)(Wuetal.,2021).Otherpromisingtechnologiesincludeorganicsolarcells,copperindiumgalliumselenidecells,dye-sensitisedsolarcellsandquantumdotsolarcells.Eventhoughthesetechnologiesholdsignificantpotential,theyarestillintheprocessofbeingdevelopedandcommercialised,andtheirperformance,durabilityandcost-effectivenessarestillbeingstudiedandimprovedupon.31GeopoliticsoftheEnergyTransformationTABLE1.1Selectedenergy-relatedtechnologyapplications,2023OtherEnergy-relatedtechnologyapplicationsMainCobalt•EVbatteries•Batterystorage•Bioenergy•ElectrolysersCopper•Electricitygrid•Batterystorage•Electrolyser•EVbatteries•Bioenergy•Geothermal•SolarPV•CSP•HydroDysprosium•EVmotors•WindGraphite•EVbatteries•BatterystorageIridium•PEMElectrolysers•BatterystorageLithium•EVbatteriesManganese•EVbatteries•Batterystorage•Geothermal•CSP•Hydro•Electrolysers•WindNeodymium•EVmotors•WindNickel•Electrolyser•Batterystorage•Geothermal•EVbatteries•Bioenergy•Hydro•CSP•SolarPVPlatinum•PEMElectrolysersNotes:CSP=Concentratedsolarpower;EV=electricvehicles;PV=photovoltaic32CRITICALMATERIALS1.4REPORTSCOPEThisreportexpandsontheaboveprovidingaforward-lookingexaminationofgeopoliticalandgeoeconomicconsiderationsandimplicationsoftheanticipatedscale-upofdemandandsupplyofcriticalmaterials.ItbuildsonIRENA’sworktodateandanalysestheevolvinglandscapeofsupplychainsandtradepatterns,thesocioeconomicandsustainabilityconsiderationssurroundingextractionandprocessingaroundtheglobe,andthestrategicimportanceofcriticalmaterialsforeconomiccompetitivenessandthespeedofarenewables-basedenergytransition.Chapter2examinesthegeopoliticalthemesoftrade,security,andinterdependence.Thesehavealwaysbeencloselyconnectedwithextractiveindustriesinabroadsense,andwillremainsowiththescale-upofmaterialscriticaltotheenergytransition.Considerationsaroundsustainability,communitiesandlivelihoodsarethefocusofChapter3,reviewedunderthebroadertermofhumansecurity.Thechaptersharpenslinesofconnectionbetweenextractiveindustriesandimplicationsforthesocialeconomy,environment,andclimateinexportingcountries,theirneighboursand,ultimately,theworld.Chapter4shiftsthefocusfromdiagnosistostrategicresponsesandpolicyconsiderations.Thisclosingchapterdoesnotprovideauniversalsetofrecommendations,butratherreviewsthemainstrainsofpolicyapproachestothechallengesandopportunitiespresentedbythescale-upofcriticalmaterialsfortheenergytransition.©TRADIUMGmbHshutterstock.com33GeopoliticsoftheEnergyTransformationCHAPTER2TRADE,SECURITYANDINTERDEPENDENCElabourspecificgeographicallocationshighlyconcentratedminingprocessingnickelreservessupplyriskstradeavailabilityexternalshocksinstabilitymineralsresourcenationalismmineralcartelsresponsiblevaluecreationcollaborationpriceshocklabourCRITICALMATERIALSHIGHLIGHTSnTheminingofcriticalmaterialsishighlyconcentratedinspecificgeographicallocations.Australia(lithium),Chile(copperandlithium),China(graphite,rareearths),theDemocraticRepublicofCongo(cobalt),Indonesia(nickel)andSouthAfrica(platinum,iridium)arethedominantplayers.Processingisevenmoregeographicallyconcentrated,withChinaaccountingformorethan50%oftheworld’srefinedsupplyof(natural)graphite,dysprosium(arareearth),cobalt,lithiumandmanganese.nReservesaredistributedrelativelyevenly,presentingopportunitiestodiversifysupplychainsinthelongrun.Onesolutionwouldbeincreasedinvestmentinexploration,especiallyinunderexploredregionssuchasAfrica.Internationalcollaborationinconductinggeologicalsurveyscouldhelptheseregionsattractexplorationinvestments.nTradeincriticalmaterialsismanyordersofmagnitudesmallerbyvaluethantradeinfossilfuels.Unlikeoil,mostcriticalmaterialsarenotwidelytradedonexchanges.Whilethislimitsopportunitiestohedgeagainstpricevolatility,itallowscommoditytraderstoplayakeyroleinmatchingproducersandconsumers.nEachmaterialhasauniquetradegeography,which,whenviewedcollectively,interconnectsmultiplecountriesinawidernetworkofinterdependence.Nocountrycaninsulateitselffullyfromtherisksofpriceshocksorsupplydisruptionsrelatedtocriticalmaterials,sincethesefactorsmayadverselyaffectthecostandpaceoftheenergytransition.nTheavailabilityofmaterialsisinfluencedbyseveralstructuralconditions,includingthegeographicalconcentrationofminingandprocessing,declineinmineraloregrades,thelimitedextentofend-of-liferecycling,thedependenceonby-productproductionformanycriticalmaterialsandthelimitedshort-termsubstitutionpossibilitiesforcertainmaterials.nSixgeopoliticalriskstothesupplyofmaterialsintheshorttomediumtermareidentifiedandassessed:externalshocks(e.g.war),resourcenationalism(e.g.expropriation),exportrestrictions(e.g.exportbans),mineralcartels(e.g.co-ordinationofproduction),politicalinstability(e.g.socialunrest)andmarketmanipulation(e.g.shortsqueezing).nThepursuitforcriticalmaterialscouldsparkgeopoliticalcompetitioninareasknowntocontainsignificantdeposits,suchastheArctic,outerspaceandthedeepsea.However,acautiousapproachiswarrantedinthecaseofouterspaceandthedeepsea,duetouncertaintiessurroundingtheenvironmentalimpactandregulatoryframeworks,alongwiththepresenceofampleterrestrialreserves.35GeopoliticsoftheEnergyTransformationThischapterprovidesacomprehensiveoverviewofthekeyplayersinvolvedinthevaluechainsofcriticalmaterials.Indoingso,ithighlightsthehighgeographicalconcentrationofsupplybutalsothecrucialroleoftheprivatesectorandcommoditytraders.Moreover,itscrutinisesprevailingtradetrendsandthecorrespondingsupplyrisksandvulnerabilities,whichencompassthepotentialperilsassociatedwiththeweaponisationorcartelisationofsupplies,aswellasnon-politicaldisruptions,suchasclimate-relatedhazardsandpandemics.Further,ithighlightstheintensifyinggeopoliticalcontestationforcriticalmaterials,especiallywithintheglobalcommons,includingtheexplorationandextractionactivitiesunfoldinginthedeepsea.36CRITICALMATERIALS2.1KEYPLAYERSINMINERALANDMETALTRADINGThecriticalmaterialsupplychainThepathwayofmineralsfromminestofinishedproductsinvolvesacomplex,andoftenopaque,networkofactorsandprocesses.2Figure2.1showssomeofthekeystagesinthevaluechainsofthemineralandmetalindustries.FIGURE2.1Schematicrepresentationofamineral-ormetal-dependentvaluechainGeologicalExplorationDevelopmentMiningresourcesSmeltingPuriﬁcationMetallurgy/OreprocessingandreﬁningreﬁningManufacturingProductionPreparation–dismantling,Source:(Ayuketal.,2020).wastecollectioncrushing,separationPrimaryrecyclingSecondaryrecyclingProductionwasteProductionwasteEnd-of-lifecollectioncollectionproducts,wasteSemi-ﬁnishedComponentsEnd-productproducts2ThissectiondrawsfromtheInternationalResourcePanel(2020).37GeopoliticsoftheEnergyTransformationThegeologicalpresenceofresourcesaloneisnotsufficientforundertakingminingprojectsandtheactualminingofmineraloresisprecededbymultiplestages.Theserequiremeetingseveralenablingconditions,includingcompliancewithminingandenvironmentalregulations,andtheacquisitionofnecessarypermitsandlicenses.Afterfulfillinglegalrequirements,miningcompaniesundertakeseveralstepsbeforeextractingresourcesfromtheground.Thisincludesassessingtheresourcebase,conductingfeasibilitystudiesand,insomeinstances,constructingdemonstrationplants.Theseprocessescantakeseveralyearsandinvolvesignificantcosts.Subsequently,theminingstagebegins,wheremineraloresareextractedfromeitheropen-pitorundergroundminesusingdrillingand/orblastingtechniques.Theextractedoresarethentransported(typicallyonconveyorsortrucks)toanearbyprocessingplant,wheretheyareconvertedintoshippableproductsthroughmultiplesteps,whichvarydependingontherawmaterialandmayinvolveprocessessuchasgrinding,crushingandchemicalprocessing.Itisworthnotingthatwhiletheseprocessesaretypicalforlarger-scaleminingoperations,artisanalandsmall-scaleminingmayemploymorerudimentarymethods,suchasmanuallabourandsimpletools.Theinvolvementoftradersinthepurchaseandtransportoftherefinedmineralsfurtherunderscoresthecomplexityofthemineralsupplychain.Thenextstageismetallurgyorrefining,whichiscrucialtoremoveresidualimpuritiesfrommetaltomeetthepurityrequirementsofdifferentmarkets.Thisprocessinvolvesvarioustechniques,suchassmelting,roastingandelectrolysis,andcangeneratesubstantialwasteandemissions.Thefinalproductfromrefiningissoldtomanufacturers,whousethemetalinawiderangeofareas,includingelectronics,batteriesandconstructionmaterial.Increasingly,thereisagrowingtrendofrecyclingproducts,includingcertainwasteproductsthataregeneratedduringtheirlifecycles.GeographyofmineralminingandprocessingTheminingofmaterialsishighlyconcentratedinspecificgeographicallocations(Figure2.2).Forexample,morethan70%ofplatinumisminedinSouthAfrica;70%ofcobaltisminedintheDemocraticRepublicofCongo;morethan60%ofnaturalgraphiteinChina;almost50%ofnickelinIndonesia;almost50%oflithiuminAustraliaandalmost50%ofdysprosiuminChina.Mineralprocessingisevenmoreconcentrated(Figure2.3).Chinaisthedominantplayer,witha100%shareofglobalrefinedsupplyfornaturalgraphiteanddysprosium(arareearthelement)over90%formanganese,70%forcobalt,almost60%forlithiumandapproximately40%forcopper.38CRITICALMATERIALSFIGURE2.2KeyminingcountriesforselectmineralsCobalt%Dysprosium%Manganese%Nickel%70.0%DemocraticChina48.7%SouthAfrica35.8%Indonesia48.8%Republicof5.4%theCongo4.8%Myanmar23.1%Gabon22.9%Philippines10.1%Indonesia3.2%Australia7.6%Australia16.4%Russian6.7%2.1%FederationRussian2.0%Federation2.0%UnitedStates2.9%China4.9%10.5%AustraliaFrance(New5.8%Caledonia)CanadaCanada2.7%Ghana4.7%CubaOthers15.0%India2.4%Australia4.9%PhilippinesBrazil2.0%Canada4.0%OthersGraphite%Ukraine2.0%China3.3%China64.6%Côted’Ivoire1.8%Brazil2.5%Mozambique12.9%Malaysia1.8%Others13.9%Madagascar8.4%Others5.3%Copper%Brazil6.6%Platinum%Chile23.6%Neodymium%Others7.5%SouthAfrica73.6%Peru10.0%China45.8%Russian10.5%FederationDemocratic10.0%RepublicoftheCongoIridium%Australia23.1%88.9%SouthAfricaZimbabwe7.8%Zimbabwe8.1%Russian2.9%Greenland8.2%FederationChina8.6%Others0.1%Canada3.1%Myanmar7.4%UnitedStates5.9%UnitedStates1.7%Brazil4.4%Russian4.5%Others3.3%FederationIndia2.1%Indonesia4.1%Others9.0%Australia3.7%KingdomofDenmarkZambia3.5%Lithium%Australia46.9%Mexico3.3%Chile30.0%China14.6%Kazakhstan2.6%ArgentinaBrazil4.7%Canada2.4%Others1.6%2.2%Poland1.7%Others16.1%latestdataavailableasof2023Source:(USGeologicalSurveyandUSDepartmentoftheInterior,2023;JRC,2020).39GeopoliticsoftheEnergyTransformationFIGURE2.3KeyprocessingcountriesforselectedmineralsCobalt%Dysprosium%Lithium%Nickel%China70.0%China100%China58.0%Indonesia39.8%Indonesia18.0%Chile29.0%China23.9%Finland11.0%Graphite%Argentina10.0%JapanOthersChina100%OthersRussian5.0%1.0%3.0%Federation4.4%CanadaCopper%Manganese%Australia3.7%Others3.6%China42.3%Iridium%China93%19.6%Chile8.1%SouthAfrica90.0%Others7%Democratic6.5%Zimbabwe8.0%RepublicoftheCongoRussian2.0%Platinum%Federation71.2%Neodymium%SouthAfrica8.6%Zimbabwe4.6%Japan6.2%NorthAmerica11.8%UnitedStates3.9%China88.0%RussianFederation3.8%Russian4.2%Malaysia11.0%OthersFederationEstonia1.0%Korea2.5%Germany2.4%Poland2.3%Others21.6%Sources:(USGeologicalSurveyetal.,2023;WPIC,2022;AngloAmerican,2022,Implats,2022;Erickson,2022;LeadLeo,2022;OEC,2023;Mining.com,2021;MitchellandDeady,2021;NVM,2021;QYResearch,2023;IRENA,2022a;S&P,2023).latestdataavailableasof2023;America=Canada,MexicoandtheUnitedStates;2021.40CRITICALMATERIALSAnycountry’sdominanceinmetallurgyposessignificantchallengesforresourcesecurityandgeopoliticaldynamics.Theenvisagedincreaseindemandpresentsanopportunitytomaketheexistingvaluechainsmoreresilient,positivelyimpactnationalbalancesheetandsupporttheglobaltransitiontoalow-carboneconomy(Figures2.4and2.5).Mineral-richcountriesstandtogainfromthegrowingdemandforcriticalmaterials.Forexample,theAustraliangovernmentexpectslithiumandbasemetalexportstoequalthevalueofitscoalexportsby2027-2028(TheHonMadeleineKingMPMediaReleases,2023).Diversifyingprocessingtowardscountrieswithabundantrenewableenergysourcescanreducetheemissionfootprint.CountriessuchasChile,whichhaveabundantsolarenergyresources,areexploringtheuseofsolarpowertodecarbonisecopperrefining(Lyng,2022).WesternAustralia,arenewableenergyhotspot,isattractingnewinvestmentsinmidstreamcriticalmineralprojects,includingthreerareearthandthreelithiumprocessingfacilities(seeFigure2.4)(GovernmentofWesternAustralia,2022).Globalcriticalmineralreservesarerelativelymoreevenlydistributedthancurrentmineralproduction.Thisopensopportunitiesfordiversifyingsupply.LargepartsoftheEarth’scrust,predominantlyindevelopingcountries,remainunexplored.Forinstance,Africa,whichhasabout20%ofthegloballandmassarea,hasattractedonlyabout14%ofglobalmineralexplorationinvestment(EricssonandOlöf,2019).Addressingthissituationrequiresnotjustincreasingglobalexplorationspending(Box2.1),butalsocontinuouscollectionandsharingofmineralresourcedataacrosscontinents.Atpresent,mostoftheworkisundertakenbycountriesthataremembersoftheOrganisationforEconomicCo-operationandDevelopment(OECD).Forexample,theAustralian,CanadianandUSgeologicalsurveysjointlylaunchedtheCriticalMineralsMappingInitiative,whichcoversover60countries(Calam,2020).GeologicalworkincountriesthatarenotmembersoftheOECDcouldbenefitfromincreasedregionalaswellasglobalcollaboration.AnexampleistheAfricanUnion’sAfricaMiningVision,whichwaslaunchedin2009andisbeinghinderedfromrealisingitsfullpotentialduetoalackofresources(Ushie,2017).41GeopoliticsoftheEnergyTransformationFIGURE2.4Miningandrefiningsupplyforselectedcriticalmaterials,20222022LithiumCobaltNickelMiningReﬁningFIGURE2.5Miningandrefiningsupplyforecastsforselectedcriticalmaterials,20302030LithiumCobaltNickelMiningReﬁningSource:(BloombergNEF,2023).Disclaimer:Thesemapsareprovidedforillustrationpurposes42only.BoundariesandnamesshownonthemapsdonotimplyanyendorsementoracceptancebyIRENA.CRITICALMATERIALSBOX2.1MineralexplorationbudgetAnexplorationbudgetreferstothefundsallocatedtoidentifyingpotentialmineraldepositsinanarea.Notallexplorationprojectsresultinanewmine,andeveniftheydo,ittakesseveralyearsfromdiscoverytoopeningthemine.AlargemajorityoftheexplorationbudgetforselectedmineralscomesfromcountriesoftheOECD,dominatedbyAustralia,Canada,ChileandtheUnitedStateswhoincreasedtheirexplorationbudgetsfornickel,cobalt,lithiumandcopperinthepasttenyears(Figure2.6).ChinaandVietNamincreasedtheirbudgetsfornickel;DRCongo,MoroccoandZambiaincreasedtheirbudgetsforcobalt;Peru,GermanyandZimbabweincreasedtheirbudgetsforlithium;DRCongoandEcuadorincreasedtheirbudgetsforcopper.SouthAfricadominatesexplorationbudgetsforplatinum,withZimbabweincreasingitsbudgetinrecentyears.FIGURE2.6Shareofglobalexplorationbudgetforselectmaterialsbycountry,2012and2022NickelCobaltCopperLithium100%Australia80%CanadaChile60%UnitedStatesRestof40%theworld20%0%20122022201220222012202220122022KeynewGabonBosniaandAfghanistanCôted'IvoireplayersPeruHerzegovinaCubaIndiain2022PolandChileCyprusMoroccoSolomonGreenlandEritreaSwedenIslandsSpainTanzaniaUnitedKingdomTanzaniaTanzaniaKingdomofDenmarkcontinuednextpageBasedon:(S&P,2023).43GeopoliticsoftheEnergyTransformationBOX2.1Mineralexplorationbudget(continued)Theminingsectordoesnotsufficientlyinvestinexploration.Between2012and2022,juniorminingcompanies’shareofglobalexplorationbudgetsgrewfrom31%to56%forbatterycathodematerials(lithium,cobaltandnickel),whilemajors’shareshrunkfrom52%to34%inthesameperiod.Governments’shareinexplorationbudgetswasconstant,atabout6%(Figure2.7).FIGURE2.7Shareofglobalexplorationbudgetforselectmaterialsbytypeofinvestment,2012-2022Shareofexplorationbudget(%)100OtherGovernment80JuniorIntermediate60Major4020020122013201420152016201720182019202020212022Basedon:(S&Pdata,2012-2022).IndustryplayersTheminingindustryisdominatedbyafewlargemultinationalcorporationsandstate-owned/controlledenterprises(SOEs),whichoperateacrossmultiplecountriesandpossessthenecessaryresourcesandskillstodevelopcomplexmines.Theindustryishighlyconcentrated,withthesecorporationsandSOEscontrollingasignificantportionofglobalproductionandtrade.Forexample,thetopfiveminingcompaniescontrol61%oflithiumoutputand56%ofcobaltoutput(seeFigure2.8).44CRITICALMATERIALSFIGURE2.8Marketshareofmajorminingcompaniesinselectmaterials,2021CobaltPlatinum47%22%21%33%OtherGlencoreOtherSibanye(CH)Stillwater(SA)0.1311%201tMtCMOC(CN)6%11%Northam18%PlatinumEurasian(SA)AngloGroup(KZ)American10%Platinum(SA)9%12%NorilskGécamines(CD)(RU)ImpalaPlatinum(SA)Nickel14%LithiumNorilsk(RU)21%13%Albemarle(US)Glencore55%(CH)37%Other1.45Mt7%Other0.56MtVale7%19%(BR)TianqiSociedad5%6%Lithium(CN)QuímicayMineradeChilePTValeJinChuan7%Indonesia(ID)GroupCo(CL)Allkem(AR)(CN)9%PilbaraMinerals(AU)Basedon:(S&P,2023).Note:a)Totalglobalproductioninmegatonnes(Mt)andtonnes(t)providedforeachmineral.b)AR=Argentina;AU=Australia;BR=Brazil;CD=DemocraticRepublicoftheCongo;CH=Switzerland;CL=Chile;CN=China;ID=Indonesia;KZ=Kazakhstan;RU=RussianFederation;SA=SouthAfrica;US=UnitedStatesofAmerica.45GeopoliticsoftheEnergyTransformationTheownershipstructureofaminingcompanycanimpactitsrisktoleranceandtheenvironmentsinwhichitoperates.SOEsmaybemorewillingtoinvestinriskierenvironmentsthatpubliclylistedcompaniesmayavoid.AnotableexampleofthisareChineseSOEs,whichhaveasignificantpresenceinAfrica’sminingindustry,includingincountrieswhererisks,realorperceived,maydeterotherinvestors(Ayuketal.,2020).Someofthelargestcompaniesinthemineralandmetalindustryvaluechainareverticallyintegrated,meaningtheyoperateacrossmultiplestagesofthevaluechain(e.g.BHP,RioTintoandFreeport-McMoRan).Othercompaniesspecialiseinspecificstages.Forinstance,somespecialiseinmineralextractionbutdonothavethefacilitiestoprocessorrefinethem.Othercompaniesspecialiseinrefiningrawmaterialsintometalsbutdonothavethefacilitiestomineorprocessminerals.Manyrecyclingcompaniesspecialiseincollectingandprocessingspecifictypesofwastematerialsratherthanoperatingacrosstheotherpartsofvaluechains.Theenergytransitionischangingcorporatestrategiesandvaluechainsintheminingindustry.Forinstance,BHP,theworld’slargestminingcompanybymarketcapitalisation,isdivestingitsoilandgasbusinessandpositioningitselfasaminingcompanyfocusedontheenergytransition(Quiggin,2021).Thegrowingdemandforcriticalmaterialsisalsoattractingcompaniesfromoutsideofthetraditionalminingindustry.Tesla,anEVmanufacturer,isbuildingalithiumrefineryinTexasandislookingtoexpanditsfootprintinthemineralsminingandprocessingbusiness(Agatie,2023).Someminingcompaniesarekeentoinvestinnewbusinesseslinkedtotheenergytransition.Forexample,theFortescueMetalsGrouphascreatedanewunittoinvestinrenewables,greenhydrogenandgreenammonia.MetalexchangesUnlikecommoditiessuchasoil,manytransitionmetalsandmineralsarenotwidelytradedonexchanges.Copperisanexceptionandiswidelytradedinspotandfuturesmarkets.Otherspecialtycommodities,suchascobalt,lithiumandrareearths,areprimarilysoldthroughnegotiatedbilateralcontractsbetweenproducersandconsumers(WorldBank,2022).Thelowliquidityandproductheterogeneityofcertainmetalsposechallengestothedevelopmentofeffectivehedgingtools(Azevedoetal.,2018).Selectedexchangesformineralsandmetalshavebeencreated.AnexampleofthisistheLondonMetalsExchange(LME),whichwassetupin1877bymerchantsandfinancierstofacilitateinternationalmetaltrading.GiventhatmetalstookthreemonthstoarrivefromChile(copper)andMalaysia(tin),thethree-monthcontractbecametheprimarytradedfuturescontractontheLME(BuchanandErrington,2018).Today,theLMEremainstheworld’sforemostmetaltradingplatform,settingglobalreferencepricesforcriticalmaterialssuchascopper,nickelandcobalt.3TheLMEplatformfacilitatesthedailytradingofmorethanUSD60billioninfutures(Burton,2022),andtherangeofmetalsandmineralstradedontheexchangecontinuestobeexpanded(Table2.1).Forexample,theLMEbegantradingcopperin1877,followedbynickelin1979,cobaltin2010andlithiumin2021(Table2.2)(LME,2023).3Manyotherexchangesexist,includingtheNewYorkMercantileExchange,theShanghaiMetalExchangeandtheTokyoCommodityExchange.46CRITICALMATERIALSTABLE2.1KeymaterialsandyearofintroductionontheLondonMetalsExchangeCommodityYear©MattBigginshutterstock.comCopper1877Nickel1979Tin1989Cobalt2010Molybdenum2010Lithium2021Commodityfuturesandderivativesarealsotradedonother,smallerexchanges,includingtheShanghaiFuturesExchangeandtheDubaiGoldandCommoditiesExchange.Cobaltandlithiumcontractswereintroducedrecentlyonmetalexchangesbuthavenotyetreceivedwideacceptanceashedgingtoolsbyindustryparticipants.Thissituationpresentsachallengeforcompaniesseekingtohedgetheirexposuretothesecriticalmetals,forinstance,carmanufacturersthatwanttolockinlithiumprices(Sanderson,2021).Metalexchangesplayacrucialroleinpricesignalling.Itiseasytoaccessunambiguouspriceinformationformetalstradedwidelyonexchanges.Bycontrast,itisdifficulttoascertaintheactualagreed-uponpriceformetalsthatareoftentradeddirectlybetweenpartiesandnottradedwidelyonexchanges.Whilesomecompaniesspecialiseinpostingpricelistings,theyrelyonbuyersandsellersvoluntarilydisclosingtheirprices,whichmaynotalwaysbetimelyorreliable.Thissituationgivestradingcompaniesasignificantadvantageastheyhaveaccesstometals’truemarketpricesaswellastransaction-relatedinformation.CommoditytradersIndependenttradershaveakeyroletoplaygiventhefragmentednatureofsomemineralmarketsandtheremotenessofsomeproducers(Table2.2).Apartfromcompaniesthattradephysicalcommodities,metalsmarketshaveoftenattractedsignificantattentionfrominvestors,includinghedgefunds,investmentbanksandcommodityindexfunds(Humphreys,2011).Thesetradersandspeculatorsoftendonotproduceorusecommoditiesassuchbutplayaroleinmatchingproducersandconsumersindifferentpartsofthemarket.Inrecentyears,commoditytradershavefacedcallsforgreateroversightandregulation(Blas,2022).47GeopoliticsoftheEnergyTransformationTABLE2.2TopcommoditytradinghousesbyrevenueCompanyFoundingHeadquartersRevenueCommoditiestradedCorporateVitolstatusTrafiguradate(2022USDbillion)Glencore1966Geneva,505Crudeoil,fueloil,gasoline,PrivateGunvormiddledistillates,naphtha,MecuriaSwitzerlandmethanol,ethanol,chemicals,liquefiedpetroleumgas(LPG),naturalgas,liquefiednaturalgas(LNG),carbonemissions,coal,ironore,power,alumina,baseoils,bitumen1993Singapore318.5Crudeoil,fueloil,middlePrivatedistillates,gasoline,naphtha,LPG,LNG,biodiesel,condensates,chemicals,coal,ironore,concentratesandores(copper,lead,zinc,alumina,nickel,tin,cobalt),refinedmetals(copper,aluminium,zinc,blister,nickel,tin,cobalt)1974Baar,255.9Copper,zinc,lead,nickel,Publicferroalloys,alumina,aluminium,limitedSwitzerlandironore,cobalt,coal,oil,oilproducts,wheat,corn,canola,barley,rice,oilseeds,meals,edibleoils,biofuels,cotton,sugar2000Geneva,150Crudeoil,heavyfuelandPrivatefeedstocks,middledistillates,Switzerlandgasoline,naphtha,LPG,biofuels,naturalgas,LNG,carbonemissions,copper,aluminium,zinc,lead,tin,nickel,manganese,steel,coal,cokingcoal,ironore,timber2004Geneva,174Crudeoil,fueloil,middledistillates,Privategasoline,naphtha,biofuels,Switzerlandpetrochemicals,naturalgas,LNG,power,coal,ironore,manganese,chrome,carbonemissions,basemetals,foodandfeedgrains,oilseeds,vegetableoilsSources:(Companies’respectivewebsitesandTrafigura,2018;Buchanetal.,2018).Note:GlencorewasfoundedasMarcRichandCo.AG.48CRITICALMATERIALSTradedependenciesThissectionpresentsananalysisofthebilateraltradeflowsrelatedtocriticalmaterials.Figure2.9showsthetopbilateraltradeflowsbyvalueforfivecriticalmaterialsin2022:copper,lithium,manganese,nickelandplatinum.Itshowshowcopperisthemostvaluablematerialbytradevalue.Thegraphalsodemonstratesthegeographicdiversityofminingcountries,butalsohowimportantminingistoseveral,relativelysmalleconomiessuchasChileandPeru.Finally,thedataindicatesthatChinaisamongthetopimporters,eventhoughitiscommonlyperceivedasdominatingcriticalmaterialsupplychains.Itistheworld’slargestimporterofraworunprocessednickel,copper,lithium,cobaltandrareearths.Assuch,thecountryreliesonimportsforinputsbutdominateslargeportionsofthemidstreamanddownstreamcapacityformanycriticalmaterials.Threecaveatsmustbeconsideredwhenexaminingtradedependencies(Nassaretal.,2015).First,intradestatistics,importtransactionsareattimesattributedonlytothecountryoflastshipmentratherthanthecountrywherethematerialwasoriginallyminedorproduced.Second,mineralcommoditiessourcedfromadifferentcountrycanbeembeddedinimportedfinishedandsemi-finishedproducts,thusobscuringthetrueimportrelianceandexposuretoforeignsupplydisruptions.Forexample,neodymiumandotherraremetalsareembeddedinpermanentmagnets;anycountryimportingthesemagnetswouldstillbevulnerabletodisruptionsinrareearthsupply.Third,foreignfirmscanownandcontrolmineralassetsandoperationspartiallyorcompletely.Chinesefirms,forinstance,haveequitystakesinlithiumprojectsinAustraliaandChile,arareearthdepositinGreenland4andcobaltoperationsintheDemocraticRepublicofCongo,PapuaNewGuineaandZambia.Researchfounda2%to14%increaseintheshareofglobalcobaltproductionandan11%to33%increaseforcobaltintermediatematerials(Gulley,2022)whenaccountingfortheequitystakesofChinesefirms.ForeignmineralassetsarealsoownedbyAmerican,British,Canadian,Japanese,Koreanandothercompanies.4KingdomofDenmark©gettyimagesunsplash.com49GeopoliticsoftheEnergyTransformationImporterFIGURE2.9Bilateraltradeflowsbyvalueforselectmaterialsin2022ExporterChileChinaPeruKazakhstanJapanMongoliaIndiaChinaCanadaUnitedStatesArgentinaUnitedKingdomSouthAfricaGermanyGabonCopperAustraliaLithiumManganeseGhanaNickelPlatinumPhilippinesRussianFederationNewCaledoniaUnitedStatesSource:(UNComtrade,2023).Notes:Alldatarefertounprocessedoresandconcentrates,exceptforlithium,wherewerelyondataforlithiumcarbonatesandlithiumoxideandhydroxide.ImportdatawasusedandonlyindividualEUcountrieswereincluded.50CRITICALMATERIALS2.2SUPPLYRISKSANDVULNERABILITIESNearlyallcountriesaresusceptibletounforeseensupplyinterruptionssincenoneareself-sufficientinallmaterials.Evencountrieswithasmallermanufacturingbasearepronetotradedisruptions.Althoughtheymaynotrelyheavilyondirectrawmaterialimport,theynonethelessrelyonafunctioningglobalmarketforcriticalmaterialsandtechnologiessincetheyimportpartsorfinishedgoods(e.g.solarpanelmodules)forrenewableenergyinstallations(Patterson,2018).Theriskofsupplychaindisruptiondirectlyaffectscompaniesusingimportedmineralsorfinishedgoodstomanufacturesolarpanels,windturbinesandbatteries.However,multipleindustriescanbeaffectedbysupplyinterruptions,whichcouldreverberatethroughouttheeconomy.Theimpactcouldbewidespreadgivenmultiplesectors–fromindustryanddigitalinfrastructuretoagriculture–relyonmineralsandmetalcommoditiesformanufacturinggoods.Theprobabilityof,andvulnerabilityto,supplydisruptionsismeasuredusingvariousindicators.Onereviewidentifiednolessthan30indicatorsofsupplyrisk(Schrijversetal.,2020).Riskassessmentscanalsobeconductedatdifferentlevels,includingforasingleoragroupofcountries,companies,productsandeconomicsectors.Figure2.10presentssixsourcesofsupplyriskforcriticalmaterials.Whilenotexhaustive,thelistcoverssomeofthemostwidelydiscussedgeopoliticalriskstothesupplyofcriticalmaterialsintheshorttomediumterm(i.e.fivetotenyears),especiallyforcountriesthatrelyheavilyonimports(Nassaretal.,2020).Othertypesofrisks,suchasenvironmentalandsocialrisks,arediscussedinChapter3.Geopoliticalrisksshouldbeassessedconsideringcertainstructuraltrendsthatcouldhavelong-termimplicationsontheavailabilityofmineralcommodities.Thesetrendsincludethegeographicalconcentrationofminingandprocessing,thedeclineinmineraloregrades,thelimitedextentofend-of-liferecycling,thedependenceonby-productsformanycriticalmineralsandthelimitedshort-termsubstitutionpossibilitiesforcertainmaterials(Nassaretal.,2020).Thesestructuralfactorshavethepotentialtomagnifytheimpactand,insomeinstances,theprobabilityofthegeopoliticalsupplyrisksdiscussedabove.51GeopoliticsoftheEnergyTransformationFIGURE2.10Keygeopoliticalriskstothesupplyofmaterials1ExternalshocksNaturaldisasters,pandemics,wars,mineaccidents,etc.2ResourceTaxdisputes,expropriation,foreigninvestmentscreening,etc.nationalismExportquotas,exporttaxes,obligatoryminimumexportprices,licensing,etc.3ExportCo-ordinationofproduction,pricing,marketallocation,etc.restrictionsLabourstrikes,violence,corruption,etc.4MineralcartelsShortsqueezing,marketcornering,spooﬁng,insidertrading,etc.5Politicalinstabilityandsocialunrest6Marketmanipulation123456ExternalshocksGlobalcriticalmaterialsupplychains,whichareinterconnected,aresusceptibletodisruptionsthatmaybecausedbynaturalevents,suchasearthquakes,orcouldresultfromhumanaction,eitherintentional(e.g.tradedisputes)orunintentional(e.g.poweroutages).Inrecentyears,forexample,globalrawmaterialsupplychainshavebeendisturbedbyshockssuchastheCOVID-19pandemic,thewarinUkraineandtheglobalenergycrisis.In2020,theCOVID-19pandemicledentireeconomiestogointolockdown,resultinginasharpdeclineintheglobaldemandformetals.Atthesametime,supplywasdisruptedbytheclosureofhundredsofmines,smeltersandrefineries.Forexample,Peru,whichaccountsfor12%oftheglobalcoppersupply,closedallitsminesbetweenMarchandearlyJuneof2020–thelongestgovernment-mandatedmineclosure(Yuetal.,2021).SouthAfrica’s21-daymineclosuredisrupted75%oftheglobalplatinumsupply(NjiniandBiesheuvel,2020).AlthoughmetalmarketsswiftlyrecoveredfromtheinitialpriceanddemandcollapseinMarch2020,theyfacedseveralmajordisruptionseversince.Onemajorshockcameintheformofthe2021-2022globalenergycrisis.Inthesecondhalfof2021,forexample,Chinesemagnesiumplantswerepartiallyclosedduetonationwideenergyshortages,asaresponsetothecountry’spowercrisis.SinceChinaaccountsforabout85%oftheworld’smagnesiumproduction,theeffectsreverberatedgloballyandpricesskyrocketed(Hume,2021).ThiswasfeltespeciallystronglyinEurope,whichdependsonChinafor95%ofitsmagnesiumsupply.Europeanindustrygroupswarnedofanimminentsupplydepletion,threateningthousandsofbusinessesandtheirworkers(Burton,2021).Similarly,inSouthAfrica,frequentpowercutssince2022havecurbedtheoutputofplatinumgroupmetals(Njini,2023).52CRITICALMATERIALSThewarinUkrainewasanotherexternalshock.Itdisruptedcertaincommodities,suchasnickelandaluminium,andledtopricesurges,eventhoughmetalmarketsmayhavebeenlessaffectedbyitthanothercommoditymarkets,especiallyfoodandenergy.Before2022,Ukrainewasakeyexporterofpigiron.TheRussianFederationwastheworld’slargestexporterofpigiron,enricheduranium,palladiumandnickel.Italsoaccountedforasignificantshareofplatinumandrefinedaluminiumexports.Thesanctionshavesofaravoidedblanketrestrictionsontheimportofkeymetals,insteadintroducingselectedimportdutiesandtariffs.5Forinstance,RussianmetalsgiantNorilskNickel,akeysupplierofnickelandpalladium,haslargelybeenexemptedfromthesanctions(MacDonald,2022).Lookingfurtherintothefuture,sanctionslimitingaccesstohigh-techimportscouldhinderminingandprocessingcompaniessincetheyrelyonequipmentandsoftwarelicensesfromforeignfirms(BloombergNews,2022).Partsofthecriticalmaterialvaluechainarealsoexposedtothephysicaleffectsofclimatechange–fromsealevelrisetomorefrequentandsevereweatherevents.Somematerials,forexample,nickel,cobaltandrareearths,areminedandprocessedinareasthatarelikelytobeatagreaterriskofheavyrainfallandfloods.Anexampleofthiscouldbefoundin2020,whena“once-in-a-century”floodinChina’ssouthwestprovinceofSichuanshutdownrareearthprocessingplantsanddamagedinventory(DalyandZhang,2020).Otherminingactivitiesarelikelytobehitbydroughtandwaterscarcity.Forexample,approximately50%oflithiumminingisinhighwaterstressareas.Giventhatlithiummininghasasubstantialwaterrequirement,thiscouldcreateconflictssurroundingtheuseofwater(IEA,2022).123456ResourcenationalismInrecentyears,numerousgovernmentshaveincreasedstatecontrolovertheirmineralresourcestoenhancethebenefitsfromextractionoraddressitsadverseimpacts.Thishasbeenaccomplishedthrough,forexample,taxregimestrengthening,royaltyrenegotiation,creationofstate-ownedmineralcompanies,nationalisationofcriticalmaterialindustriesandrestrictionsonforeigninvestments.Thistrendcanbeobservedinmanycountries,includingAustralia,Canada,Chile,Mongolia,Namibia,Peru,SouthAfricaandZambia,amongothers.Policiesaimedatrevisingownershipandaccessrightsovernaturalresourcescanimpactglobalsupply.Forexample,aroyaltypaymentdisputebroughtsupplyfromtheDemocraticRepublicofCongo’sTenkeFungurumecopperandcobaltminetoastandstillforseveralmonthsaftermid-2022.Thisdisrupted15%oftheglobalcobaltsupply(WhiteandHook,2023).Chile’sannouncementinApril2023ofitsdecisiontonationalisethelithiumindustryraisedconcernamongsomeanalystsandindustrygroups,eventhoughlong-termimpactonglobalsupplyisnotvisible(seeBox2.2)(DempseyandWhite,2023).Thebroadbannerof“resourcenationalism”iswidelyusedtodescribethistrend.However,itisworthnotingthatthetermputstogetheradiversesetofpoliciesandobscuresthecomplexsetofmotivationsthatcandrivethem(Ward,2009).Therecenttrendofstrictermineralsectorregulationsisreminiscentofthe1970s,whenmanymineral-richcountries,includingnewlyindependentones,adoptedstate-interventionistpoliciesandsetupstate-ownednaturalresourcecompaniesinthemineralssector.Ascommoditypricesdeclinedin5TheUnitedKingdomhasimposed35%additionaldutiesonimportsofRussiancopper,lead,nickel,primaryaluminiumandaluminiumalloy(seewww.lme.com/en/news/russian-sanctions).TheUnitedStatesintroduceda200%importtariffonRussianaluminium(seewww.whitehouse.gov/briefing-room/presidential-actions/2023/02/24/a-proclamation-on-adjusting-imports-of-aluminum-into-the-united-states-4/).53GeopoliticsoftheEnergyTransformationthe1980sand1990s,andtheglobalpoliticalconsensusshiftedinfavourofunfetteredmarkets,themineralssectorwassweptbyawaveofliberalisation,deregulationandprivatisationofstateassets(Dietsche,2014).Bytheearly2000s,therewereonlyafewstate-ownedmetalminingcompaniesleft.In2005,forexample,thestatehadamajorityownershipstakeinjustthreeoftheworld’stop25metalminingcompanies(CodelcoinChile,AlrosaintheRussianFederationandDebswanainBotswana).Eighteenofthetop25metalminingcompanieswerefullyprivate(UNCTAD,2007).BOX2.2Chile’sstrategyforlithiumInApril2023,ChileanPresidentGabrielBoricannouncedthecountry’sdecisiontonationaliseitslithiumindustry.Chileholdstheworld’slargestlithiumreservesandrankssecondinlithiumproduction.PresidentBoricstatedthatthecountry’slithiumreservesrepresent“anopportunityforeconomicdevelopmentthatwilllikelynotberepeatedintheshortterm”andthatnationalisingtheindustrywillenablethecountrytobuild“aChilethatismorejust,moresustainable,andmoredemocratic”(Sharp,2023).Thegovernmentwouldlooktoprotectbiodiversityandshareminingbenefitswithindigenousandsurroundingcommunities.Atpresent,twocompaniesaremininginChile:SociedadQuimicaYMineradeChile(SQM)andAlbemarle.Undertheplan,aseparatestate-ownedcompanywouldbecreatedtoproducelithium–amovethatwouldneedtobeapprovedbyCongress.Theplanenvisagestheissueoffuturelithiumcontractsthroughpublic-privatepartnerships,inwhichthestatewouldholdamajorityshare(StottandBryan,2023).Thegovernmentwouldalsonotterminatecurrentcontracts(GovernmentofChile,2023),buthasexpressedhopethatcompanieswouldbeopentostateparticipationbeforetheyexpire.SQM’scontractiscurrentlysettoexpirein2030andAlbemarle’sin2043.Someanalystsareconcernedthatnationalisationofthelithiumindustrymaydeterpotentialpartners,shiftforeigndirectinvestmentstoothercountriesandadverselyaffecttheChileanlithiumindustryaswellasglobalsupply(InnovationNewsnetwork,2023;Sharp,2023).However,thegovernmenthasindicatedagradualandpragmaticapproachtobringingthesectorunderstatecontrolthroughpartnerships.ChilehasapositivetrackrecordwithCodelco,thestatecoppercompany,whichwasestablishedafterthenationalisationofChileancopperminingin1971duringtheAllendeadministration(MaloneandBazilian,2023).Codelcoistheworld’slargestcopperminingcompanyand,accordingtotheChileanthinktankCenda,generatesoverthreetimesthetaxrevenueperunitofproductioncomparedwithprivatecompanies(Mining.com,2022).54CRITICALMATERIALSManycountrieshavealsoincreasedscrutinyofforeigninvestments,notjustintheminingindustrybutacrossvarioussectors(UNCTAD,2023).AustraliaandCanada,forinstance,haverecentlyimplementedstricterforeigninvestmentregulationsintheirmineralsectors.InAustralia,foreigninvestmentintheminingsectorissubjecttoscreeningbytheForeignInvestmentReviewBoard,whiletheCanadiangovernmenthasintroducedanewnationalsecurityreviewprocessforforeigninvestment.Thistrendofincreasedgovernmentscrutinyofforeigninvestmentsreflectsconcernsaboutnationalsecurity,environmentalsustainability,andlocalownershipandcontrolovernaturalresources.Table2.3showsafewillustrativeexamplesofhowforeigninvestmentintheminingsectorisfacingincreasedscrutinyacrossdifferentjurisdictions.TABLE2.3IllustrativeexamplesofincreasedforeigninvestmentscrutinyinthemineralssectorCountryDescriptionAustraliaIn2020,Australiaadoptedanewregulationtogovernforeigninvestment,whichCanadagrantsextraordinarypowerstotheForeignInvestmentReviewBoardtorejectinvestmentsongroundsofnationalsecurity(FederalRegisterofLegislation,2021).IndonesiaInOctober2022,Canadasetanewpolicylimitinginvestmentinthecountry’sMexicocriticalmineralssectorfromforeignstate-ownedcompaniesandforeignprivateMongoliainvestorscloselytiedtoforeigngovernments(GovernmentofCanada,2022).UnitedRepublicofTanzaniaIn2009,IndonesiapassedalawthatrequiresforeignminingcompaniestodivestUnitedStatesmajoritystakesinprojectstolocalentitiesaftertenyearsofproduction(RepublicofIndonesia,2009).InApril2022,Mexicoofficiallynationaliseditslithiumindustry,givingthestateexclusiverightsovertheexploration,extractionanduse(UnitedMexicanStates,2022).In2019,Mongoliapassedalawthatallowsthegovernmenttoacquireupto50%ofmineraldepositsdeemedbyparliamenttobeof“strategic”valuetothestate.In2017,Tanzaniapassedlawsrequiringminingcompaniestogivethegovernmentatleasta16%stakeintheiroperationsandprocesstheirorelocally(GovernmentofTanzania,2017).InSeptember2022,USPresidentBidensignedanExecutiveOrderthatcallsontheCommitteeonForeignInvestmentintheUnitedStatestoreviewallcriticalmineralinvestmentapplicationsthataffectnationalsecurity(WhiteHouse,2022).55GeopoliticsoftheEnergyTransformationNumberofexportrestrictions23456ExportrestrictionsoncriticalmaterialsExportrestrictionsonrawmaterialsareagrowingconcernininternationaltrade.Incidencesofsuchrestrictionshavegrownmorethanfivefoldoverthepastdecade(Figure2.11)(OECD,2023).AccordingtotheOECD,about10%oftheglobalvalueofcriticalrawmaterialexportshasfacedatleastoneexportrestrictionmeasureinrecentyears(OECD,2023).6Exportrestrictionstakemultipleforms,includingexportquotas,exporttaxes,obligatoryminimumexportprices,orlicensing.FIGURE2.11Globalincidenceofexportrestrictionsonrawmaterials,2009-2020200001600012000800040000200920102011201220132014201520162017201820192020Sources:(KowalskiandLegendre,2023;OECDInventoryofExportRestrictionsonIndustrialRawMaterials,2022).Notes:They-axisshowsthenumberofexportrestrictionsinforce.Thedatabasecoversinformationon65industrialrawmaterialsand80exportingcountries,whichaccountedfor97%oftheworld’smineralandmetalproductionin2018.Themethodologicalnoteavailableatwww.oecd.org/trade/topics/trade-in-raw-materials/documents/methodological-note-inventory-export-restrictions-industrial-raw-materials.pdf.6Exportrestrictionsareoftencategorisedunder“resourcenationalism”,whichisdiscussedintheprevioussection.However,exportrestrictionsarediscussedseparatelyinthisreportbecausetheyoftenserveadifferentpurpose.Whilehostgovernmentshaveassertedstatecontrolovermineralresourcestooptimiserevenuecapture(resourcerevenueoptimisation),exportrestrictionstypicallyservethebroadergoalofdevelopingdownstreamindustries(resource-basedindustrialisation).56CRITICALMATERIALSExportrestrictionsespeciallyforcriticalmaterialsappeartobeontherise,withseveralcountriesimplementingmajorexportbans.ZimbabwebannedtheexportofrawlithiuminDecember2022(MarawanyikaandNdlovu,2022).Similarly,IndonesiabannedbauxiteexportinJune2023(Shofa,2023).Aroundthesametime,Namibiaprohibitedtheexportofrawlithiumandothercriticalmaterials(NyashaNyaungwaetal.,2023).Theserecentmeasuresreflectagrowingtrendofcountriestakingstepstoencouragedomesticprocessingandattractdownstreamindustries.Exportrestrictionsonrawmaterialsarenotanewphenomenon.In1937,theLeagueofNationsconstitutedaCommitteefortheStudyoftheProblemofRawMaterialstoassesstheincidenceofexportrestrictionsandexportduties(LeagueofNations,1937).Suchrestrictionsvarysignificantlybasedontherawmaterial(Figure2.12).Theyarenotsolelyimplementedbymineral-richcountries.Countriesseekingtoreducerelianceonrawmaterialimportsoftenimposeexportrestrictionstoretainsecondarysources,suchaswasteandscrap(OECD,2023).FIGURE2.12Shareofglobalexportssubjecttoanexportrestriction,2020Platinum92%Germanium91%84%Cobalt82%Bismuth82%Palladium68%Nickel65%PhosphatesPO43−59%RareearthREE8%elements7%6%Magnesium3%BoratesBO33−LithiumGraphite0%20%40%60%80%100%Sources:(Kowalskietal.,2023;OECDInventoryofExportRestrictionsonIndustrialRawMaterials,2022).Notes:Foreaseofreading,thelabel“Germanium”hasbeenusedtodenotethefollowinggroupofmaterials:germanium,niobium,vanadium,gallium,indiumandhafnium.57GeopoliticsoftheEnergyTransformationQuantitativeimportandexportrestrictionsarelargelyprohibitedunderArticleXIoftheWTO’sGeneralAgreementonTariffsandTrade,exceptundercertainlimitedexceptions,suchasenvironmentalconservation,nationalsecurityorassuringrawmaterialsupply.Theseexceptionsmustmeetspecificconditions,forexample,notprotectingdomesticindustriesordiscriminatingagainstothercountries.Themeasuresshouldalsonotunfairlyrestrictinternationaltrade.Thegrowingtrendofexportrestrictionsoncriticalmaterialshastriggeredaseriesoftradeconflicts,someofwhicharebeingaddressedattheWorldTradeOrganization(WTO)(Table2.4).Thesedisputescannotbelinkedsolelytotheenergytransitiongiventhatthematerialsinvolvedhaveamuchwiderapplicationbeyondtheenergysector,suchassteelmaking(molybdenum)orthechemicalindustry(fluorspar).Themineraltradedisputethatreceivedthemostattentionwastherareearthcrisisof2010-2011(seeBox2.3).TABLE2.4RecentWorldTradeOrganization(WTO)tradedisputesoverexportrestrictionsoncriticalmaterialsCase(shorttitleandWTOconsultationsComplainantsMeasure(s)atissuecasenumber)requestedChina2009EU,Mexico,USExportrestrictionsonbauxite,coke,Rawmaterialsfluorspar,magnesium,manganese,(DS394,395,398)siliconcarbide,siliconmetal,yellowphosphorus,andzinc.China2012EU,Japan,USExportrestrictionsonseveralrareearths,tungsten,andmolybdenum.RareearthsTheexportrestrictionscomprisedexportduties,exportquotas,and(DS431,432,433)certainlimitationsontheenterprisespermittedtoexporttheproducts.China2016US,EUDutiesandotherallegedrestrictionsRawMaterialsIIontheexportofvariousformsof(DS508,509)antimony,chromium,cobalt,copper,graphite,indium,lead,magnesia,talc,tantalum,andtin.Indonesia2019EUThecomplaintcoversthefollowingRawmaterialsallegedmeasures:(a)restrictionson(DS592)exportsofnickel,includinganactualprohibitiontoexport;(b)domesticprocessingrequirementsfornickel,ironore,chromiumandcoal;(c)domesticmarketingobligationsfornickelandcoalproducts;(d)exportlicensingrequirementsfornickel;and(e)aprohibitedsubsidyscheme.Source:(WTO’sIndexofDisputeIssues,availablefromWTO,2023a).58CRITICALMATERIALSTheexistinginternationaltradeframeworkhastraditionallyfocusedonreducingimportrestrictions.Whileimporttariffshavedecreasedovertimethroughmultilateraltradenegotiations,exporttaxesarenotsubjecttoanyWTOregulations,exceptforsomerecentlyaccededmembers,whichhaveagreedtoreduceoreliminatethemundertheirWTOaccessionagreements.BOX2.3Therareearthcrisisof2010-2011Rareearthsareagroupof17chemicalelementswhosepropertiesmakethemvaluableforuseinmodern,high-techapplications.Today,theyareusedmostlyinpermanentmagnetselectricmotors(forelectricvehicles)andgenerators(e.g.inwindturbines)(Garcia,2020).TheUnitedStatesdominatedglobalrareearthproductionuntilthe1990s,afterwhichChinabecamethebiggestproducer.Bytheearly2000s,Chinahadanearmonopoly,miningapproximately95%oftheworld’srareearthelements(USGeologicalSurveyandUSDepartmentoftheInterior,2010).However,increasingconcernsoverenvironmentalpollution,illegalminingandresourcedepletionledthegovernmenttodecideondevelopingadownstreamindustry(Wübbeke,2013).Startingin2006,thecountryintroducedseveralregulations,includingexportquotas,productionquotas,exporttaxesandrestrictionsonforeigninvestment(Shenetal.,2020).Exportquotaswereintroducedgradually,butin2010,Chinadecreaseditsexportquotaforrareearthsby37%,resultinginasurgeinrareearthoxidepricessincealternativesupplieswerelacking(seeFigure2.13).Apartfromexportquotas,ChineseshipmentstoJapanwerereportedlyinterruptedforafewweeksbetweenSeptemberandNovember2010afterthedetentionofaChinesefishingtrawler’scaptainamidamaritimedispute(Wilson,2018).Reportsonthenumberofdelayedrareearthexports,thelengthofdelaysandthepartiesresponsibleforthemcontinuetobeconflicting.AnalysisofcustomsdatafromtheJapaneseMinistryofFinanceshowsthatJapaneseimportsofChineserareearthsdidnotdeclineuniformlyfollowingthetrawlerincident(Johnston,2013).The2010-2011pricespikecausedmajorshiftsinrareearths’supplyanddemand,leadingtopriceattenuationby2012.Recyclingandsubstitutionreduceddemandsubstantially,whiletradedeflection,inventorymanagement,theopeningofnewminesandsmugglingensuredresidualsupply(GholzandHughes,2021).InMarch2012,Japan,theEuropeanUnionandtheUnitedStatesrequestedaWorldTradeOrganizationconsultationoverChineserareearthexportrestrictions.Chinadefendedtherestrictionsasnecessaryforconservation,whereasthecomplainantscounteredthattheywere,“designedtoachieveindustrialpolicygoalsratherthanconservation”.In2014,theWorldTradeOrganizationAppellateBodydecidedinfavourofthecomplainants,andChinawasrequiredtoliftitsrareearthexportrestrictions.continuednextpage59GeopoliticsoftheEnergyTransformationBOX2.3Therareearthcrisisof2010-2011(continued)FIGURE2.13Internationalrareearthmetaloxideprices,2007-2016REEIndexedprices(baseyear2007=100)1000CeriumDysprosium800EuropiumLanthanum600NeodymiumTerbium40020002007200820092010201120122013201420152016Basedon:(Wilson,2018;DataretrievedfromtheUSGSNationalMineralsInformationCentre,USGeologicalSurvey).Note:REE=rareearthelements.60CRITICALMATERIALS3456MineralcartelsThehighconcentrationofmineralproductionraisesconcernsofmarketcartelisationandcollusion.Mineralsupplyisconcentratedgeographically,andcorporationswithlargemarketsharesinkeysegmentsofmineralvaluechainsdominatetheirminingandrefinement.Thisconcentrationofproductioncouldpotentiallyleadtotheformationofcommoditycartels,groupsofmajorproducersthatmaximisetheirprofitsbyco-operatingontheproduction,pricingand/ordistributionofcommodities.Historically,producergroupsandgovernmentshavemadevariousattemptstoinfluencemineralmarketsthroughcollusion(WorldBank,2022).Intheearly20thcentury,therewereactiveproducercartelsinthealuminium,copper,nickel,steel,zincandleadindustries(Barbezat,1989;Bray,1997;Storli,2014;Tsokhas,2000;Walters,1944).Anumberofthesecartelswerecreatedinthe1930sinresponsetotheextremelylowpricesthatprevailedduringtheGreatDepression.The1960sto1970ssawanotherwaveofcartelisation,intheaftermathofdecolonisationandaboomingworldeconomy,withthecreationofseveralcartelsandproducerclubstogovernmetalmarketssuchasforbauxite,copper,ironore,tin,tungstenanduranium(seeTable2.5).Manyoftheseattemptswere,however,short-lived,7astheywereplaguedbyissuessuchasinternaldiscord,non-participationofmajorproducers,andmineralsubstitutionorinnovationinsupplyanddemandtechnologies.Inadditiontoproducerclubs,therehavebeenseveralinternationalcommodityagreementsinvolvingbothproducersandconsumers.Forinstance,aseriesofinternationalcommodityagreementsgovernedthetinmarketfrom1956till1985,whenthelastinternationaltinagreementcollapsed(Hillman,2010).Theseagreementsaimedtostabilisethetinmarketbyestablishingabufferstocksystemthatwouldallowproducerstostoreexcesssuppliesduringperiodsofoversupplyandreleasethemduringperiodsofshortages.Whilethissystemkepttinpriceselevatedforseveralyears,italsoencouragedthesubstitutionoftinwithaluminium,especiallyinthebeveragecanindustry(WorldBank,2022).Inrecentyears,severalmineralproducingcountrieshaveagainconsideredtheideaofcartelisation,althoughplansandproposalsfornewmineralcartelsdonotmeetthecriteriaforestablishingcommoditycartels(Box2.4).7Manynon-fuelmineralexporterswerehithardbythefirstoilshock.Theythussawaneedtoincreasetheirexportrevenuesbyformingsuchproducerclubs.©mykhailopavlenkoshutterstock.com61GeopoliticsoftheEnergyTransformationTABLE2.5Metalproducerclubsinthe1970sto1980sMetal/associationDateMembershipDescriptionBauxite1974-1994Jamaica,Guyana,JamaicaandSurinameraisedtaxesonInternationalBauxiteSuriname,Guinea,bauxite,expectingotherstofollow.Initially,Association(IBA)SierraLeone,theCaribbeanproducerswereabletoraiseYugoslaviaandprices,buttheygraduallylostmarketshareBAUAustraliaweretheasotherproducers,especiallyAustralia,foundingmembers.refusedtojointheeffort.TheformalwithdrawalofJamaicain1994markedtheAlgeria,Cameroon,formaldissolutionoftheInternationalBauxiteGhanaandMaliwereAssociation.observers.Copper1967-1988Chile,Peru,ZaireandTherelativelyhighelasticityofcopper’sZambiawerethedemand,mistrustamongtheCIPECmembersIntergovernmentalCouncilfoundingmembers.andthecouncils’limitedmarketshare(inofCopper-Exporting1975,theCIPECcontrolledjust37%oftheCountries(CIPEC)Yugoslaviaandglobalcoppersupplies)preventedthecouncilIndonesiajoinedlater,fromraisingpricesbycuttingproduction.TheandAustraliaandCIPECwaseventuallydissolvedin1988.PapuaNewGuineabecameassociates.Ironore1975-1989Australia,Algeria,APEFattemptedtosetexportpricesbutwasAssociationofIronOreIndia,Liberia,unsuccessful,becauseAustraliaandSwedenExportingCountries(APEF)Mauritania,Peru,wereunwillingtoparticipate,whileBrazilSwedenandandCanada,bothsizableexporters,stayedVenezuela.outsideoftheclub.Theassociationthenreduceditsroletocollectingmarkettrendstatistics,untilitsclosurein1989.Tin1983-2001Australia,DespiteagroupoftinproducersinterveningAssociationofTin-PlurinationalStateandimplementinganexportquotafollowingProducingCountries(ATPC)ofBolivia,Indonesia,theeventualcollapseoftheinternationaltinMalaysia,Nigeria,agreementinthemid-1980s,theearly1990sThailandandZaire.sawasteadydeclineintinprices,withtheAssociationofTin-ProducingCountriesbeingofficiallydisbandedin2001.Tungsten1975-1987Fourteenmembers–OneofthekeyaimsofthePTAwastopreventPrimaryTungstenbothgovernmentandtheUnitedStatesfromsellingexcessvolumesAssociation(PTA)privateenterprisesoftungstenat“uncompetitiveprices”fromits–fromAustralia,strategicstockpile.ItalsowantedtointroducePlurinationalStatepriceindicestomaketungstenpricesmoreofBolivia,Brazil,stableandtransparent.However,in1987,theFrance,Peru,associationceasedtoexistamidawaveofPortugal,Rwanda,tungstenmineclosures.Spain,Sweden,ThailandandZaire.Sources:(Kooroshyetal.,2014;Radetzkietal.,2020;Gochtetal.,1988;Stewart,1981).62CRITICALMATERIALSBOX2.4Prospectsforcartelisationintheplatinum,nickelandlithiummarketsMostnewproposalswillstruggletomeetalltheconditionsforasuccessfulcommoditycartel.Foracommoditycarteltobesuccessful,itmustbringtogetherdominantproducerswithsubstantialmarketsharesthathavefirmownershipofmineralproductionwithintheirrespectivestates.Theremustexisthighentrybarriers,preventingnewproducersfromenteringthemarketandcompetingwithexistingproducers.Producthomogeneityisanotherimportantfactor,wherecommoditiesstandardisedtothepointwheretheyarevirtuallyidenticalacrossproducers.Thisattributeisessentialforthemembersofasuccessfulcommoditycarteltoco-ordinateproductionandpricingstrategieseffectively.Demandelasticityisanothercrucialfactorthataffectsthefeasibilityofacommoditycartel.Itreferstohowquicklyandtowhatextentaproduct’sdemandmightshiftinresponsetohighprices.Acommoditycartelhaslimitedcontroloverpriceifaproductishighlyelastic,meaningconsumersarewillingtoreduceitsconsumptionathigherpricesorcouldswiftlyshifttosubstitutes.Conversely,acommoditycartelmayhavegreatercontroloverpriceifaproductisrelativelyinelastic,meaningconsumershavefewornosubstitutes.PlatinumTheRussianFederationandSouthAfricasignedamemorandumofunderstandingonplatinumgroupmetals(PGMs)attheMarch2013BRICS(Brazil,Russia,India,ChinaandSouthAfrica)summit.Together,theyholdasubstantialshareofthePGMmarket–over80%ofglobalplatinumsupplyandover96%ofglobalPGMreserves–hinderingtheentryofpotentialcompetitors(USGeologicalSurveyandUSDepartmentoftheInterior,2022).Inpractice,however,therearemajorobstaclestothecreationofaPGMcartelsincenoneofthecountrieshasastate-ownedcompanymonopolisingPGMmining.Anyproductioncutswouldrequirethebuy-inofseveralprivatecompanies,includingNorilskNickel,Anglo-AmericanPlatinumandImpalaPlatinum.Further,productioncutsdesignedtoincreasepricescouldleadtojoblossesinthelabour-intensivePGMindustry,whichisthelargestminingemployerinSouthAfrica.8Thealternativeofpurchasingplatinumfromproducersandstoringittosupportpricescouldstraingovernmentfinances(Stoddard,2013).Finally,sustainedhighpriceswouldlikelyadverselyimpactdemandasindustrialuserswouldintensifyeffortstoreduce,reuseorrecyclePGMsincatalystsandotherapplications(Kooroshyetal.,2014).AlthoughtheRussianFederationandSouthAfricareaffirmedtheircommitmenttothe2013memorandumofunderstandingin2018,fewdetailshavesinceemerged.NickelIndonesia,theworld’slargestnickelminer,isconsideringthepotentialestablishmentofanOrganizationofthePetroleumExportingCountries(OPEC)-styleorganisationforcertainbatterymetals,includingnickel,cobaltandmanganese(DempseyandRuehl,2022).Whilethecountryaccountsforalmosthalfoftheglobalnickelproduction,asharelargerthanthatofOPECcountriesinoilproduction,replicatingtheOPECmodelwouldnotbewithoutchallenges.8AccordingtotheMineralsCouncilofSouthAfrica,172159peopleweredirectlyemployedinPGMminingin2022–higherthanthejobsincoal,goldoranyotherminingsector(www.mineralscouncil.org.za/downloads/send/18-facts-and-figures/1996-facts-and-figures-2022-pocketbook).continuednextpage63GeopoliticsoftheEnergyTransformationBOX2.4Prospectsforcartelisationintheplatinum,nickelandlithiummarkets(continued)Forinstance,majornickelproducerssuchasAustralia,CanadaandthePhilippinesarenotsupportiveoftheideaoftheOPEC-styleorganisation(ListiyoriniandHarsono,2022;SerapioJrandLopez,2023).Inaddition,theexistenceofuntappedreservesoutsideofIndonesiapresentsopportunitiesforsupplydiversification.Further,multipleprivatecompanies,notasinglestate-ownedentity,controlIndonesia’snickelmining.9Nationalisationofthecountry’snickelindustrywouldthereforehavefinancialandpoliticalchallengesespeciallyconsideringthatChinesefirmshaveastrongpositioninit.Productheterogeneitycouldbeanotherobstacletocreatinganickelsupplycartel.Nickeloresexistintwotypesofdeposits:sulphideandlaterite.SulphidedepositsaremainlyfoundinAustralia,CanadaandtheRussianFederation,andcontainhigher-gradenickel,whichcanbeprocessedmoreeasilyintoClass1battery-gradenickel.ThelateritedepositsofIndonesiaandthePhilippinescontainlower-gradenickel,whichrequiresadditionalenergy-intensiveprocessingforconversionintobattery-gradenickel(Paraskova,2022).Low-andhigher-gradenickeloresactasimperfectsubstitutesandcompeteindistinctbutrelatedmarkets(Kooroshyetal.,2014).Unlikepetroleum,whichhaslongbeenanunrivalledtransportationfuel,thereareampleopportunitiestoshiftdemandawayfromnickel.Althoughnickel-richcathodeshelda60%shareoftheEVbatterymarketin2022,theshareoflithium-iron-phosphatebatteries,whichdonotrequirenickel,increasedfrom7%in2019to40%inthesameyear(BloombergNEF,2022).Innovationinbatterychemistry,forexample,manganese-richcathodes,andrecyclingcouldfurtherreducethedemandfornickel.LithiumArgentina,BoliviaandChileareintalkstoestablisha“lithiumOPEC”.Collectivelyknownasthelithiumtriangle,thesethreecountriesholdaround65%oftheworld’sknownlithiumresourcesandaccountedforalmost30%oftheglobalproductionin2020(GielenandLyons,2022b).However,therearechallengestotheformationofalithiumcartel.Australia,theworld’slargestlithiumproducerandsecondintermsoflithiumreserves,isunlikelytoparticipateinsuchanendeavour(Mares,2022).Additionally,manycountrieshaveidentifiedsignificantuntappedlithiumreservesandresourcesthroughongoingexploration.Further,likeplatinumandnickel,mostlithiumminingisunderprivatecontrol,oftenbyforeigncompanies.Lithiumisprimarilyminedfrombrines(mainlyinSouthAmericaandChina)andhardrockore,especiallyspodumene,whichisspreadmorewidely(inAustralia,Canadaandelsewhere).EVbatteriesuseeitherlithiumcarbonate(lithium-iron-phosphatebatteries)producedfrombrines,orlithiumhydroxide(nickel-manganese-cobaltbatteries)producedfromhardrockoreorfromlithiumcarbonatethroughchemicalprocessing.Australianproducershaveanadvantagesincetheirspodumeneoreischeaperandeasiertoconvertintolithiumhydroxide,whichbatterymakersincreasinglyprefer(Gielenetal.,2022b;Mares,2022).Finally,lithiumcompoundscanbesubstitutedinbatteries,theprimaryuseoflithium.Sodium,andairmetals,includingzinc,canreplacelithiumwhollyorpartiallyasbatterymaterialsforsomeEVs,althougheverychangecomeswithtrade-offsintermsofcost,performanceandsecurityofsupply(Blakemoreetal.,2022;IRENA,forthcoming).9Forinstance,fourofthefivelargestnickelminesinIndonesiaareownedbytheprivate,foreigncompaniesVale(Brazil),theTsingshanHoldingGroup(China)andtheSolwayInvestmentGroup(Switzerland)(www.mining-technology.com/marketdata/five-largest-nickel-mines-indonesia-2021/).64CRITICALMATERIALS456PoliticalinstabilityandsocialunrestPoliticalorsocialunrestinproducingcountries,includingcoups,labourstrikesandcivilwars,coulddisruptmineralsupply.ThemajorityofmineralsareextractedincountriescategorisedaseitherextremelyunstableorunstableintheWorldwideGovernanceIndicators,whichmeasurethequalityofgovernanceacrosssixmajordimensions,includingabsenceofviolence,controlofcorruptionandruleoflaw(seeFigure2.14).Examplesofsuchsupply-disruptinginstabilityarenumerous.Forinstance,in1978,theAngolancivilwarspilledovertoZaire’sShabaprovince(nowKatangaintheDemocraticRepublicofCongo),triggeringasevenfoldcobaltpricesurgeinatwo-yearperiodduetofearsofglobalcobaltshortages(Gulley,2022).This“cobaltcrisis”promptedashiftfromcobalttorareearthsformanufacturingpermanentmagnets,inawayforeshadowingthe“rareearthcrisis”of2010.AnotherexampleisMyanmar,wheretheminingsectorsawprotestsandstrikeseruptfollowingacoupinFebruary2021.Theseinstabilitiescausedan80%declineinexportearningsfrommineralsforthecountry,whichisamajorrareearthproducer(Frontier,2022).AfurtherexampleisGuinea,whichwitnessedpoliticalcrisisin2021,causingsupplydisruptionsanduncertaintyintheglobalaluminiummarketgiventhatitistheworld’slargestbauxiteproducer.Criticalmaterialsupplycanalsobedisruptedduetolabourstrikes.LabourstrikesintheSouthAfricanplatinumsectorsignificantlydisruptedglobalsupplychains,withonemajorstrikein2014lastingfivemonthsandcausinga40%dropinglobalplatinumproduction(Stoddard,2014).Chile,theworld’slargestcopperproducer,hasalsowitnessedproductiondisruptionsandsupplyshortagesduetolabourstrikes,ofwhichamajoronein2017lasted44days,causingasignificantdropinglobalcopperproduction(Iturrieta,2017).InPeru,strikesbycoppermineworkershaverecentlyledtoproductionshutdownsanddelays,causingsupplyshortagesandpricevolatilityintheglobalcoppermarket(Attwood,2023).Theselabourstrikesoftenhighlighttheworkers’legitimateconcernsaboutpoorworkingconditions(seeChapter3).FIGURE2.14Politicalstabilityofmineralproducingcountries,2020Productionofmineralrawmaterials(t)18000Stable1500012000Fair9000UnstableExtremelyunstable600030000200020201996Source:(WorldMiningData,2022).65GeopoliticsoftheEnergyTransformation56MarketvolatilityandmanipulationCriticalmaterialmarkets,likeothercommoditymarkets,demonstrateacyclicalnature,exhibitingaclassicboom-bustpattern.Thisispartlyduetotheextendedleadtimesrequiredtoestablishnewmines,causingasupply-demandgap,especiallyduringperiodsofrapiddemandgrowth.Formajornewgreenfieldmines,advancingfromresourcediscoverytoactualproductiontypicallytakesseventotenyears.Thismeansthattechnologicaladvancementscantriggerresourcedemandsmuchfasterthanproducerscanraisesupplies,resultinginperiodicpricesurges.Thisdynamiciscompoundedbythefactthatcriticalmineralsareoftenby-productsofotherminedbasemetals.Forexample,cobaltistypicallyaby-productofnickelandcoppermining,nearlyallindiumisaby-productofzincminingandmostrareearthelementsareby-productsofironoremining.Theproductionoftheseminormetalsisthereforestronglyinfluencedbytheproductionofthebasemetals,whichoftengeneratemorerevenues.Forexample,investmentsinnewcobaltprojectsareoftenlinkedmoretomarketdynamicsforcopperthancobalt.Inotherwords,ahighercobaltpricedoesnotnecessarilyincentivisecopperminersenoughtoproducemoreofit.Supplyresponsesformetalssuchascobalt,indiumandtelluriumareindirectlyinfluencedbypriceincreasesduetothepeculiarnatureofby-productproduction(Nassaretal.,2015).Inadditiontosupplyanddemanddynamics,mineralandmetalmarketsarealsopronetomarketmanipulation,whichcanexacerbatepricevolatilityandsupplychaindisruptions.Between2000and2010,therewereatleast15caseswhereantitrustauthoritiesuncoveredandpenalisedattemptstoforminternationalprivatecartelsinminingandprimarymetals(Connor,2012).Consideringmineralmarketsaresmallwithrelativelylittleliquidity,thereareampleopportunitiesfortraderstodevelopmarket-corneringpositionsthatcanconstrictsupplyandcausepricespikes(HendrixandBazilian,2022).Inthepast,therewerenumerousattemptstomanagethemarketandinfluenceprices,creatingconcernsovercorporatemarketmanipulation.Forinstance,inthe1985tincrisis,thetinmarketcollapsedwhenagroupoftraders,whotriedtocornerthemarket,couldnotfindbuyersfortheirlargetinholdingsduetotheunprecedentedpricesurges(AndersonandGilbert,1988).Similarly,inthe1996Sumitomocopperaffair,copperpricesrosesharplyafterasingletraderatSumitomoCorporationaccumulatedasignificantamountofcopperfuturescontracts.Sumitomoandothermarketparticipantssufferedheavylosseswhenthetrader’spositionswererevealed,causingamarketcrash(Kozinn,2000).Morerecently,theLMEsuspendednickeltradinginMarch2022afterpricessurgedbyover250%injusttwodays.Thepricesurgewasattributedtoashortsqueeze,wheretraderswhohadbetagainstthepriceofnickelwereforcedtobuybacktheirpositionsathigherprices,drivingthepriceevenhigher(Farchyetal.,2022;OliverWyman,2023).Overayearlater,thenickelmarketremainsunstable,withtradingvolumesfallingsharplyandpricesexperiencingfrequentuncontrolledswings(CangandFarchy,2023).Theseincidentshavepromptedfinancialregulatorsandexchangestolaunchprobestoincreasemarketoversight,transparencyandriskmanagement.Forexample,theLMEhasintroducednewrulestopreventshortsqueezeandotherformsofmarketmanipulation.Theseinclude,forexample,limitsontheamountofnickelthatcanbedeliveredonfuturescontracts.However,theeffectivenessoftheseeffortsinpreventingmarketmanipulationremainstobeseen.66CRITICALMATERIALS2.3THERACEFORCRITICALMATERIALSANDTHEPOTENTIALFORCONFLICTMiningandinternationalconflictAccesstonaturalresourcesisakeyaspectofstrategicinterestformanycountriesandisreflectedintheirforeignpolicydoctrinesandactions.Thepursuitofcriticalmaterialshasbeenamajormotiveforstatesseekingterritorialexpansion.Now,theglobaldemandforcriticalmaterialscouldleadtoincreasedcompetitionespeciallyindeposit-richareas,potentiallysparkinggeopoliticaltensionsintheArctic,outerspaceandthedeepsea,ascountriesscrambletosecureaccesstotheseresources(Fox,2022).TheArcticisknowntohavevastreservesofcriticalmaterialssuchasnickel,zincandrareearths(Boydetal.,2016).Miningisnotanewactivityintheregion,whichishometoseveralwell-establishedmines,suchastheRedDogzincmineinAlaskaandthePolarDivisionnickelminesinArcticRussia(Loginovaetal.,2023).Newdepositsarebeingdiscovered.InJanuary2023,theSwedishminingcompanyLKABannouncedthediscoveryofthelargestknownrareearthelementsdepositinEurope.TherapidmeltingoftheArcticseaice,duetotheregionwarmingattwicetheglobalaveragerate,hasexposedpreviouslyinaccessibleresources,triggeringheightenedcompetitionamongcountries(IPCC,2021;PaulTaylor,2020).10Whiletheregionhasseenincreasedmilitarypresence,mostscholarsseealowlikelihoodofconflictoverresources(Tunsjø,2020).Nonetheless,theregion’smineralbountiescontributetoitsstrategicimportance.Outerspaceisalsobecominganewfrontierintheraceforcriticalmaterials.Asteroidsandothercelestialbodiesarebelievedtobeextremelyrichinraremetals,includingplatinumandgold.Thishasspurredincreasedinvestmentinspaceexplorationandmining,withcountriessuchasChina,theRussianFederationandtheUnitedStatesvyingforafootholdinthisemergingindustry.NASA’sOSIRIS-RExmission,forinstance,gatheredasmallsamplefromasteroidBennuandwillreturntoEarthon24September2023(NASA,2023).Arapidtake-offofcommercialspaceminingis,however,unlikelyduetounresolvedquestionsaboutitscost-effectiveness,technicalfeasibility,legalgovernance,andenvironmentalandsafetyimplications.Theraceformineralscouldalsotriggergeopoliticalconflictsoveroceanseabeds,whichholdsomeofthelargestestimatedmineraldepositsontheplanet.Somecountrieshavealreadyinitiateddeep-seaexplorationwithintheirexclusiveeconomiczonesorextendedcontinentalshelves.Norway,forinstance,isplanningtoopenanareaofoceannearlythesizeofGermanytodeep-seamining(BryanandMilne,2023).However,theseareasoftenoverlapbetweenneighbouringcountries,triggeringdisputesoverresourceownershipandextractionrights.Deep-seamininginwatersbeyondnationaljurisdictionisregulatedbytheInternationalSeabedAuthority,createdbytheUnitedNationsConventionontheLawoftheSea.However,aregulatoryframeworkremainsincomplete,andmembercountrieshaveopposingviewsonhowtoproceed(seeBox2.5).10Allland,internalwaters,territorialseasandexclusiveeconomiczonesintheArcticareunderthejurisdictionofoneoftheeightArcticcoastalstates:Canada,Denmark,Finland,Iceland,Norway,theRussianFederation,SwedenandtheUnitedStates.67GeopoliticsoftheEnergyTransformationBOX2.5Governingdeep-seaminingAgrowingnumberofcountriesandcorporationsareshowinginterestindeep-seaminingforcriticalmaterials,thatis,extractingmineralresourcesfromtheoceanfloor.Todate,22stateandprivatecontractorshold31miningexplorationcontractstosearchforpolymetallicnodules,polymetallicsulphidesandcobalt-richferromanganesecrusts(Figure2.15)(InternationalSeabedAuthority,2023),whichareextremelyrichinvaluablemetalswithhigh-gradeore,suchascobalt,copperandmanganese.Deep-seaminingraisesconcernsregardingenvironmentalimpacts,includingmarinehabitatdestructionandthereleaseoftoxicchemicals.Deep-seaecosystemsarecrucialforglobalclimateregulationandformanimportantpartofoceanicfoodwebs(EnvironmentJusticeFoundation,2023).Whilesomeproponentsofdeep-seaminingarguethatitismoreeco-friendlythanland-basedmining,othersarguethatitisnotsustainableandcouldcauseirreversibleenvironmentaldamage(Levinetal.,2020).ThishaspromptedFIGURE2.15Geographicaldistributionofthethreetypesofmineraldepositstargetedbydeep-seaminingPolymetallicnodulesCobalt-richcrustsPolymetallicsulphides/ventsExclusiveeconomiczonesClarionClippertonZoneAtlanticOceanSolwara1PaciﬁcOceanDISCOLIndianOceanSource:(Milleretal.,2018).Disclaimer:Thismapisprovidedforillustrationpurposesonly.BoundariesandnamesshownonthismapdonotimplyanyendorsementoracceptancebyIRENA.68©RobertSzymanskishutterstock.comCRITICALMATERIALSBOX2.5Governingdeep-seamining(continued)severalcallsforamoratoriumondeep-seamining.InSeptember2021,theInternationalUnionforConservationofNature’sWorldConservationCongressadoptedamotioncallingforamoratoriumondeep-seamining(Resolution122,IUCN,2021).Severalcountriesalsohavecalledforamoratoriumorprecautionarypauseondeep-seaminingininternationalwaters(DeepSeaConservationCoalition,2022).TheEuropeanCommissionwantsdeep-seaminingtobeprohibiteduntil“scientificgapsareproperlyfilled,noharmfuleffectsarisefromminingandthemarineenvironmentiseffectivelyprotected”(Directorate-GeneralforMaritimeAffairsandFisheries,2022).Deep-seaminingisregulatedbytheInternationalSeabedAuthority(ISA),anintergovernmentalbodyof167memberstatesandtheEuropeanUnionestablishedunderthe1982UnitedNationsConventionontheLawoftheSea.TheISAhastheexclusiverighttoissueexplorationandexploitationcontractsformineralsintheinternationalseabed,althoughitisalsorequiredtoensureprotectionofthemarineenvironmentfromthepotentialharmfulimpactsofdeep-seabed-relatedactivities.WhiletheISAhasdevelopedregulationsgoverningprospectingandexplorationactivitiesforminerals,itisstillworkingonamorecomprehensiveminingcodethatwouldcovercommercial-scaleexploitationoftheseresources.InJuly2021,thePacificIslandnationofNaurutriggeredthe“two-yearrule”,whichgavetheISAtwoyearstofinaliserulesandregulationsfordeep-seamining.ThisexpeditedISA’seffortstocompleteitsminingcodebeforethedeadlinestipulatedinNauru’ssubmission,9July2023,potentiallyenablingtheapprovalofcommercialminingapplicationsasearlyasmid-2023.69GeopoliticsoftheEnergyTransformation©mehmetalipoyrazshutterstock.comMiningandlocalconflictTheraceformineralscanexacerbateorcontributetolocalarmedconflictinmultipleways.Incountrieswithweakgovernanceandpoliticalinstability,mineralextractioncanbelinkedtolocalgrievances,conflictandhumanrightsabuse(ChurchandCrawford,2018).Thishasbeenobservedwithcertainotherhigh-valueresources,suchasdiamonds,goldandtimber.Infact,theUnitedNationsEnvironmentProgrammeestimatesthatatleast40%ofallintrastateconflictsinthepast60yearscanbelinkedtonaturalresources(UNEP,2009).Mineralrichescancontributetoconflictinseveralways(UNEP,2009).Forexample,mineralexploitationcanstirconflictoverthefairdistributionofbenefitsandcostsamongthelocalpopulation.Miningwealthcanalsobeexploitedtosustainlocalconflicts,andinareaswithweakstateauthority,itcanhelparmedgroupsfundtheiractivitiesbyexploitinggreenmineraldeposits,leadingtoincreasedviolenceandinstability.Thisisespeciallytrueinregionswithahistoryofconflictorwhereethnicorreligioustensionsexist.70©MatthieuCattinshutterstock.comCRITICALMATERIALSInColombia,forexample,RevolutionaryArmedForcesofColombia(FARC)rebels,whohavebeenfightinganinsurgencysince1987,longfinancedpartoftheiroperationsbyproducingtungstenfromthedepthsoftheAmazonianjungle.Similarly,intheDemocraticRepublicofCongo,rebelgangsareestimatedtomakemillionsfromillegallyproducingtungsten,tin,tantalumandgold(alsoreferredtoas“3TG”).Itisestimatedthatapproximately21%oftheworld’stantalumsupplyin2011camefromconflictedregions(Abraham,2017).Certainmineralresourcesarelesslikelytobeinvolvedinlocalconflictsthanothers.Forexample,mineralssuchasbauxite,lithiumandgraphiteareprofitableonlywhenextractedonalargeindustrialscale.Also,bauxiteandgraphitehavelowvalue-to-weightratios,makingthemlessattractivetonon-statearmedgroups,suchasrebelarmiesandmilitias,whichexploitvaluableresources.Further,althoughartisanalminersmineasubstantialportionofcobalt,theartisanalcobaltminesintheDemocraticRepublicofCongohavenotyetbeentargetsforarmedactors,despitetheprevalenceofconflictaroundtheartisanalgoldandotherconflictmineralsinEasternCongo(Hendrix,2022).71GeopoliticsoftheEnergyTransformationCHAPTER3HUMANSECURITYANDGEOPOLITICALSTABILITYlabourenvironmenthumansecuritymineralsdevelopingcountrieswaterstressnickellandscapecobaltlithiumminingriskgreenhousegasemissionslandlosslabourindigenouscommunitiesreliablevaluecreationconflictsstockpilinegxtrarigcthiotsnsCRITICALMATERIALSHIGHLIGHTSnTheminingindustryhas,attimes,causedharmtoworkers,indigenouscommunitiesandtheenvironment,raisingconcernsthattheenergytransitionwillexacerbatetheseimpacts.nTheminingofcriticalmaterialshasbeenassociatedwithlandloss,displacementandhumanrightsabusesagainstindigenouscommunities.Goingforward,miningprojectsmustincluderobustandproactivecommunityengagement,considering80%oflithiumprojectsandmorethanhalfofnickel,copperandzincprojectsarelocatedinterritoriesbelongingtoindigenouspeoples.nPoorlabourconditionshavebeenpersistentintheglobalminingindustry,whichlacksadequatesocialprotectionandlabourlaws.Thesechallengesarefurtheramplifiedbyartisanalandsmall-scalemining,whichischaracterisedbyhazardousworkingconditions,lowwagesandalackofsocialprotection.Afairandsustainablegreeneconomytransitionthusrequiresaddressingthesechallenges.nThemetalsandminingsectorisresponsiblefor10%ofglobalgreenhousegasemissions,withaluminiumandsteelindustriesbeinglargecontributors.Despitetheirmineralintensity,renewableenergytechnologiesemitonlyafractionofthegreenhousegasesreleasedbyfossilfueltechnologies.Increasinginvestmentsinenergyefficiencyandshiftingtorenewableelectricitycanreduceemissionsfromminingandprocessing.nMiningactivitiescanhavedetrimentaleffectsonlandscapes,forexample,deforestation,soilerosionandpollution.Mitigatingtheseimpactsrequiresimplementingrobustenvironmentalmanagementpracticesandadoptingsustainableminingapproaches.nCriticalmaterialextractioncanexacerbatewaterstress.Abouthalfofglobalcopperandlithiumproduction,forexample,isinhighlyaridareas.Encouragingwatersavingsatminesitesby,forexample,increasingwaterreuseandrecycling,theuseofdesalinatedwatersupplyandresponsiblewaterdischargeofappropriatequalityareessentialtominimiseimpactsonlocalpopulationsandecosystems.nIfmanagedresponsibly,theenergytransitioncanpromoteinclusivityandstabilitybyincreasingaccesstoaffordableandreliableenergy,catalysingeconomicgrowthandimprovingsocialandenvironmentaloutcomes.Internationalco-operationisessentialtoensureasustainable,rights-basedapproachtotheenergytransitionthatbenefitsallstakeholders.nFordevelopingcountries,thegrowingdemandforcriticalmaterialsbringsrisksbutpotentiallyevengreaterrewards.Combatingcorruptionandmultinationaltaxavoidanceintheextractivesectorisessentialtoensureitsmaximalcontributiontoasuccessfulenergytransition,whichcanhelpdevelopingnationsmoveupthevaluechain,attractinghigher-marginactivitiessuchasmineralprocessingandavoidingrelianceonprimaryoreexports.73GeopoliticsoftheEnergyTransformationTheconceptof“humansecurity”canhelpbroadenthetraditionalsecurityagendatoincludenon-traditionalthreatssuchasclimatechange,energyinsecurity,poverty,migrationandpollution,whichcanindirectlyordirectlyaffectpeaceandstabilitybothwithinandbetweencountries.Understandingthegeopoliticalrisksrelatedtothedevelopmentofcriticalmaterialsfortheenergytransitionthereforerequiresacomprehensiveunderstandingoftheassociatedthreatsandvulnerabilities(Table3.1).TABLE3.1Selectedsocial,environmentalandgovernancerisksassociatedwithcriticalmaterialsRiskAreasDescriptionSolutionsSocialIndigenousMininghasbeenassociatedwithlandFacilitaterobustandproactivecommunitiesloss,displacementandhumanrightscommunityengagementthroughoutabusesagainstindigenouscommunities.theentireprojectcycleLabourPoorlabourconditionshavebeenImplementstringentsafetyconditionspersistentintheglobalminingregulationsandensurefairwagesandindustry,whichlacksadequatesocialsocialprotectionforworkersprotectionandlabourlaws.EnvironmentalArtisanalASMhasbeenlinkedtohazardousImproveASMoversight,engageinandsmall-conditions,childlabour,lowwagesdialoguewithASMcommunitiesscaleminingandalackofsocialprotection.andofferalternativelivelihood(ASM)opportunitiesThemetalsandminingsectorisClimateresponsiblefor10%oftheglobalIncreaseenergyefficiencyinvestments,changegreenhousegasemissions.shifttocleanerfuelsandrenewables,andfostercircularityandrecyclingBiodiversityMiningactivitiescanharmbiodiversityIntegratebiodiversityconsiderationsthroughdeforestation,habitatlossandintominingpracticesthroughsoilerosion.sustainableplanningandresourcemanagementWasteandMiningwastecanposehazardsforAdoptstringentwastereduction,pollutionlocalenvironmentsandcommunitiesifmanagement,andreclamationandnotmanagedproperly.rehabilitationprogrammesWaterstressMiningandprocessinghavesignificantEncouragewatersaving,reuseandwaterrequirementsandposedesalination,andresponsiblewatercontaminationrisks.dischargeGovernanceCorruptionCorruptionriskscanariseinmanyImprovetransparency,accountability,stagesofminingprojects,includingpublicparticipationandgovernancelicensingandrevenuecollection.frameworksInadequateTaxavoidanceandinadequatetaxStrengthenfiscalframeworks,taxframeworkscanleadtosubstantialadministrativecapacitiesandcollectionrevenuelossesforhostgovernments.internationaltaxco-operationRevenueMineralrevenuesarenotalwaysDirectmineralrentstowardsindustrialmanagementallocatedinthemosteffectivewaytransformationandeconomictosupporteconomicgrowthanddiversificationindustrialisation.74CRITICALMATERIALS©istanbulphotosshutterstock.comTheextractiveindustryhascontributedtohumaninsecurityinthepast(UnitedNationsDevelopmentProgramme(UNDP)etal.,2016),raisingconcernsthattheextractionofenergytransitionmineralsmayexacerbatethistrend.Incertaincases,miningofcriticalmaterials,suchascopper,lithium,nickelandcobalt,hascausedseriousharmtoworkers,indigenouscommunitiesandtheenvironment.Therefore,itisessentialthatthesematerialsareextractedandprocessedresponsibly,givingdueconsiderationtotheirimpactonlocalcommunitiesandtheenvironment.Ifmanagedwell,theenergytransitioncouldbeagamechangerforinclusivityandstability.Byexpandingaccesstoreliableandaffordableenergy,thetransitioncancatalyseeconomicgrowth,alleviatepoverty,andenhancesocialandenvironmentaloutcomes(IRENA,2023a).Theneedtoexpandanddiversifycriticalmaterialsupplychainsalsooffersanopportunitytorewritethelegacyoftheextractiveindustries,whileopeningopportunitiesforlocalvaluecreationinmineral-richdevelopingcountries.Internationalco-operationcanensureanenergytransitionguidedbytheprinciplesofsustainability,humanrightsandsocialjusticesothatthebenefitscanbesharedbyall.Thischapterdiscussessomeofthemostsalienthumansecurityrisksassociatedwithmineraldevelopment,includingtheirimpactonindigenouscommunities,humanrights,labourconditions,climatechange,landuseandwatersecurity.Theserisksvaryacrosscriticalmaterials,withpronouncedenvironmentalandsocialimplicationslinkedtospecificminerals.CobaltsourcedfromtheDemocraticRepublicofCongo,forinstance,hasbeenlinkedtogravehumanrightsviolations.Nickelproduction,especiallyfromlateritedepositsprevalentinIndonesiaandthePhilippines,posessignificantchallengesconcerningemissionsanddeforestation.Further,lithiumextractionfrombrinesinLatinAmericaraisessubstantialconcernsoverwaterstress.75GeopoliticsoftheEnergyTransformation©NickFoxshutterstock.com3.1ECONOMICANDSOCIALTENSIONSIndigenouscommunitiesandhumanrightsMiningdisplacesindigenouscommunitiesandcanleadtolossoflandandnaturalresourcesthatareessentialtotheirlivelihoodsandculturalpractices.Displacementofthesecommunitiescausesthemtoloseaccesstotheirtraditionalterritories,potentiallydisruptingtheirculturalpracticesandsocialstructures,and,insomecases,hasinvolvedtheforcedrelocationofentirecommunities(Ali,2009).Accordingtoarecentsurvey,54%ofenergytransitionmineralsarelocatedonornearindigenouspeoples’land(Owenetal.,2022).11Theproportionvariesbymineral,withover80%oflithiumprojectsandmorethanhalfofnickel,copperandzincprojectslocatedinindigenouspeoples’territories.Moreover,miningprojectsintheseareasareoftenlocatedinhighlyvulnerablesettings.Overathirdoftheenergytransitionmineralprojectsarelocatedonornearindigenousorpeasantlandfacingacombinationofthreecontextualrisks–waterrisk,conflictandfoodinsecurity(Figure3.1)–whoseco-occurrenceisbyfarthehighestforplatinum,followedbymolybdenum(76%)andgraphite(74%).Ninety-onepercentofplatinumreservesandresourcesarelocatedonornearindigenousorpeasantlandfacingthesethreecontextualrisks.11Note:Thearticleconsideredagroupof30energytransitionmetalsandminerals.76CRITICALMATERIALSFIGURE3.1Co-occurrenceofwaterrisk,conflictandfoodinsecurityforcriticalmineralmi-ningprojectslocatedonornearindigenousorrurallandBauxiteBAURareearthelementsREEGraphiteTungstenLithiumCobaltMolybdenumSilver0PlatinumTinManganeseNickel10LeadZincVanadium2030405060708090100IronOreCopper(%)PercentageofreservesandresourcesWaterRiskConﬂictFoodinsecuritySource:(Owenetal.,2022).©PhilippEdlershutterstock.com77GeopoliticsoftheEnergyTransformationTheUnitedNationsDeclarationontheRightsofIndigenousPeoples,adoptedbytheGeneralAssemblyin2007,setsoutaninternationalframeworkfortheprotectionandpromotionofindigenouspeoples’rights,includingtheirrighttofree,priorandinformedconsent(UnitedNations,2007).However,despitethisframework,theminingofmineralscriticaltotheenergytransitioncontinuestofaceallegationsofhumanrightsabuse.AccordingtotheBusinessandHumanRightsResearchCentre–anon-governmentalorganisationmonitoring103firmsengagedinminingsixmineralsimportanttothetransition–495allegationsofhumanrightsviolationswerereportedin2010-2021.Theallegationsincludedevelopmentonindigenouspeoples’landwithouttheirconsent,desecrationofsacredsites,increasedriskofviolenceagainstindigenouswomenandenvironmentalthreatstothesubsistenceresourcesofcommunitiesalreadyfacingclimatechangeimpacts(Business&HumanRightsCentre,2022).TheindigenousstruggleagainsttheFénixnickelmineinGuatemalaillustratesseveraloftheseissues(seeBox3.1).BOX3.1IndigenousrightsandresistanceagainsttheFénixnickelmineinGuatemalaGuatemala’sFénixnickelmine(ownedbyasubsidiaryoftheSwisscompanySolwayInvestmentGroup)hasbeenatthecentreofasocialstruggleformanyyears.Indigenouscampaignersaccusedthemineofcausingsevereenvironmentalandsocialimpactsonnearbycommunities,andthecompanyhasbeencriticisedforitslackofconsultationwithlocalindigenouscommunitiesandtheMayaQ’eqchi’fishermen,andfornotrespectingtheirrightstolandandresources(UnitedNations,2011).Theminefacedprotestsfirstin2014,whenlocalcommunitiesaccusedthecompanyofcontaminatingnearbyriversaswellasLakeIzabal,thecountry’slargestlake.Althoughthecompanydeniedtheallegations,tensionscontinuedtorise,andthesituationescalatedin2017,whenpoliceandsecurityforcesweredeployedtosuppressprotests.Manywereinjuredintheseclashesandoneprotesterlosthislife.Theincidentdrewinternationalattentionandledtocallstoholdthecompanyaccountableforitsactions(Cuffe,2022).In2019,theGuatemalangovernmentsuspendedoperationsattheFénixmine,citingconcernsaboutthecompany’sfailuretocomplywithenvironmentalregulations.Thecompanychallengedthedecision,allowingmineoperationstocontinueamidthelegalbattle.In2021,theGuatemalanSupremeCourtruledthattheminecouldresumeoperations,althoughlocalcommunitiesandhumanrightsorganisations,whichfearfurtherharmtotheenvironmentandhumanrights,haveopposedthedecision(Daniels,2022).TheFénixmineremainsacontentiousissue,highlightingtheneedforgreateraccountabilityandrespectforindigenouspeoples’rightsintheminingindustry.78©Dendenalshutterstock.com©NanangSugishutterstock.comCRITICALMATERIALS©GillesPaireshutterstock.comMineralandmetalextractionhasbeencreatingsimilarsituationsinindigenousterritorieselsewhere.Forexample,inOntario,Canada,criticalmineralextractionhasraisedconcernsaboutitspotentialimpactonthetraditionalterritoriesoftheFirstNations(Dufour,2023).Anotherexamplecanbefoundin2020,whenRioTintoattractedsignificantpubliccriticismforlegallydemolishingtwoancientandsacredcavesintheJuukanGorgeinWesternAustralia’sPilbararegionforexpandinganironoremine(BurtonandBarrett,2020).Thesechallengesunderscoretheutmostimportanceofensuringeffectivecommunityengagementwithintheminingsector,whichrequirestheequitablerepresentationandinvolvementoflocalcommunitiesfromtheinitialprojectplanningstages,andensuringtheirvoicesareheardandthattheirconcernsaddressedthroughouttheprojectlifecycle.Also,miningcompaniesshouldensurethatlocalcommunitiesandindigenouspeoplesbenefitfromminingrevenues,forexample,throughinvestmentinlocalinfrastructureandcommunitydevelopment.Byactivelybuildingtrustandcultivatingstrongrelationshipswithlocalcommunities,miningcorporationsnotonlypromotemutualprosperitybutalsoestablishasolidfoundationoftrustwithinvestorsandpolicymakers(EnergyTransitionsCommission,2023;ETC,2023).LabourconditionsandemploymentTheminingindustryisplaguedbypoorlabourandworkingconditions.Manycountriesrichinmineralreserveslackrobustsocialprotectionandlabourlaws.Thisleadstoinadequatewagesandcreatessubstandardworkingconditions,indicatingthattheextractionofenergytransitionmineralscouldpotentiallycontributetolabourexploitationandhumanrightsviolations.Threatstolabourconditionsareamplifiedthroughthewidespreadpracticeofartisanalandsmall-scalemining(ASM),whichisofteninformalandunregulated,withworkersfrequentlyworkingunderhazardousconditionsonlowwages,withnobasicsocialprotection.ASMiscommonintheminingofmineralssuchascobalt,butalsoassociatedwithexploitativelabourpractices,childlabour,pollution(anditsassociatedhealthimpacts)andenvironmentaldegradation.AjustandsustainableenergytransitionrequiresaddressingthechallengesassociatedwithASM(seeBox3.2).79GeopoliticsoftheEnergyTransformationBOX3.2Artisanalandsmall-scaleminingWorldwide,almost45millionpeopleacross80countriesareengageddirectlyinartisanalandsmall-scalemining(ASM),12withanother134millionindirectlyinvolvedinindustriessupportingthesector(WorldBank,2020a).ThenumberofpeopleengagedinASMhasincreasedmorethansevenfoldsincetheearly1990s(Figure3.2andFigure3.3).ASM’sgrowthoverthepasttwodecadeshasbeendueto,amongothers,feweralternativelivelihoodsandthegrowingmineraldemandfromlow-carbonandcleanenergytechnologies(FlorenceBascomGeoscienceCenter,2019;WorldBank,2020a).Forexample,thesectorproduces18–30%oftheworld’scobalt,akeybatterymetalpoweringtheglobalcleanenergytransition(OECD,2019).Otherenergy-transition-relevantmineralsminedthroughASMincluderareearthelementsminedinMyanmarandcopperminedinPeruandtheDemocraticRepublicofCongo(Awng,2022;BangkokPost,2021).EventhoughASMoftenreducespoverty,increasesnationalincomeandcontributestoexportearningsfordevelopingcountries(Hilson,2002),itfacesseveralchallenges(givenbelow),whichmustbeaddressed.nHealthandsafetyconcerns:ASMischaracterisedbyalackofregardtominers’occupationalhealthandsafety.ASMminersareexposedtophysicalandtoxichazardsandareatagreaterriskofinfectiousdiseasesandcancer,makingitoneofthemostdangerousprofessions(Landriganetal.,2022).nLabourandhumanrightsabuse,includingchildlabour:TheASMsectorisnotformalisedandisinadequatelyregulated,causingseveralchallengesforitsminers,fromlackofappropriatesafetyequipmentandfaultymachinery(Casey,2019)tolowdailywages(Pattinson,2021).Childlabourisamajorchallengeofthislow-cost,low-techandlabour-intensiveindustry.CobaltminingemployschildrenasyoungastenyearsondailywagesrangingbetweenUSD3.50andUSD10fortheriskyandarduoustasksofdiggingunderground,carryingheavysacksandwashingtheextractedcobaltintheriver(Fleming,2018).FIGURE3.2NumberofpeopleengagedinASM(inmillions)NumberofpeopleworkinginASM(inmillions)50(2020WorldBank)44.75(2018IGF)40.540(IIED2013)30.0302015.0(ILO1999)13.0(EuropeanCommission2012)106.0(UnitedNations1993)01990199520002005201020152020continuednextpageSource:(DELVE,2023).Note:ASM=artisanalandsmall-scalemining.12TheOrganisationforEconomicCo-operationandDevelopmentdefinesASMas“formalorinformalminingoperationswithpredominantlysimplifiedformsofexploration,extraction,processing,andtransportation”.ASMtypicallyrequireslesscapitalandusestechnologythatneedssubstantiallabour.80CRITICALMATERIALSBOX3.2Artisanalandsmall-scalemining(continued)nEnvironmentaldegradation:ASMminingisfrequentlyassociatedwithsubstantialenvironmentaldegradation.Ingeneral,itadverselyimpactswaterandsoilresourceswhenminingeffluentsaredischargedintotheenvironmentwithoutpropertreatment(Gyamfietal.,2019).Besidesexacerbatingpollution,ASMactivitiesalsocausedeforestation,threateninglocalecosystemsandecosystemservices(ServirGlobal,2020).nEconomiclosses:LossoftaxrevenuesduetoillegalminingandtradingremainsachallengefortheASMsector(Noetstaller,1995).Furthermore,reducedfiscalrevenueshavetheconsequenceofrestrictinggovernments'capacitiestocarryoutregulatorydutiesandsustainingunregulatedminingpractices.(Tarras-Wahlberg,2002).nArmedconflict:ThelackofaformalstructureandthewidegeographicalreachofASMcanresultintheextraction,tradeandsaleofcommoditiesviaunofficialchannels.Thiscouldpotentiallyleadtocriminalorterroristorganisationsbeingfundedthroughtheseactivities,increasingtheriskofconflict,violenceandterrorismescalationwithincountries,whichcouldalsoimpacttheirinteractions(ScienceforaChangingWorld,2022).Inrecentyears,severalgovernmentsattemptedtointroduceASMreforms,ofwhichsomehaveresultedintheunintendedeffectofminersoperatingillegally.Forexample,inSub-SaharanAfrica,minersresortedtoillegalartisanalminingafterregularisationoftheregion’sinformalsmall-scaleminingsectorresultedinlongbureaucraticprocedurestoobtaintherequiredlicenses(MohammedBanchirigah,2006).Further,theformalisationofartisanalminingisnotwithoutchallengesasitrequireslegislativechanges,hands-ontrainingofartisanalandsmall-scaleminers,andcapitalinvestmentinthesector(VeigaandMarshall,2019).Thesectorwillthereforeneedabottom-upapproachtopolicymakingthatfostersaconduciveclimateforASMactivities(MaconachieandHilson,2011).FIGURE3.3Top10countriesbynumberofpeopleengagedinASM(inmillions)India159ChinaIndonesia3.6DemocraticRepublicofCongo21.26Ethiopia1.11Ghana11BurkinaFaso1ZimbabweSudanTanzania03691215NumberofpeopleworkinginASM(inmillions)Source:(DELVE,2023).Note:ASM=artisanalandsmall-scalemining.81GeopoliticsoftheEnergyTransformation©NadaBshutterstock.com©MarkAgnorshutterstock.comNotallminingofenergytransitionmineralsisassociatedwithpoorlabourconditions.Insomecases,miningoperationsmaybenefiteconomicallymarginalisedregionsbyprovidingmuch-neededemploymentopportunities.Forexample,theconstructionofnewminesandprocessingfacilitiesmaycreatejobsincommunitiesaffectedbydeindustrialisationoreconomicdownturns.In2021,theUSDepartmentofEnergyawardedUSD19millionforinitiativestoproducerareearthelementsandothercriticalmaterialsinfossil-fuel-dependentcommunities,includingtheAppalachianregion,whichhadbeenhithardbythecoalindustrydownturn(USDOE,2021).Themovetonet-zeroemissionspresentsasignificantchallengetotheminingindustryanddependentcommunities.Whilecoaldominatestheindustryintermsofvolumeandvalue,itsdeclineisinevitable.Bycontrast,thedemandforenergytransitionmineralssuchascobalt,lithiumandnickelcouldgrow.Whilethesemineralsmaynotfullyreplacecoalearnings,theycanhelpoffsetlossesforminingcompanies,allowingthemtoadjusttheirportfoliosandallocatecapitalaccordingly.However,forcoalworkersandcommunities,thetransitionwillbeviableonlyifmineraldepositsarenearby.82CRITICALMATERIALS3.2CLIMATE,LANDANDWATERSECURITYClimatechangeTheenergytransitionisacrucialresponsetothethreatofclimatechange,whichcouldpotentiallymultiplythreatstogeopoliticalstability.Atthesametime,themetalsandminingsectorisresponsiblefor10%oftheglobalgreenhousegasemissions,ofwhich7%isduetosteelproduction,2%isduetoaluminiumproductionandtheremainderisduetotheproductionoftheothermetals(KULeuven,2022)–whichincludesemissionsfromtheminingandprocessingofcriticalmaterials.13Formostmetals,smeltingandrefiningareresponsibleforthebulkofgreenhousegasemissions.Forcountrieswheresmeltersandrefineriesarelocated,theelectricitymixisthereforeamajordeterminantoftheiroverallemissions.Today,asignificantshareofmineralsandmetalsisrefinedinChinaandothercountrieswithacoal-basedgrid.Thescaleofemissionsvariessignificantlyamongminerals.Energyconsumptionandgreenhousegasemissionspertonneareespeciallysubstantialforaluminium,cobalt,nickel,siliconandrareearthelements.Annualenergyconsumptionandemissionsarethehighestforaluminium,duetothelargeannualproductionvolumes.Aluminiumdemandintheenergysectorisdrivenbysolarphotovoltaic(87%)andwind(10%)deployments,whilethedemandforcobalt,graphite,lithiumandnickelproductionprimarilycomesfromenergystoragetechnologies,notably,batteries.Renewableenergytechnologiesemitonlyafractionofthegreenhousegasesemittedbyfossilfueltechnologies,eventhoughtheirmineralintensityishigh.Mineralproductionandoperationofcleanenergytechnologiesgeneratea6%oftheemissionsfromcoal-andgas-basedgeneration(WorldBank,2020b).Forinstance,batteryelectricvehiclesemitsignificantlylessintotalthantraditionalinternalcombustionenginevehiclesovertheirlifecycles,eventhoughtheyrequiremoremineralsthanthelatter(IEA,2021).Itispossibletofurtherreduceemissionsfrommineralminingandprocessingthroughincreasedenergyefficiencyinvestmentsandashifttocleanerfuelsandlow-carbonelectricity.In2022,theCanadianminingcompanyFirstQuantumMineralsannouncedplanstoconstruct430megawatts(MW)ofsolarandwindpowerforitscopperminingoperationsinZambia,whichincludesAfrica’stwolargestcoppermines(HillandMitimingi,2022).Meanwhile,AngloAmerican,amininggiant,hassecuredrenewableenergydealstomeetallitspowerrequirementsforChile-basedcopperoperationsfrom2021,Brazil-basedironoreandnickeloperationsfrom2022andPeru-basedcopperoperationsfrom2022(AngloAmerican,2021).Thesamecompanyhasalsolaunchedaprototypeofitsfirsthybridhydrogen-andbattery-poweredminehaultruck,aretrofitteddiesel-poweredtruck,atitsMogalakwenaplatinummineinnorth-easternSouthAfrica(AngloAmerican,2023).13Thissubsectionfocusesonlyonemissionsimpactsofmining.83GeopoliticsoftheEnergyTransformationEnd-of-lifemanagement(reuse,repurpose,recycle)alsoplaysaroleinemissionsreduction.Itcansignificantlyreduceemissionsrelatedtomineralmining,evenifitmaynoteliminatethemcompletely.Forinstance,recycledsecondaryaluminiumcanhaveacarbonfootprintthatisonly5%ofthecarbonfootprintofprimaryaluminiumproduction(EuropeanAluminium,2020).14Increasingrecyclingcanaidintheshifttowardsamoresustainableenergysystem,althoughthereremainobstacles,suchasensuringmineralscrapavailabilityandmaintainingmaterialpurityforcertainapplications.Itisalsoimportanttoreducetheemissionsintensityofrecyclingprocesses(IRENA,forthcoming).Astheenergytransitionprogressesandtechnologiesreachendoflife,materialrecoveryandreusewillalsocontributetoreducingemissionsalongthevaluechain.Landuse,biodiversityandwasteMiningisawidespreadactivitywithextensiveimpactsontheEarth’ssurface.Besidesminesthemselves,miningareasalsoincludewastedumps,waterpondsandindustrialprocessingfacilities(Mausetal.,2020).Miningactivitiescanhaveawiderangeofadverseeffectsonlandscapesandgivewaytolanduseconflicts.Overthepasttwodecades,metalmininghasexpandedintobiodiverseecosystems(Luckenederetal.,2021).Thishascontributeddirectlyandindirectlytodeforestation,withcoalandgoldresponsiblefor71%ofallglobaldirectmining-relateddeforestation(WWF,2023).Thedevelopmentofmining-relatedinfrastructure,settlements,agriculturethroughsettlements,andwaterandsoilcontaminationcaused7%oftheglobalindirectdeforestation(HundandReed,2019).Whileminingactivitiesextensivelyimpactforests,theycanalsoimpactotherbiodiverseecosystems,suchasgrasslands,wetlandsandaquatichabitats,causingsoilerosion,soilandwaterpollution,andlossofhabitatforendangeredspecies.Suchenvironmentalimpactsofmininghaveoftenledtolanduseconflictsbetweenminingcompaniesandlocalcommunitiesandconservationgroups,resultinginlegalbattlesorviolenceinsomecases.Miningcanalsocompromiselandaccesssecuritythroughthewasteandpollutionitgenerates.Miningproducesthelargestvolumesofwasteglobally,invariousforms,forexample,overburden(thesoilorrockcoveringamineraldeposit),wasterock(thematerialextractedalongwiththeore)andtailings(wastegeneratedfromprocessing).A2016estimateshowedthatmetalandmineralextractiongeneratedover70billionmetrictonnesofwasterockandover8billiontonnesoftailingsinthatyear(Figure3.4).Decliningoregradeshavealreadyincreasedthevolumeofwastegeneratedperunitofmineralproduced(Mudd,2010).Theincreaseinmineralandmetalextractionwillleadtoafurtherincreaseinminingwaste.Producing1metrictonneofcoppergeneratesapproximately540tonnesofwasterockand200tonnesoftailings(Bakeretal.,2020).15Copper,nickel,manganeseandlithiumminingcouldgeneratenearlyatrilliontonnesofwastecombinedfrom2020to2050(Valentaetal.,2023).14ThiscomparesprimaryaluminiumimportstoEurope(10.6tonnesofCO2equivalentpertonneofproduction)andrecycling(0.5tonnesofCO2equivalentpertonneofproduction).15Calculatedfromfigure5inBakeretal.(2020).84CRITICALMATERIALSFIGURE3.4Estimatedvolumeoftailings,wasterockandoreproducedin2016CommoditiesWasterockOremilledBauxiteChromium72000Mt18800MtCoalCopperOreproducedGoldIronOre10180MtLead-ZincLithiumTailingsManganeseMolybdenum8850MtNickelNiobiumPhosphatePlatinumGroupElementsRareEarthsTinUraniumVanadiumSource:(Bakeretal.,2020).Overburdenandwasterockareeitherdepositedonsiteor©ChristyamdeLimashutterstock.comtransportedtodesignatedoff-siteareasfordisposal.Bycontrast,tailingsaretypicallystoredinpondscontainedbydams,whichcouldrupture,causingextensiveecologicaldamageandthreateningnearbycommunities(Rocheetal.,2017).Also,thetoxicsubstanceswithinthetailingscanendangertheenvironmentandlocalwildlife.The2019BrumadinhodamdisasteratanironoreminingcomplexinMinasGerais,Brazil,isanexampleofhowcatastrophicsucheventscanbe.Thedamfailurespilledsome10millioncubicmetresofminewaste,killing270peopleandcausingenormousdamagetotheenvironmentandlocalcommunities(Piciulloetal.,2022).Assolutionstomanagingtailingsonsite,someminespumpthemdirectlyintonearbywaterbodies,suchasriversystemsoroceans,causingextensivepollution(seeBox3.3).85GeopoliticsoftheEnergyTransformationBOX3.3ThecontroversialpracticeofmarinedisposalofminetailingsMarinedisposaltechniquesareprohibitedinmanycountriesbutcontinuetobeusedatseveralcoastalminingsitesincludinginIndonesia,Norway,PapuaNewGuineaandthePhilippines.16AttheRamunickelandcobaltmineinPapuaNewGuinea,locatedintheSouthPacific,miningwasteisdumpeddirectlyintotheocean.Concernswereraisedaboutthepotentialcontaminationoffishandotherseafoodafterseveralpipelineleaksattherefinerycausedtheoceanwatertoturncrimsonred.Inresponse,theMadangprovincialgovernmentinstitutedafishingbaninOctober©THPCreativeshutterstock.com2019,deprivinglocalpopulationsofoneoftheirmainsourcesoflivelihood.In2020,over5000villagersandthelocalgovernmentfiledalawsuitagainsttheoperatorsoftheChinese-ownedRamunickelmine,demandinganendtothepracticeofdumpingwasteintotheocean(Sanderson,2022).Thelawsuitisjustoneexampleofthegrowingoppositiontotheuseofmarinedisposalofminetailings.Environmentalandcommunitygroupshavelongraisedconcernsabouttheimpactsofthesepracticesonmarineecosystemsandhumanhealth.Thepotentialharmincludesthereleaseoftoxicmetalsandchemicalsintooceans,whichcanaccumulateinmarinelifeandseafoodconsumedbyhumans.Thisledseveralcountriestobanorrestrictthemarinedisposalofminetailings,andinternationalstandardsfortailingsmanagementwereestablishedtoprotectpeopleandenvironmentbodiesfromharm(e.g.thestandardssetbytheInternationalCouncilonMiningandMetals).Miningcompaniesareencouragedtoexplorealternativemethodstomanagetailings,suchasdrystacking,whichinvolvesfilteringanddryingthewastetoproduceamorestablematerialthatcanbestoredonland.Stringentwastemanagementpoliciescanreducelocalpollutionfromtheexcavation,transportandprocessingofcriticalmaterials.Effortsshouldpromotetheadoptionofadvancedtechnologiesandbestpracticesthatprioritisethereduction,reuseandrecyclingofwastematerials,whileensuringthatpotentiallyharmfulby-productsaretreatedanddisposedofproperly(GlobalTailingsReview.org,2020;ICMM,2021,2022a).Comprehensivereclamationandrehabilitationprogrammescanbeimplementedalongsidewastemanagementprogrammestorestoredisturbedminingsitestoastatethatalignswithecologicalandcommunitywell-being.Miningcompaniescancontributeactivelytothepreservationandrestorationofbiodiversityandecosystemservicesbyinvestinginpost-mininglandrestoration,includingreforestationeffortsandthere-establishmentofnaturalhabitats(PrachandTolvanen,2016).16WhileIndonesiahasnotinstitutedabanonsubmarinetailingsdisposal,inFebruary2021,itannouncedthatnewminingprojectsusingthistechniquewouldnotgetapermit.86CRITICALMATERIALSWaterstressCriticalmaterialminingprojectscanexacerbatewaterstress.Abouthalfoftheglobalcopperandlithiumproduction,forexample,isconcentratedinhigh-water-stressareas(Gielenetal.,2022b;IRENA,forthcoming).Thisincludesthe“lithiumtriangle”,alithium-rich(65%oftheworld’slithiumreserves)regioninAndesencompassedbythebordersofArgentina,BoliviaandChile.Globally,sevenwater-stressedmininghotspotsstandout:CentralAsia,theAndesregion,Australia,theMiddleEast,southernAfricaandalargezoneinwesternNorthAmerica(Figure3.5).Mineraloreminingandprocessinghavesubstantialwaterrequirementsforpumping,treating,heatingandcoolingoperations.Whiletheoveralluseoffreshwaterforminingactivitiesisonlyasmallportionoftheglobalandnationalwateruse,theycansignificantlyimpactlocalfreshwaterresourcesbydegradingtheirqualityandreducingthequantityofwateravailable(Meißner,2021).Miningactivitiessuchastailingsdisposalintowaterways,acidrockdrainageandwasterockdumpscanalsocontaminatesurfaceandgroundwaterbodies(AYetal.,2018).Asoregradescontinuetodecline,morewaterisrequiredtoproduceatonneofmetal.Thiscanfurtherstrainlocalwatersuppliesandbringareasalreadyfacingsignificantwaterstressundergreaterwaterrisks.Climatechangeisexpectedtocompoundwaterscarcity,posingasignificantchallengetotheminingindustry(Northeyetal.,2017).FIGURE3.5ThemajorityofminingsitesfacehighwaterrisksOverallTotalminingsitesatriskWaterRisk1–10sites11–50sites51–100sites101–500sites>500sites1.0–1.41.4–1.81.8–2.22.2–2.62.6–3.03.0–3.43.4–3.83.8–4.24.2–4.64.6–5.0Source:(Laporte-BisquitandMorgan,2019).Note:TheWorldWideFundforNature’swaterriskassessmentframeworkconsidersthreetypesofbasinandoperationalwaterrisks:physical,regulatoryandreputational.Moreinformationonthemethodologycanbefoundathttps://riskfilter.org/water/explore/data-and-methods.Disclaimer:Thismapisprovidedforillustrationpurposesonly.BoundariesandnamesshownonthismapdonotimplyanyendorsementoracceptancebyIRENA.87GeopoliticsoftheEnergyTransformationBOX3.4Watersecurity,lithiumextractionandindigenouspeoplesinChile’sAtacamadesertLithiumcanbeextractedfromhard-rockoresorfromcontinentalbrinesthroughevaporation,whichisespeciallywaterintensive.Thesocio-environmentalimpactsofthebrineevaporationtechniquearemostvisibleinChile’sSalardeAtacama,wheretheworld’slargestbrine-basedlithiumproductionisbased.Intheevaporationtechnique,brine,whichissalty,lithium-containingwater,ispumpedfromundergroundreservoirsintolarge,open-airpondsforlithiumtoseparateviasolarevaporation,whichcantakemonths.Ninetypercentofthebrine’soriginalwatercontentislostthroughtheevaporationprocess(Veraetal.,2023).Hydrologistsareraisingagrowingconcernthatminingactivitiescouldsignificantlyimpactvitalecosystemsanddepriveindigenouscommunitiesoftheiressentialwatersources,exacerbatingthedesert’saridconditions(Pearce,2022).Theseandotherconcernshaveresultedinincreasedcallsforwaterjustice,andprotestsagainsttheminingoperations(Jerezetal.,2021).Localresidents,includingindigenouscommunitiessuchasKolla,Atacameño,LickanantayandAymara,haveusedavarietyoftactics,includinglegalaction,roadblocksanddemonstrations,toprotestthethreattotheirlivelihoodsandwatersecurity(LundeSeefeldt,2022).Minimisingmining’simpactsintermsofwaterforlocalpopulationsandecosystemsrequireseffortstoencouragewatersavingatminesites,increasewaterreuseandrecycling,stimulatetheuseofdesalinatedwatersuppliesandensureresponsiblewaterdischargesofappropriatequality(EnergyTransitionsCommission,2023;ICMM,2014).88©MarcvanKessel.comshutterstock.com©JoseLuisStephensshutterstock.comCRITICALMATERIALS3.3ANEWDEVELOPMENTPATHMiningandthedevelopingworldGlobalproductionofkeyenergytransitionmetalsispredominantlyoccurringindevelopingcountries(WorldMiningData,2022),althoughsomeofthemhavemuchsmallersharesofglobalproductionthanreserves(Figure3.6).Forexample,Guinea’sshareintheglobalextractionofbauxite,akeymetalforaluminiumproduction,isjust6.5%,whereasitrepresents63%ofglobalreserves.ThePlurinationalStateofBoliviahas21milliontonnesoflithiumresources–morethananyothercountry–butitproducedlessthan1%oftheglobalsupplyin2021.Onekeyissueisthatmanydevelopingregionsremainunderexploredandlackbasicgeologicalmapping.Thiscreatesacommercialriskforminingcompanies(AfricanMineralsDevelopmentCentre,2018).FIGURE3.6Shareofglobalmineralproductionandreservesheldbydevelopingcountries(excl.China),2017Cobalt70%95%Copper67%Lithium100%Manganese47%Production46%NickelPGM45%68%63%47%25%34%7%57%RareearthREE2%19%elements3%0%20%40%60%80%ReservesSource:(WorldBank,2017).Note:Developingcountriescompriselow-andmiddle-incomecountries,excludingChina.PGM=platinumgroupmetals.89©mehmetalipoyrazshutterstock.comGeopoliticsoftheEnergyTransformationWhilebasemetalsmaynotbeassignificantasoilinglobaleconomicactivity,theyareimportantintheeconomicactivityofaboutone-thirdofemergingmarketsanddevelopingeconomies(WorldBank,2021),ofwhichsomerelyheavilyonexportrevenuesfromtheirmining.Morethan80%oftheexportrevenuesofBotswana,theDemocraticRepublicofCongoandGuinea,forinstance,isderivedfromtheminingsector(seeFigure3.7).FIGURE3.7Exportdependenceonmining,2018-2019Dependencyonmining0-20%20-40%40-60%60-80%80-100%Source:(UNCTAD,2019).Disclaimer:Thismapisprovidedforillustrationpurposesonly.BoundariesandnamesshownonthismapdonotimplyanyendorsementoracceptancebyIRENA.90CRITICALMATERIALSBuckingtheresourcecurseDevelopingcountriesoftenstruggletofullybenefitfromtheirvaluablemineralresources,aphenomenonknownasthe“resourcecurse”.Thistermreferstotheparadoxicalsituationwherenatural-resource-richcountriestendtohaveslowereconomicgrowth,higherpovertylevelsandweakergovernancethanresource-limitedcountries.Thisisoftenduetofactorssuchasoverdependenceonasinglesectoroftheeconomy,rent-seekingapproachesandcorruption.Withagrowingmineraldemand,urgentlyaddressingtheserisksbecomescrucialforstableandsustainablesupply.Corruptioninmineralsupplychainsisonesuchrisk(NationalResourceGovernanceInstitute,2022).Theextractivesvaluechaincanhavecorruptionatanypoint,includingintheissueofexplorationandexploitationlicenses,aswellasthecollectionofroyalties,feesandtaxes(OECD,2016).Corruptionrisksareespeciallyhighintheawardofminingrightsascompaniesrushtosecurelicenses,andofficialsmayfacepressuretocompromiseonenvironmentalandsocialimpactassessments,andduediligenceingeneral,tospeedupapprovals(Clark,2023).Anotherchallengeliesintheopaquetaxstructureswithintransitionmineralvaluechains,whichincurssignificantrevenuelossesforgovernments(Sturmanetal.,2022).Baseerosionandprofitshiftingposegovernancechallengesasmultinationalenterprisesshifttheirprofitstojurisdictionswithlowertaxrates.Thisissueisespeciallyprevalentintheenergytransitionmineralssector,whereintegratedbusinessstructuresandglobalpartnershipscontrolvaluechains.Unfairpricingarrangementsmadebeforeproductioncanincursubstantialrevenuelossesforhostgovernments.ResearchindicatesthatmultinationalenterprisetaxavoidanceleadstoannuallossesofapproximatelyUSD600millionincorporateincometaxfromminingsectorsforSub-SaharanAfricancountriesalone(Albertin,Giorgia.etal.,2021).Addressingcorruptionandtaxevasionrequiresemphasisingthesignificanceofwell-designedpoliciesandinstitutionsforeffectivelyinvestingmineralrevenuesinsocio-economicdevelopment.Historicalinsightsprovidevaluablelessonsonhowcountriescanavoidtheresourcecurseandmaximisethebenefitsoftheirmineralresources.Examplesfromthepastdemonstratethatthenegativeimpactsofmineraldependencycanbemitigatedthrougheconomicdiversification,promotionoflocalcontentdevelopment,investmentininfrastructureandhumancapital,andfosteringinclusivegovernancestructures(TheAfricanClimateFoundation,2022).Successfulcasescanprovidecountrieswithlessonstolearninfosteringindustrialdevelopmentandeconomicdiversification.91©Insight-Photographyshutterstock.com©SunshineSeedsshutterstock.comGeopoliticsoftheEnergyTransformation©JoseLuisStephensshutterstock.comAgeo-economicopportunityTheexpectedsurgeinmineralresourcedemandduetotheenergytransitionanddigitalisationpresentsanopportunityforattractingnewinvestmentflows.Ifmanagedproperly,thesenewresourcerevenuescouldkick-startlong-termeconomicprosperity,newgreenjobsandsustainablelocaldevelopment.Akeyquestioniswhethertheenergytransitionallowsdevelopingandemergingcountriestomoveupthevaluechainandattracthigher-marginactivitiesinadditiontoincreasingtheirprimaryoreexports.Processedmaterialscommandsignificantpricepremiaoverunrefinedores,potentiallyimprovingthetradebalanceandloweringtheinputcostofinfrastructuralandindustrialprojects,spurringlocaleconomicdevelopment(Hendrix,2022).WhilemanybatterymineralsareminedindevelopingcountriesinAfrica,AsiaandLatinAmerica,theactualvalue-additionwork,suchassmelting,refining,cellassemblyandultimatelyEVproductionoftentakesplaceelsewhere.AsFigure3.8illustrates,theminingofnickel,lithiumandcobalthasonlya0.6%shareinthetotalEVvaluechain(1.1%ifmetalsmeltingandrefiningareincluded).Climbingupthevaluechainispoliticallyandeconomicallyappealingbutchallengingformanydevelopingcountries,whichoftenlackthenecessaryinfrastructure,technicalexpertiseandaccesstootherproductionfactors,suchasaskilledworkforceandaffordablepower.InadequatelyregulatedexpansionofdomesticprocessingandrefiningcapacityinthesecountriesmayamplifytheenvironmentalandsocialimpactsofsourcingtherawmaterialsusedinEVsandothervitalenergytransitiontechnologies(Jonesetal.,2023).92CRITICALMATERIALSFIGURE3.8Estimatedvalueofthebatterymineralandelectricvehiclevaluechainby2025Mining11bnNickel,lithiumandcobaltareextractedfromminesandcrushedinto‘mineralconcentrate’attheminesiteMetals44bnMineralconcentratesareprocessedbysmelting,reﬁningandothertechniquestocreateindustry-grademetalsPrecursor271ProcessedmetalsareturnedintoachemicalmaterialproductionthatisaprecursortomakingabatterycathodebnCell387Cathodesareputtogetherwithananode,separatorandproductionelectrolyteintoanaluminiumcasetomakeabatterycellbnCell1200DozensofcellsareassembledintoabatterypackassemblybnElectric7000Abatterypackiscombinedwithmanyothervehiclescomponents,eachwiththeirownvaluechains,bntocreateanelectricvehicle.Adaptedfrom:(UNECAandDieneetal.,2022;UNECA,2021).93GeopoliticsoftheEnergyTransformationCHAPTER4STRATEGIESTOREDUCERISKSANDOPENUPNEWOPPORTUNITIESlabourdevelopingvulnerabilitymineralsdevelopingcountriesregulationsnickeltrade-offcobaltrisklithiummininggreenhousegasemissionsdevelopingsustainabilitysecurityallianceslabourrisksvaluecrereacytcilinognstockpillingstockpilinbgenreigfithstsCRITICALMATERIALSHIGHLIGHTSnManycountriesaredevelopingstrategiestomitigatethevulnerabilityofcriticalmaterialsupplychains.Thesestrategiesaimtosecureaccesstomaterials,promotedomesticproduction,andreducedependenceonanysinglesupplierorregion.nSomeeffortsoftenhaveno-regretoutcomes,includingtheformulationofnationalcriticalmaterialstrategies,periodicassessmentofmineralcriticality,andthepromotionofdiplomaticalliancesandpartnerships.nOthereffortsmayinvolvetrade-offsorrisks.Forinstance,manycountriesaimtolocalisecriticalmaterialsupplychains.TheEuropeanUniontargets10%domesticmineralextractionand40%localprocessingby2030,whereastheUnitedStates’InflationReductionActincentivisesdomesticsourcingandtheformationoffriendlyrelationshipswithsuppliersofmineralsusedinelectricvehicles.Achievingthesegoalsrequiresbalancingeconomic,environmentalandsocialconsiderations.nStrategicstockpilingofmaterialsrequirescarefulconsiderationtopreventmarkettightnessandpriceincreases,whichcouldslowdowntheglobaltransitiontocleanenergy.Stockpilingcouldalsohindersupplychaindiversificationandlocalvaluecreationsincenotallcountriescanmaintainlargereserves.nEffortstoreduce,reuseandrecyclematerialshaveacceleratedalongsideattemptstoenhancetherobustnessofsupplychains,whichcanberelievedfrompressurethroughenergyefficiency,energyconservationandconsumerbehaviouralchanges.However,recyclingonlyshowspromiseinthemediumtolongtermsincesignificantstockturnoverisrequiredbeforesecondarysupplybecomessubstantial.nDevelopingcountriesaretakingstepstomaximisethebenefitsfromtheirmineralresources.Exportrestrictions,inparticular,aregainingattentionasameanstoattractprocessingandotherdownstreamindustries,althoughtheydonotguaranteesuccess.Countriescouldcapturegreatermineralwealthsharesthroughregionalco-operation.nAlthoughseveralinitiativesandregulatoryframeworkshavebeencreatedtourgentlypromoteresponsible,sustainableandtransparentmineralsupplychains,compliancewillbedifficulttoenforceevenwherestandardsforsupplychainduediligence,auditingandcertificationarealreadyestablished.Mostrelatedinitiativesarevoluntary,andstandardsneedtobealignedwithvalidationmechanismsandprocesses.95GeopoliticsoftheEnergyTransformationThischapterprovidesacomprehensiveoverviewoftheinitiativesundertakenbyglobalpublicandprivateentitiestoensureareliable,equitablecriticalmaterialsupply(Table4.1).Itseekstoofferinsightstopolicymakers,industrystakeholdersandotherkeyactorsbyexaminingthestrengthsandlimitationsofeachstrategy.TABLE4.1StrategiestoensureareliableandequitablecriticalmaterialsupplyRiskAreasDomesticMeasuresExternalMeasuresSecuringaccesstocriticalmaterialsnNationalcriticalmaterialnInternationaltradeandinvestmentassessmentsandstrategiesagreementsIncreasingdomesticbenefitstomineral-nPoliciestosupportreshoring,nRegulatoryco-operationrichcountriesnearshoringandfriendshoring(e.g.onstandards)nPoliciestoreduce,reuseandrecyclenExportcreditsforoverseasminingnStrategicstockpilinginvestmentsnJointpurchasing(buyers’club)nTaxandroyaltyrenegotiationsnExportrestrictionsandtaxesnCreatingstate-ownedresourcenDomesticprocessingrequirementsnForeigninvestmentscreeningcompaniesnRegionalcollaborationonmineralnExpropriation/nationalisationvaluechains©Evgeny_Vshutterstock.com©NataliNekrasovashutterstock.com96CRITICALMATERIALS©Regzishutterstock.com4.1MITIGATINGSUPPLYCHAINVULNERABILITYTheconcentrationofcriticalmaterialminingandprocessinginahandfulofcountrieshasraisedconcernsaboutthereliabilityofglobalsupplychains,promptinggovernmentsandstakeholderstodevelopstrategiestomitigatetheirvulnerability.Thesestrategiesaimtosecureaccesstocriticalmineralsandmaterials,promotedomesticproduction,andreducedependenceonanysinglesupplierorregion.Thissectionwillexplorefivekeyapproaches:nDevelopingcriticalmineralstrategiesnLocalisationandredesignofsupplychainsnCriticalmaterialdiplomacynStrategicstockpilingnReducing,reusingandrecycling.CriticalmineralstrategiesAgrowingnumberofcountriesrecognisethestrategicimportanceofmineralsupplychainsandarecompilingorupdatingnationalcriticalmaterialstrategies(Box4.1andFigure4.1).Forcountriesdependentonsuchmaterials’imports,theprimaryobjectiveistoanticipateandoffsetpotentialsupplyrisks,whereasmineral-richcountriesseektoboostthecompetitivenessoftheirminingsectorsandattractinvestments.97GeopoliticsoftheEnergyTransformationFIGURE4.1Countriesthathaveadoptednationalmineralstrategies,2010-2023Nationalmineralstrategies202320222021202020192010-18Note:Themapshowsnationalcriticalmaterialstrategies,visionsandpolicydocuments.Miningcodesorspecificregulationswerenotretained.Disclaimer:Thismapisprovidedforillustrationpurposesonly.BoundariesandnamesshownonthismapdonotimplyanyendorsementoracceptancebyIRENA.©SunshineSeedsshutterstock.com98CRITICALMATERIALSBOX4.1CriticalmaterialstrategiesrecentlyupdatedoradoptedAustralia:ItfirstadoptedaCriticalMineralsStrategyin2019,updatingitin2022.ThestrategyhasacentralobjectivetoturnAustraliaintoa“globalcriticalmineralspowerhouse”by2030andexpandsthecriticalmineralslisttoincludehigh-purityaluminaandsilicon,recognisingtheirimportanceintechnologiessuchaslithium-ionbatteriesandsemiconductors.Itaimstoboostregionaljobsandgrowththroughathrivingmineralsector,andhelpAustraliamoveintodownstreamprocessingandcapturehigher-value-addedproducts.17Brazil:In2021,itlaunchedtheNationalStrategicPro-MineralsPolicy(MinistryofMinesandEnergy,2021),whichaimstoprioritisetheenvironmentallicensingprocessandtheimplementationofmineral-miningprojectsdeemedstrategicforthecountry’sdevelopment.ItalsocreatedanInterministerialCommitteefortheAnalysisofStrategicMineralProjects,whichidentifiedalistof14strategicminerals(CTAPMEResolutionNo.2/2021),includinglithium,cobalt,nickel,graphiteandrareearthelements.In2022,theBrazilianpresidentsignedadecreetoestablishanationalmineralpolicyandcreatetheMineralPolicyNationalCouncil(Decreton.11.108).EuropeanUnion:In2023,theEuropeanCommissionproposedtheCriticalRawMaterialsAct,whichwasbuiltonthe2008RawMaterialsInitiativeandthe2020ActionPlanonCriticalRawMaterials.Theregulationsetsoutfourobjectives:(1)strengtheningtheEuropeanUnion’scapacitiesalongallstagesofthestrategicrawmaterialsvaluechain,includingextraction,processingandrecycling;(2)diversifyingexternalsupply;(3)strengtheningtheUnion’scapacitytomonitorandmitigatesupplyrisks;and(4)increasingthecircularityandsustainabilityofcriticalrawmaterialsconsumedintheUnion.Regardingthefirstobjective,theregulationsetkeytargetsforstrategicrawmaterialsin2030:nAtleast10%extractedintheEuropeanUnionnAtleast40%processedintheEuropeanUnionnAtleast15%recycledintheEuropeanUnionnNotmorethan65%oftheEuropeanUnion’sannualconsumptionofeachstrategicrawmaterialatanyrelevantstageofprocessingfromasinglethirdcountry.Theregulationalsosetsoutaframeworktoselectandimplementstrategicprojects–bothwithinandoutsidetheEuropeanUnion–thatwouldbenefitfromfasterpermittingandadditionalfunding.ItalsocreatesaEuropeanCriticalRawMaterialsBoardtoadvisetheEuropeanCommissionandmembercountries,aswellasaframeworktodiscussstrategicpartnershipswiththirdcountries.TheCommissionwillgatherinformationonthestrategicstocksheldinEUMemberStates,bypublicorprivateentities.Itwillalsosetupasystemforthejointpurchaseofcriticalrawmaterialsfromthirdcountries.continuednextpage17www.industry.gov.au/data-and-publications/2022-critical-minerals-strategy.99GeopoliticsoftheEnergyTransformation©SunshineSeedsshutterstock.comBOX4.1Criticalmaterialstrategiesrecentlyupdatedoradopted(continued)India:In2019,thecountryadopteditsNationalMineralPolicy,whichaimstopromotedomesticindustry,reduceimportdependencyandfeedintotheMakeinIndiainitiative.Itemphasisestheneedforenvironmentallysustainableminingpractices,stakeholderparticipationandtheequitabledistributionofmineralwealth.Thepolicyprioritisessupporttodomesticexplorationformineralscriticalorstrategicfortheenergysector(MinistryofMines,2019).However,thereisnoofficiallistofcritical/strategicmaterialsfortheenergytransition.Japan:InMarch2020,JapanadoptedanewInternationalResourceStrategy,whichcoversenergyresourcessuchasoilandliquefiednaturalgasandemphasisestheimportanceofstockpilingraremetals.Thestate-ownedJapanOil,GasandMetalsNationalCorporationistaskedwithprovidingloansandothersupporttooverseasmineralsdevelopment,includingexploration,miningandsmelting,andthroughit,thegovernmentseekstostrengthenco-operationwithcountriesinvolvedinvariousstagesofthesupplychain(AgencyforNaturalResourcesandEnergy,2020).SouthAfrica:InApril2022,theSouthAfricangovernmentreleaseditsExplorationStrategyandImplementationPlanfortheMiningIndustry,18whichaimstoattractforeigninvestmentinexploration,acceleratenewmineraldiscoveriesandpromotetheresponsibleuseofthecountry’smineralresources,inaccordancewithenvironmental,socialandcorporategovernanceprinciples.Itaimstospendmorethan5%oftheglobalexpenditureonexplorationinthenextthreetofiveyears,andstreamlinesregulatoryrequirementsacrosslicensingdepartmentstoimproveturnaroundtimeforprocessingprospectingrights.Italsoprovidesalistoftargetedcriticalmineralsandmetalsdeemedessentialfortheshifttowardsagreeneconomy.continuednextpage18ExplorationStrategyfortheMiningIndustryofSouthAfrica(14April2022),availablefrom:https://cer.org.za/wp-content/uploads/2022/04/DMRE-Exploration-Strategy-for-the-Mining-Industry-of-South-Africa-14-April-2022.pdf.ExplorationStrategyofSouthAfrica:ImplementationPlan2022(14April2022),availablefrom:https://cer.org.za/wp-content/uploads/2022/04/Exploration-Strategy-of-South-Africa-Exploration-Implementation-Plan-2022.pdf.100CRITICALMATERIALS©PaulNashshutterstock.comBOX4.1Criticalmaterialstrategiesrecentlyupdatedoradopted(continued)UnitedKingdom:InJuly2022,theUKgovernmentadopteditsCriticalMineralStrategy,whosecentralaimistomitigaterisksandmakecriticalmineralsupplychainsmoreresilientthroughwhatitdubsan“A-C-Eapproach”tocriticalminerals:Acceleratedomesticcapabilities(inmining,trainingrecycling),Collaborateinternationally(mainlytofostersupplydiversification)andEnhanceinternationalmarkets(includingincreasingmarkettransparencyandresponsiblesupplychains).InMarch2023,adeliveryupdatewaspublished,whichreviewedprogressandsetoutupcomingmilestones.OneoftheseisthelaunchoftheindependentTask&FinishGrouponCriticalMineralsResilienceforUKIndustry,whichwillpresentareportby2023end.19UnitedStates:Thecountryhaslongapproachedcriticalmaterialsstrategically,20andhasbeenguidedinrecentyearsbymultipleexecutiveorders.In2017,PresidentTrumpissuedsuchanorder,whichtaskedtheDepartmentofCommercetodevelopafederalstrategyoncriticalmaterials(ExecutiveOfficeofthePresident,2017),releasedinJune2019.Thestrategy’ssixcallstoactionincludeacceleratingdomesticcriticalmineralresourcedevelopmentandbuildingrobustdownstreammanufacturingcapabilities(USDepartmentofCommerce,2019).Inanotherexecutiveorderin2020,Trumpdeterminedthatthecountry’srelianceoncriticalmineralsfromforeignadversariesconstitutedan“unusualandextraordinarythreat”,anddeclaredanationalemergencytodealwiththethreat(WhiteHouse,2020).TheUSDepartmentofEnergywastodeviseastrategytoensureasecureandreliablesupplyofcriticalminerals,whichitissuedin2021(USDepartmentofEnergy,2021).Thestrategyreliesonthreekeypillars:diversifyingsupply,developingsubstitutes,andimprovingreuseandrecycling.In2021,theBidenadministrationissuedExecutiveOrder14017,whichoutlinedtheimportanceofsecuresupplychainsandmandated100-dayinteragencyreviews(WhiteHouse,2021).Paralleltotheseexecutiveorders,thelegislativebranchadoptedrelevantlegislation,suchastheAmericanMineralSecurityAct(2020)andtheInfrastructureInvestmentandJobsAct(2021),which,amongotherthings,allocatedfederalfundingforcriticalmineralextractionprocessingandresearchactivities.TheInflationReductionActof2022isdiscussedinBox4.2.19www.gov.uk/government/publications/uk-critical-mineral-strategy/critical-minerals-refresh-delivering-resilience-in-a-changing-global-environment-published-13-march-2023.20Forexample,theUSDepartmentofEnergy(DOE)publishedacriticalmineralsstrategyin2010(alongwitha2011update).101GeopoliticsoftheEnergyTransformationAspartoftheirnationalcriticalmineralstrategies,countriesarecompilinglistsofcriticalmineralsbasedontheirindustrialneedsandastrategicassessmentofsupplyrisks.Evaluationsofmineralcriticalitydifferbycountry(seeTable4.2).Forexample,onlyninematerialsfeatureonthecriticalmateriallistsoftheUnitedStates,theEuropeanUnionandChina,includingcobalt,lithium,graphiteandrareearths.Copperandplatinumgroupfeatureonjusttwolists.TABLE4.2AcomparisonofthecriticalminerallistingsinChina,theEUandUnitedStates,2023OverlappingExclusiveUSEUChinaUSEUChinaAluminium/bauxiteCesiumAntimonyChromiumCobaltIndiumFluorsparRubidiumGraphite/naturalSamariumgraphiteTelluriumLithiumZincNickelBoron/borateRareearthmetalsCokingcoalTungstenFeldsparArsenicGalliumBaryteHeliumBerylliumPhosphaterockBismuthScandiumGermaniumSiliconHafniumStrontiumMagnesiumGoldManganeseIronoreNiobiumMolybdenumPlatinumgroupmetalsPotashTantalumUraniumTitaniumVanadiumTinZirconiumCopperPhosphorus102CRITICALMATERIALSCriticalmaterialslistsaredynamicandrequireupdatingascircumstanceschange.Forinstance,thefirstlisttheEUpublishedin2011featuredonly14rawmaterials.Thelisthasbeenupdatedfourtimessince,withthe2023versionidentifying34rawmaterialsascritical.LocalisationandredesignofsupplychainsRecentsupplychaindisruptionshavedrivenmanycountriesandregionstopursuesupplychainlocalisationforgreaterstrategicautonomyandforreducingdependenceonpotentialadversaries.Morespecifically,governmentsareformulatingpoliciestoencouragestrategicindustriestoeitherrelocateorestablishnewoperationsintheirhomecountries(reshoring),innearbyregions(nearshoring)orintrustedallynations(friendshoring).Criticalandstrategicmineralsupplychainsarealsocoveredbytheseefforts.TheUnitedStatesandtheEUrecentlyoutlinedminimumthresholdsforthedomesticsourcingofminerals.TheEUproposedatleast10%localmineralextractionand40%localprocessingby2030.TheUSInflationReductionAct,signedintolawinAugust2022,providestaxcreditsforcriticalmineralproductionandmandatesthedomesticsourcingorfriendshoringofthecriticalmineralsusedinEVbatteriesasaconditionforsubsidies(seeBox4.2).BOX4.2TheInflationReductionActandcriticalmineralsFollowingarethekeyprovisionsonmineralsoftheInflationReductionAct(IRA):nMiningcompaniesextractingcriticalmetalswillbeabletoseekaproductioncreditequalto10%ofproductioncostsiftheextractedmineralsmeetspecifiedpuritythresholds.nTheIRAalsosetsatargetforthecriticalmineralcontentofEVbatteries.ForanEVtobeeligibleforataxcreditin2023(thefirstyearoftheprogramme),40%ofthecriticalmaterialsinitsbatterymustbesourceddomesticallyintheUnitedStates,fromlocalfree-tradepartners,21orfromrecyclinginNorthAmerica.22Thepercentageincreasesgraduallyto80%by2027andbeyond(USGovernmentPublishingOffice,2022).nTheIRAfurtherstipulatesthatanEVisnoteligibleforataxcreditifitsbatterycontains“any”criticalmineralsourcedfromso-called“foreignentitiesofconcern”.21TheUScurrentlyhasfreetradeagreementsinforcewith20countries.Theyare:Australia,Bahrain,Canada,Chile,Colombia,CostaRica,DominicanRepublic,ElSalvador,Guatemala,Honduras,Israel,Jordan,RepublicofKorea,Mexico,Morocco,Nicaragua,Oman,Panama,Peru,SingaporeandUSMCA(US-Mexico-CanadaAgreement)(www.ustr.gov/trade-agreements/free-trade-agreements).22TheUnitedStatesisindiscussionwiththeEuropeanUniontomakeEuropeanmineralseligibleforUStaxcredits(www.reuters.com/markets/eu-us-working-free-trade-agreement-like-status-2023-03-03/).103GeopoliticsoftheEnergyTransformationCountriescanencouragedomesticmining,refiningandrecyclingusingpolicytoolstostreamlineadministrativeprocesses,expediteplanningandpermittingprocedures,andincreasepublicfundingtobolsterdomesticinvestmentsincriticalmaterialvaluechains.Thesetoolscouldalsobeappliedtotrustedinternationalalliesthroughinternationalpartnerships(seenextsubsection).Suchpoliciescanmakesupplychainsrobust,reducegeopoliticalrisks,andincreasenationalandregionalstrategicautonomy.However,theyalsoentailsignificantrisks,suchasincreasedcosts,reducedeconomiesofscaleandpotentialretaliatorymeasuresfromaffectedcountries.Reshoringandnearshoringmayimplyhighercoststhansourcingfromdistant,low-costsuppliers.AnillustrationofthisriskistheUSminingcompanyMolycorp,whichreopeneditsCaliforniarareearthminein2012butfiledforbankruptcyin2015whenitcouldnotsupportitshighcostsduetogloballowprices.23Policiestoencouragedomesticminingmayalsorequiretradebarriers,whichcouldaffecttraderelationsandraiseconcernsaboutprotectionism.Adoptingreshoring,nearshoring,friendshoringandassociatedpoliciesrequirescarefulassessmentofthetrade-offsandcoststobalanceeconomicconsiderations,tradeobjectivesandenergytransitionpriorities.Further,effortstorewirethesesupplychainswillrequireadelicatebalancebetweeneconomicconsiderations,environmentalconcernsandlocalcommunities’welfare.Fordecades,theenvironmentalandhumancostsofminingandprocessingmineralslikelithiumandrareearthshavelargelybeenhiddenfromtheviewofthecitizensofmanycountries,includingindustrialisedeconomies.Countrieswillhavetoconfrontthesetrade-offsastheylooktodiversifytheirsupplychains.Forinstance,oneofthekeyissuesincurrentdiscussionsontheEuropeanUnion’sCriticalRawMaterialsActiswhetherstrategicmining,refiningandrecyclingprojectsshouldbedesignatedasprojectsofoverridingpublicinterest–meaningtheycouldoverrideenvironmentallaws(Zimmermann,2023a).Despiteongoingeffortstorestructureandbroadencriticalmineralsupplychains,theyfacenotablechallenges,suchasNIMBY(NotinMyBackyard)protests,environmentalissues,andlongleadtimestobringnewmining,refiningandprocessingcapacitiesonline.InSerbia,forinstance,thedevelopmentoftheJadarlithiummine(consideredoneoftheworld’slargestlithiumdeposits)hasbeenfacinggrowingopposition,withlocalcommunitiesraisingconcernsaboutthemine’spotentialenvironmentalimpacts,especiallyintermsofwaterpollutionandthedisplacementoflocalcommunities.Early2022sawthemininggiantRioTinto’slicenserevokedamidpublicprotests(Sekularac,2022).ProtestssuchasthoseinSerbiahavealsohitotherlithiumprojectsinEurope,includinginPortugal,SpainandGermany(Caceres,2023;Zimmermann,2023b).ThediscoveryofalargerareearthdepositinArcticSwedeninJanuary2023raisedconcernsamonglocalSámicommunitiesaboutthepotentialimpactonreindeergrazingareas(Frost,2023).Itisnotjustminingprojectsthatfacelocalopposition.In2012,AustraliancompanyLynasfacedheavylocaloppositioninMalaysiaoverthehealthandenvironmentalrisksposedbypotentialleaksofradioactivewastefromitsproposedrareearthprocessingfacilityinthecountry.Activiststooktothestreets,initiatedlegalactionandsomeevenwentonhungerstriketostoptheproject(Feffer,2023).Thisdelayedtheprojectsignificantly,eventhoughthefacilitybeganoperatingin2013.Protestshaveneverthelesscontinued,andtheMalaysiangovernmentwantsLynastostopthecrackingandleachingpartsofitsoperationsbymid-2023.Theseexamplesunderscoretheimportanceoftheearlyandmeaningfulinvolvementoflocalcommunities,toensuresupportandsecurelong-termbenefits.23TheMountainPassrareearthminewaspurchasedoutofbankruptcybyaconsortiumthatincludedaChinese-ownedfirm(mining.com/mountain-pass-sells-20-5-million/).104CRITICALMATERIALSCriticalmaterialdiplomacyCriticalrawmaterialshavegainedsignificanceininternationaldiplomacy,leadingcountriestoestablishnewalliancesandpartnershipstoensureaccesstothesevitalresources(seeTable4.3).TABLE4.3InternationalcriticalmaterialalliancesAlliancesYearCountriesAimCanada-USJoint2019Canada,Promotejointinitiatives,includingresearchUnitedStatesanddevelopmentco-operation,supplychainActionPlanonCriticalmodellingandincreasedsupportforindustry(NaturalResourcesCanada,2020)MineralsCollaborationEnergyResource2019Australia,Botswana,ShareandstrengthenmineraldevelopmentbestGovernanceInitiativeCanada,Peru,practices,frommappingmineralresourcesto(ERGI)UnitedStatesmineclosureandreclamation(ERGI,2019)CriticalMinerals2019Australia,Canada,ResearchcollaborationamongtheGeologicalMappingInitiativeUnitedStatesSurveyofCanada,GeoscienceAustraliaandtheUS(CMMI)GeologicalSurveytoharnesstheseorganisations’combinedgeologicalexpertisetoaddressglobalnaturalresourcevulnerabilities(Emsboetal.,2021)EuropeanRaw2020EuropeanUnionAddressthechallengeofsecuringaccesstoMaterialsAlliancesustainablerawmaterials,advancedmaterialsand(ERMA)industrialprocessingknow-how(ERMA,2020)SupplyChain2021Australia,India,SharingofbestpracticesonsupplychainresilienceResilienceInitiativeJapan,andorganisinginvestmentpromotioneventsandbuyer-sellermatchingeventstogivestakeholdersopportunitiestoexplorepossibilitiesofdiversifyingtheirsupplychains(MinistryofCommerceandIndustry,GovernmentofIndia,2021)MineralsSecurity2022Australia,Canada,Toensurethatcriticalmineralsareproduced,Partnership(MSP)EuropeanprocessedandrecycledinamannerthatenablestheCommission,Finland,countries’torealisethefulleconomicdevelopmentFrance,Germany,benefitoftheirgeologicalendowments.TheMSPItaly,Japan,Norway,willhelpcatalysegovernmentandprivatesectorRepublicofKorea,investmentforstrategicopportunities–acrosstheSweden,Unitedcompletevaluechain–thatadheretothehighestKingdom,Unitedenvironmental,socialandgovernancestandardsStates(USDepartmentofState,2022).SustainableCritical2022Australia,Canada,DrivetheglobaladoptionofenvironmentallyMaterialsAllianceFrance,Germany,sustainableandsociallyinclusiveandresponsibleJapan,Unitedmining,processingandrecyclingpractices,Kingdom,UnitedandresponsiblecriticalmineralsupplychainsStates(GovernmentofCanada,2022)105©Andy.LIUshutterstock.comGeopoliticsoftheEnergyTransformationApartfromtheallianceslistedinthistable,theG7membersarealsopursuingtheideaofcreatingabuyers’clubforcriticalminerals.24Suchanarrangementwouldfocusonensuringaccesstocriticalminerals,whilepreventingabiddingwarbetweentheG7economiesoverthem(Duehren,2023).TheideawasreaffirmedduringameetingoftheG7climate,energyandenvironmentministersinJapan,whichalsoresultedina“Five-PointPlanforCriticalMineralSecurity”,summarisedinBox4.3(G7HiroshimaSummit,2023).Somecountrieshavebegunsupportingoverseasminingprojectstomitigatetheriskofrawmaterialshortages.TheUnitedStates,forinstance,fundsroughlyadozenmineralprojectsabroad,potentiallyinvolvingmining,mineralprocessingandrecycling,includingthroughtheMineralSecurityPartnership(Holzman,2022).Likewise,theJapanesegovernmentisseekingtodiversifyitscriticalmineralsupplychainsbyencouragingcompaniestoacquiremininginterestsoverseas,havingallocatedJPY1.03trillion(USD7.8billion)towardsthecostsofprovidingassistanceunderitsEconomicSecurityProtectionAct,adoptedinMay2022(Asamina,2022).China,thedominantplayerincriticalmineralsupplychains,hasalsobeenseekingtosecureitsresourcesupplylinesbybuildingstrategicallianceswithmultipleAfricancountries.ThisbolsteredbilateraltradebetweenSub-SaharanAfricaandChina,withthelatterreceivingmineralsandmetalsaskeyimportsfromAfrica(seeFigure4.2).China’s“goout”strategy,formulatedin1999,hasencouragedChinesecompaniestobecomegloballycompetitive,anditcouldsuccessfullyexpanditsinfluenceincriticalmineralsupplychains.BOX4.3TheG7’sfive-pointplanforcriticalmineralsecurity,20231.Forecastlong-termsupplyanddemand2.Developresourcesandsupplychainsresponsibly3.Recyclemoreandsharecapabilities4.Promoteinnovationinresourcesavingandsubstitutetechnologies5.Prepareforshort-termsupplydisruptions.24TheEuropeanUnion’sproposedCriticalRawMaterialsActalsoincludesplansforjointpurchasingofcriticalmaterials.106CRITICALMATERIALSFIGURE4.2ThekeyroleofmineralsandmetalsinChina’straderelationswithAfricaChina's112.4ChemicalsexportsFuelstoAfricaMachineryandChina'selectricalgoodsimportsfromAfricaMinerals&metals075.0PlasticorrubberStone&glassTextilesandclothingTransportation20406080100120WoodOtherUSDbillionSource:(WorldBank,2020c).Note:Thedataarefor2020.TheEUhasalsobeenpursuingarawmaterialdiplomacysinceadoptingitsRawMaterialsStrategyin2011.Ithascommittedtoformingstrategicpartnershipsandholdingpolicydialogueonbroadertopics,suchashumanrightspromotion,goodgovernance,conflictresolutionandregionalstability,withnon-EUcountries(EuropeanCommission,2011).IthasalreadyforgedpoliticalagreementsonrawmaterialswithcountriessuchasArgentina,Brazil,Canada,Chile,China,Colombia,Egypt,Greenland(KingdomofDenmark),Japan,Mexico,Morocco,Peru,Tunisia,theUnitedStates,UruguayandtheAfricanUnion(DirectorateGeneralforInternalMarket,Industry,EntrepreneurshipandSMEs,EuropeanCommission,n.d.).Abalancedandco-operativeapproachinforeignpolicyengagementrequiresaddressingtheobligationsofimportingstatestosupportsustainabledevelopmentandmovingbeyondextractivespatternsincriticalmaterialsupplychains.Thisentailsfosteringpartnerships,advocatingresponsiblesourcingpractices,supportingcapacitybuildinginproducingcountries,promotingtransparencyandaccountability,andinvestinginsustainableinitiatives.Theseconcretestepscanhelpimportingstatescontributetoequitableandsustainabledevelopment,ensuringamoreinclusiveandmutuallybeneficialapproachtoprocuringcriticalmaterials.107GeopoliticsoftheEnergyTransformation©JoseLuisStephensshutterstock.comStrategicstockpilingStrategicstockpilingisanemergencytoolforgovernmentstocopewithpotentialshortagesofkeyfuelsandcommodities.IndustrialisedcountriessuchasChina,Japan,theRepublicofKoreaandtheUnitedStateshaveestablishedstockpilesofstrategicallyimportantimportedcommodities.25Stocksarealsoheldbyprivatecompanies,tradersandmetalexchangesforpricehedgingandsupplychainmanagement.However,reliabledataonthesizeandlocationofthesestocks,andtheirutilisationarecurrentlyunavailable(Wilburnetal.,2016).Strategicstocksofpetroleumareoftenusedasananalogyinpublicdebates,althoughitisworthnotingthatstockpilingrawmaterialsforcleanenergymanufacturingdiffersfromstockpilingcombustiblefuels,whichismorecomparabletohoardingsteelforbuildingoildrillingrigs.Forinstance,acountryfacingrestrictionsongalliumwouldmeanitsthin-filmsolarpanelmanufacturerswouldbeimpacted,justassteelrestrictionswouldimpactdrillingrigbuilders.However,gallium’sunavailabilitywouldnotpreventexistingsolarpanelsfromfunctioning,eventhoughafewcompanieswouldfacesignificantimpacts(KraneandIdel,2022).Stockpilingcouldalsolimitthespeedandscaleoftheenergytransition.Althoughmanufacturingandconstructionofenergyassetsrequirecriticalmaterialstobeavailable,notallcountriespossessthefinancialorotherresourcestomaintainstrategicreserves.Stockpilingcanthereforehaveanunintendedimpactofimpedingsupplychaindiversificationandhinderingcountriesfromreachingtheirpotentialinlocalvaluecreation.Thisraisesthequestionoftheeffectivenessofstockpilingenergytransitionmineralscomparedtostockpilinginsomeothersectors.25Russiaisalsoreportedtohoststrategicstockpilesofvariousmetals,butdataontypesandquantitieshavenotbeenreleased.108CRITICALMATERIALSSofar,theUSgovernment,whichpossessesthelargestpublicstockpiles,hasrefrainedfromstockpilingthesecommoditiesforpurposesotherthandefence.TheUnitedStatesbeganstockpilingcriticalmineralsin1939,undertheprovisionoftheStrategicMineralsAct.Itbuiltinventoriesof42commoditiescriticaltoitsdefenceeffortsandexpandedthemfurtherintheearly1950sinresponsetofearsofshortageduetotheKoreanWar(NationalResearchCouncil,2008).Someinventoriesreachedextremelevels.Forinstance,bytheearly1970s,itsstrategictinstockcorrespondedtoafullyearofglobalconsumption(Radetzkietal.,2020).Materialsfromthestockpilehavebeenreleasedononlytenoccasionsbetween1945and2008(NationalResearchCouncil,2008).Inrecentyears,andespeciallysincethe1990s,theUSNationalDefenceStockpilehasmainlysoldexcessmaterial.InChina,strategicstockpilingofmetalsfallsundertheremitoftheStateReserveBureau(SRB),agovernmentagencycreatedin1993.TheworkingsoftheSRBarenotpubliclydisclosed,althoughitisknownthatitbuysandstoresmineralsinvastquantitieswhenpricesarelowandreleasesthemintothemarketwhenpricesincrease.Assuch,ithasbecomeaninfluentialforceininternationalmarkets.Forexample,in2020,theSRBboughtrefinedcopperinsubstantialquantities,helpingtoboostitspriceamidtheCOVID-19-inducedeconomicslowdown(Home,2021).Consideringminerals’strategicimportance,manycountriesrecentlystrengthenedtheirstockpilingpolicies.Anexamplecanbefoundin2020,whenJapan’snewInternationalResourceStrategyraisedthetargetnumberforstockpilesto60days,andupto180daysformineralswithhighergeopoliticalrisks(AgencyforNaturalResourcesandEnergy,2020).Also,in2021,theRepublicofKoreaannouncedthatitwouldincreaseitsstockpilesof35criticalmetals,forexample,cobalt,nickelandrareearths,tocover100daysofconsumption,upfrom56.8dayspreviously(Byung-wook,2021).Itisworthnotingthatnotallmajorindustrialregionshaveimplementedstrategicstockpilingpolicies.Forinstance,therecentlyproposedCriticalRawMaterialsActintheEUdoesnotenforcemandatorystockpiling.Instead,itencouragesvoluntarymeasures,whilealsorequiringmembercountriestosubmitreportsontheirrespectivepolicies.Theideaofmandatorystockpilingfacedresistancefromsomecompaniesconsideringitcouldbringalreadystrainedsupplychainsundermorepressure(Burton,2023).©JoseLuisStephensshutterstock.com109GeopoliticsoftheEnergyTransformationBuildingstrategicstockscanindeedbewithchallenges.Itcouldexacerbatemarkettightnessandratchetuppricesifdonewithoutadequateconsideration.Anexampleofthiscanbefoundin2010,whenmanyJapanesecompaniesheldrareearthstockpilesamidacrisis,andexpandedthemintheimmediateaftermathoftheembargo.Thishelpeddrivethepricebubble,whichlasteduntiltheendof2011(Sprecheretal.,2015).Unnecessaryprecautionsbycompaniescouldleadthemtofacemarketconsequences.AnexampleofthisistheUScarcompanyFord,whoseconcernsaboutrisingpalladiumpricesdroveittostockpileitinlargequantitiesin2000.Thepricesfellsoonafter,causingthecompanyaUSD1billionloss(White,2002).Stockpilingcanalsorunintomorepracticalproblems.Highlyreactivemetalssuchasmagnesiumarepronetocorrosionanddegradation,whilealkalimetalssuchaslithiumcanigniteorexplodewhenexposedtoairorwater.Therefore,anystockpilingstrategyshouldbepursuedwithcarefulassessmentofpossibleimpactsandregularreviewofcircumstancesanddevelopments.©IAMCONTRIBUTORshutterstock.comReducing,reusingandrecyclingEffortstoreduce,reuseandrecyclecriticalmaterialsaregainingmomentumassolutionstomakesupplychainsmorerobust,supportthetransitiontoacirculareconomyandreducethesematerials’environmentalimpacts(Gielen,2021b).Energyefficiency,conservationandbehaviouralchangecouldeffectivelyrelievepressureoncriticalmaterialsupplychains.Forexample,batterychemistryoptimisationforEVscouldbeaccompaniedbyanotherstrategy,whichisfocusedonEVdemandreduction(e.g.throughbetterpublictransport,encouragingcyclingandwalking,orincentivisingtelework)andoptimisationoftheexistingfleet(e.g.throughcarorridesharingschemes,orreducingthevehicles’massandaerodynamicdrag)(Lovins,2022).Further,governmentscanimplementregulationstoreducetheproductionandconsumptionofsingle-useproducts,whichcouldreducethedemandforcriticalmaterials.Thesebehaviouralchangescanbesignificantinensuringthesustainableproductionanduseofcriticalrawmaterials,whilealsomitigatingtheenvironmentalimpactsoftheirextractionandprocessing.110CRITICALMATERIALSThedemandforcriticalmaterialscanalsobereducedbyimprovingproductdesign,developingnewmaterialswithlowercriticality,andimplementingcircularbusinessmodelsthatprioritisedurabilityandreuse(Babbittetal.,2021).Forexample,transitioningtolow-cobaltbatterydesignscanreducethegeopolitical,socialandenvironmentalrisksandcostsassociatedwiththecobaltsupplychain.However,suchsubstitutionstypicallycomewithtrade-offsintermsofnewresourcedependencies(e.g.shiftingtonickel)orlossofbatteryperformance.Recyclingandreuseofcriticalmaterialscanalsorelievepressureonprimarysupplysourcesandpreventtheassociatedenvironmentaldamages,consideringtheyconsumelessenergyandgenerateloweremissionsthanprimaryextraction(GregoirandvanAcker,2022).Contrarytofossilfuelsandothersingle-usematerials,metalshavepermanentphysicalproperties,makingthemindefinitelyrecyclableintheory.Forsomematerials,recycledsourcesalreadyconstituteamajorproportionoftheglobalsupply.Approximately40%ofcopperandsteelareproducedfromrecycledmaterials.Forothercommonmaterials,suchasaluminium,leadandzinc,over30%ofproductionpresentlyusesrecoveredinputs(BureauofInternationalRecycling(BIR),2021).However,recyclingratesaremuchlowerforothermetals.Forexample,intheEU,onlyabout20%ofplatinumandcobaltisobtainedfromsecondary(recycled)sources;thisrateis5%orlessformostothercriticalmaterials,andclosetozeroforgallium,indiumandrareearths(EuropeanEconomicandSocialCommittee,EuropeanCommission,2020).Increasingtheend-of-liferecoveryofcriticalmaterialsfromlow-carbontechnologiesoftenencounterstechnicalchallenges,collectionissuesandeconomicbarriers(IRENA,forthcoming;KaraliandShah,2022).Whenconsideringrecyclingasapotentialsolutiontosupplyrisks,itisimportanttoexaminethetimescaleofstockturnover.Asubstantialsecondarysupplyispossibleonlywhenthereisasubstantialstockofmaterialsinactiveusethatarenearingtheirendoflife.However,suchconditionsareunlikelytobemetuntilaboutthemid-2030s,especiallyinthecaseofbatteryEVsandtheirassociatedminerals(Zengetal.,2022).Recyclingshouldthusberegardedasamedium-to-long-termstrategytobolstersupplysecurity.©VladyslavHoroshevychshutterstock.com111GeopoliticsoftheEnergyTransformation4.2INCREASINGDOMESTICBENEFITSTOMINERAL-RICHDEVELOPINGCOUNTRIESStrategiesforoptimisingvalueretentioninhostcountriesDevelopingcountriesaretakingstepstooptimisethebenefitsfromtheirmineralresources,oftenutilisingtheirbargainingpowertosecurebettertermsformineralextraction.Anexampleofthiscanbefoundin2018,whentheDemocraticRepublicofCongorenegotiatedforeignaccesstocobaltreservestosecureamorefavourableagreement.Also,Perureformeditscopperroyaltyregimein2021toincreasegovernmentrevenuefromtheminingsector.Further,theChileangovernmentplanstocreateastate-ownedcompanyforlithium,“LithiumforChile”,toensuregreaterstatecontroloverthecountry’slithiumreservesandensurethatChilereceivesafairshareofthevaluegeneratedbyitsresources.Severaldevelopingcountriesalsoaspiretocapturegreatervaluefromtheirmineralresources.Indonesia,forinstance,hasbannedtheexportofunprocessednickeltoencouragevalueaddedactivitieswithinitsborders(seeBox4.4),whileZimbabwehasbannedrawlithiumexporttocurbartisanalminingandattractdownstreamindustries(Banya,2022).Manymoredevelopingcountrieshaveimplementedexporttaxesandnon-automatedlicensingprocedures.However,exportrestrictionscannotguaranteesupporttodownstreamprocessingforanycountry.AstudyexaminingtheuseofvariousmineralandmetalexportrestrictionsbyfourAfricancountriesfoundtheserestrictionstocreatenobenefitfordownstreamindustries(Fliessietal.,2017).Oneexplanationisthatmineralprocessingtypicallyconsumeslargeamountsofenergy,whichisoftensuppliedinadequatelyorunreliablyindevelopingcountries,especiallythosethathaveunderdevelopedgridsandalargepartofthepopulationwithoutelectricityaccess.Thesehighervalueaddedactivitiesalsoemployalabourforcewithhigherskillsthanintheextractivesector,andtheyrequiremorecapital.Attractingsufficientinvestmentsandcapitaltobuildmoreelaboratelocalsupplychainsisoftenachallengefordevelopingcountries.Mineral-richdevelopingcountrieshaveanaturaladvantageinextractionbutnotnecessarilyprocessing.Miningactivitiesareconcentratedinspecificlocations,whicharedeterminedbygeology.However,downstreamindustrieshavegreaterflexibilityintermsoflocation.Bulkshippingmakesitpossibletolocaterefiningandprocessingoperationsthousandsofmilesawayfromminingsites,inareaswithmorefavourableenergysupply,betterenvironmentalconditions,greaterpoliticalstabilityandmoreaffordablecapitalaccess(Hendrix,2022).Sincesomeoftheseadvantagesstemfromhistoricaldisparities,anapproachgearedtowardsinclusivedevelopmentwouldneverthelessseektoexpandprocessingcapacitiesinthedevelopingworld.112CRITICALMATERIALSBOX4.4LessonsfromIndonesia’snickelexportbanIndonesiaholdstheworld’slargestnickelreserves,whichitleveragestoattractinvestmentalongthebatteryandEVsupplychain.InJanuary2014,itbannedtheexportofunprocessednickelandbauxiteores,mandatingtheirprocessingdomestically.Underthelaw,onlycompaniescommittedtobuildingasmelterweregrantedanexportlicense.Themineralexportbandidnotrestrictwhichcompanies,foreignordomestic,couldqualifybybuildingsmeltersinthecountry(Terauds,2017).Thebancontributedtoabrief,sharpincreaseininternationalnickelpricesinthefirsthalfof2014,althoughpricesquicklyrecededamidageneralcommodityslump.Followingabudgetdeficitin2016,thebanwasputonhold,andreintroducedinJanuary2020.Whilethebanmeantshort-termlossofexportearnings,miningjobsandgovernmentrevenues,ithasbeenrathersuccessfulinitslong-termobjectiveofattractingnewinvestmentinnickelprocessingandnurturingadownstreamindustry.Priortotheexportban,Indonesiahadonlytwooperatingnickelsmelters.By2020,thenumberhadrisento13,andmanymorearebeingplanned(Huber,2021).ThecountryhasattractedmorethanUSD15billionofforeigninvestmentinnickelprocessing(seeFigures4.3and4.4).FIGURE4.3Foreigninvestment(USDbillion)inIndonesia’snickelproductionfacilities,2022USDbillion3.5Australia3.02.5Canada2.01.5China1.00.5RepublicofKorea0United20122013201420152016201720182019202020212022StatesSource:(HoandListiyorini,2022).continuednextpage113GeopoliticsoftheEnergyTransformationBOX4.4LessonsfromIndonesia’snickelexportban(continued)FIGURE4.4Indonesia’sexportofrawnickelandnickelproducts(inUSDbillion),2021USDbillion12000Stainlesssteelandrelatedproducts10000Nickelandrelatedproducts,andferro-nickel8000Nickeloresandconcentrates600040002000020012003200520072009201120132015201720192021Source:(UNStatisticsDivision,2022;Kim,2023).MetalsectorinvestmentsinIndonesiahavefocusedonturningthecountry’snickeloreintonickelpigiron,whichisthenfedintostainlesssteelproduction.Thegovernmenthoweverseekstoclimbthenickelvaluechainfurther,havingalong-termgoaltodevelopafullEVsupplychain,includingtheproductionofcathodes,batterycellsandEVs(Kim,2023).Therehavebeensomeinitialsuccesses.Forexample,theRepublicofKorea’sLGEnergySolutionisbuildingaUSD1.1billionbatterycellplant,whilecarmakerHyundaiopenedaplanttoassembleelectriccars.China’sCATL,theworld’slargestbatterymanufacturer,hasinvestedinthecountry,whileTeslaandBYDhaveeithersignedorarefinalisinginvestmentdeals(MauliaandDamayanti,2023;Ruehl,2023).continuednextpage114©rdpcollectionshutterstock.comCRITICALMATERIALS©KAISARMUDAshutterstock.comBOX4.4LessonsfromIndonesia’snickelexportban(continued)Whileothercommodity-dependentdevelopingcountriesmighttakeinspirationfromIndonesia’snickelexportban,theyshouldtreadwithcautionforatleastfourreasons:nTheban’srelativesuccesswaslargelyduetothenon-substitutabilityofIndonesianlateritenickeloreinthenickelpigironprocess.Bycontrast,thebanonbauxiteoreexportsfailedtoattractnewsmeltingactivity,merelyshiftingtheore’sextractiontoothercountries,suchasMalaysia.Fromthisperspective,theIndonesianexamplesuggestedthatitispreferabletoavoidacomprehensiveexportbanoncommoditiesforwhichtherearereadysubstitutes(Terauds,2017).nNickelalsorepresentedarelativelysmallshareoftheIndonesianeconomy;itwasthuslessriskytoinstituteanexportbanonnickelthanonamorestrategicresource,suchascopper.Forcountrieswhosemaincommodityexportsrepresentamoresizeableshareoftheireconomy,anexportbanwouldbeconsiderablyriskier(Terauds,2017).nThenickelexportbanhascomeatcertaincosts.Inthefirstthreeyearsafteritwasimposed,itwasestimatedtohaveincurredlossesofUSD4.5billioninexportearnings,30000miningjobsandUSD270millioningovernmentrevenues(Terauds,2017).Whiletheselossesneedtobeoffsetagainstsubsequentgains,suchasnewinvestmentinnickelrefiningcapacity,suchcostsmustbeaccountedforwhenconsideringpolicyoptions.nIndonesia’ssuccessinattractingnickelrefiningactivitieshascomewithenvironmentalandsocialcosts.Agrowingnumberofprojectsrelyontheso-calledhigh-pressureacidleaching(HPAL)technique,whichproducessubstantialwastecomparedwithtraditionalsmeltingtechniques(Tan,SijabatandIrwandi,2023).nTherearealsolegalrisks.AWorldTradeOrganizationpanelrecentlyruledinfavouroftheEuropeanUnion’sprotestagainstIndonesia’snickeloreexportban(WTO,2022),butIndonesiawillnowappealtheruling(Strangio,2022).115GeopoliticsoftheEnergyTransformation©NamLongNguyenshutterstock.comMineral-richdevelopingcountriesseekingtoclimbupthemineralvaluechainmayfacetradebarriers.Developedcountriesoftenplacehighertariffsonmanufacturedgoodsthanrawmaterials(aprocessknownas“tariffescalation”).Futureimporttariffsmaybetiedtoemissions,asundertheEuropeanUnion’sCarbonBorderAdjustmentMechanism,which,intermsofmetals,willinitiallycoveronlysteelandaluminium,eventhoughitsproductscopemaybeextendedtocovercopper,zinc,nickelandsilicon,amongothers.TheproductionofthesemineralsisnowsubjecttoacarbonpriceundertheEuropeanUnion’sEmissionsTradingScheme,whiletheyareexposedtoasignificantriskofcarbonleakage,justlikealuminiumorsteel(EuropeanCommission,2020).BuildingregionalvaluechainsforEVbatterymineralsRegionalco-operationcouldhelpcountriescaptureagreatershareofthevaluefromproducingminerals.Mineral-richcountriescouldbenefitfromco-ordinatedregionalagreementstoensurefulfilmentoftheconditionsforforeigninvestments,ratherthanpursuingone-on-onedealswithoftenforeigncompanies.Regionalco-ordinationisalsoimportantintermsofattractingdownstreamindustries.OnlyahandfulofcountrieshaveallthemineralstoproduceEVbatteries.Thismeansthatpoolingmineralsupplieswouldbenefitthemajorityofcountriesiftheyweretobuilddownstreamindustries.Moreover,developingcountriescouldalsocreatebiggermarkets.Proximitytodownstreamconsumermarketsisanimportantsuccessfactorinattractinghigher-marginactivitiesinthebattery-EVvaluechain–probablymoreimportantthanproximitytomineralresources.Theproductionof“batteryprecursormaterial”–chemicalsthatareprecursorstomakingbatterycathodes–ismoreviableiflocatednearaclusterofotherchemicalplants.Thenextstepinthevaluechain,batterycathodeproduction,isbestlocatednearbatterycellmanufacturers,becausecathodesaredifficulttotransport(Dieneetal.,2022).TheUnitedNationsEconomicCommissionforAfricahasidentifiedseveralopportunitiesfordevelopingregionalbatterymineralandEVvaluechainsthatspanacrossCentralAfricaandintoEastandSouthernAfrica(Pedro,2021).AconcreteexampleofregionalvaluechaindevelopmentistheSouthernAfricanDevelopmentCommunity’sIndustrializationStrategyandRoadmap2015-2063.Also,theDemocraticRepublicofCongoandZambiahavesignedanagreementtofacilitatevaluechaindevelopmentintheEVbatteryandcleanenergysectors(UNECA,2022).AsiaandLatinAmericaarealsoseeingregionalco-operationonmineralvaluechains.116CRITICALMATERIALS©ATIKANPORNCHAIPRASITshutterstock.com4.3PROMOTINGRESPONSIBLE,SUSTAINABLEANDTRANSPARENTMINERALSUPPLYCHAINSThegrowingrecognitionofsustainabilitychallengesassociatedwiththemineralsupplychain,especiallypertainingtoEVbatterymaterialproduction,haspromptedglobalgovernments,businessesandcivilsocietygroupstodevelopavastarrayofinitiativesandregulatoryframeworks,whichseektoaddresspressingsustainabilityrisks,includingthoserelatedtohumanrights,labourpractices,corruptionandenvironmentalimpacts,amongothers.Whiletheseinitiativesshowsignificantoverlaps,theyvaryintermsoftheactorsandorganisationstowhichtheyapply,theinitiatives’scope(e.g.applicableonlytospecificminesitesorentirevaluechains),themineralscoveredandthecompliancemechanismsinvolved.Theyaremostlylimitedtovoluntaryadherence,resultinginapatchworkofsupplychainmanagementstandards,whichriskssowingconfusionforstakeholders(Elkindetal.,2020).Whileafulloverviewofalleffortstopromoteresponsible,sustainableandtransparentmineralsupplychainsisbeyondthescopeofthisreport,someofthepublic,multi-stakeholderandprivateinitiativesthataremostrelevanttotransitionmineralsarediscussedbelow.PublicsectorstandardsandlegislationTheUnitedNations’UNGuidingPrinciplesonBusinessandHumanRights(UnitedNationsHumanRightsOfficeoftheHighCommissioner,2011)isparticularlynotable.Theyguidebusinessesonhowtorespecthumanrightsthroughouttheiroperationsandsupplychains,withafocusonduediligence,riskassessmentandremediesforhumanrightsabuses.VariousUNagencies,forexample,theInternationalLaborOrganization,havedevelopedsustainableminingstandards.Finally,theSustainableDevelopmentGoalsarealsorelevanttotheminingsectorinmultipleways,asshowninFigure4.5.117GeopoliticsoftheEnergyTransformationFIGURE4.5MiningandtheSustainableDevelopmentGoalsCountry-by-countryFinancingEconomicactivityLandcompetitionPreventativereporting•Displacement•Agromineralshealthcare•Opendata•Fiscalissues•Soilsurveys•Illicitﬁnancial•Jobs•Micro-nutritients•Mentalhealthﬂows•Public-privatepartnerships•HIV/AIDS•Conﬂict•Domestic•TB,emerging•Free,priorandcapacityinfectiousdiseasesinformedconsent•OSHEcosystemIntegrationwithservicesnationalcurricula•Riskmitigation•Scholarships•Net-positive•Baselinesimpact•Technical,voca-•Osetstional,andedu-cationaltrainingTailingsdisposalEqualpayandopportunity•Impactassessments•Asymmetricimpacts•Deep-seamining•Gender-inclusivepoliciesEmissionsWaterrecyclingreductions•Community•Materialsforinvolvementlow-Csociety•Waterreporting•Adaptation•Shareduse•CarboncaptureRenewablesandstorage•Eciencyaudits•ShareduseMaterials•Reliabilitystewardship•Circulareconomy•MinimisingwasteNetpositivePoliticalinclusionResourcecorridorsDiversiﬁcationreclamation•Valueadded•Participatory•Shareduse•Localcontent•Appropriateplanning•Innovation•Businesstechnology•Socialunrestincubators•Urbanmining•Multipliers•JobsSource:(ColumbiaCentreonSustainableDevelopmentetal.,2016).Notes:AIDS=acquiredimmunodeficiencysyndrome;C=carbon;HIV=humanimmunodeficiencyvirus;OSH=occupationalsafetyandhealth;TB=tuberculosis.118CRITICALMATERIALS©sunsingershutterstock.comLikelythemostwidelyreferencedinternationalstandardistheOrganisationforEconomicCo-operationandDevelopment’s(OECD,2016b)DueDiligenceGuidanceforResponsibleSupplyChainsofMineralsfromConflict-AffectedandHigh-RiskAreas(hereafter“OECDMineralsGuidance”),whichprovidescompanieswithasupplychainduediligenceframeworkforsourcingmineralsfromconflict-affectedandhigh-riskareas.Theguidelines,whicharevoluntary,coverseveralissues,includingsupplychaintraceability,riskassessmentandstakeholderengagement,andthe46signatorystates–representing85%offoreigninvestment–aremandatedtooperateagovernmentcomplaintmechanism(Whitmore,2021).TheOECDMineralsGuidancehasbeenintegratedintoseveralregulatoryframeworks(notablyintheUnitedStatesandtheEU,aswellasinproducingandtradingcountriessuchastheDemocraticRepublicofCongo,RwandaandtheUnitedArabEmirates),industryguidelinesandmarketrequirements.Forexample,theChinaChamberofCommerceofMetals,Minerals&ChemicalsImporters&Exporters(closelyassociatedwiththeMinistryofCommerceandwithover6000members,whoseannualimportandexportvaluerepresentsabout30%ofChina’stotalimportandexportvalue)hasintegratedOECDstandardsintoChinesestandards.Also,in2022,allmetalstradedontheLondonMetalExchange,includingaluminium,cobalt,copper,tin,nickel,zincandlead(mostofthemessentialforthegreenanddigitaltransitions)werebroughtundermandatoryduediligencefollowingtheOECDMineralsGuidance.26Consideringinternationalstandardsprovideaglobalreferencepointforthetrade,itisworthmentioningtheInternationalStandardsOrganization(ISO),anindependent,non-governmentalinternationalorganisationwith167nationalstandardisationbodiesasmembers.Since1955,ithasatechnicalcommitteeformining,whichdevelopsstandardsforminingactivities.Since2015,twonewISOcommitteesonmetalsandmaterialshavebeencreatedattherequestofSAC(StandardsAdministrationofChina;theChinesestandardisationbodyonrareearthsandonlithium).Thesetechnicalcommittees,whicharenowledbytheSAC,developstandardsfortheclassification,traceability(fromminetofinalproducts),packagingandchemicalanalysismethodsforthosematerials.Sevenstandardshavebeenpublishedonrareearths,andninestandardsonrareearthsand14standardsonlithiumareunderdevelopment(ISO,2023a,2023b).Also,AssociationFrançaisedeNormalisation,theFrenchstandardsbody,recentlyproposedtocreateatechnicalcommitteefor14additionalcriticalmaterials,includingcobalt,graphiteandpalladium(ANSI,2023).26Giventhesignificanceofmultinationalcorporationsinmineralindustries,theOECDGuidelinesforMultinationalEnterprises,undergoingrevision,arealsorelevanttomentionhere(OECD,2011).Theseguidelinessetoutprinciplesforenvironmentalandsocialduediligenceandreporting,amongothers.119GeopoliticsoftheEnergyTransformation©savaskeskinergettyimages.comCountries’activeparticipationininternationalstandarddevelopmentisessentialfortheirinvolvementintradeandreapingitsbenefits.WhiletheISOtechnicalcommitteeonlithiumhasallmajorlithiumminingandrefiningcountriesasmembers,severalcountriesengagedinrareearthminingandrefiningarenotyetitspart–theseinclude,notably,Estonia,amajorrefiningcountry,andtheUnitedRepublicofTanzaniaandMyanmar(notafullISOmember),amajorminingcountry.Apartfromtheseinternationalinitiatives,themineralsupplychainisalsoregulatedbymanynationalandregionalregimes.TheseincludetheEUConflictMineralsRegulation,whichcameintoeffectin2021andrequirescompaniestoconductduediligenceontheirsupplychainsandeffectivelyidentifyandmitigateriskswhensourcingmineralsfromconflictedandhigh-riskareas(Directorate-GeneralforTrade,EuropeanCommission,2017).Theregulationonlyappliesto3TG(tin,tantalum,tungstenandgold)minerals,nottootherenergytransitionminerals,suchascobalt,graphite,nickelandlithium.OtherexamplesincludeSection1502oftheUSDodd-FrankAct(whichrequirescompanieslistedonUSstockexchangestodisclosewhethertheirproductscontainconflictminerals[3TGminerals]),theUKModernSlaveryActof2015andtheDutchChildLabourDueDiligenceAct,adoptedin2019.TheEuropeanUnion’supcomingBatteriesRegulationaimstobringbatteryrawmaterialsunderstringentsustainabilitystandardstoensuretheirsustainabilitythroughouttheirlifecycle,fromtheirsourcingtotheircollection,recyclingandrepurposing.Theregulationincludescarbonintensityandrecyclingquotasandduediligence,andwillensurethatbatteriescanberepurposed,remanufacturedorrecycledattheendoftheirlife(EuropeanCommission,2022).120CRITICALMATERIALSMulti-stakeholderinitiativesThereisaglobalincreaseinmulti-stakeholderinitiativestopromoteresponsiblesourcing,sustainableproductionandtransparencyinthecriticalrawmaterialsupplychain.AnexampleinthisregardarethewidelyusedGlobalReportingInitiative(GRI)sustainabilityreportingstandardsforlargecorporations(UNEP,2020).Inadditiontothegeneralstandards,theGRIhasaspecialguidancedocument,whichsetsperformanceindicatorsfordisclosuresintheminingandmetalssectors(GRI,2023).AnothernotableexampleistheResponsibleMineralsInitiative(RMI),whichaimstoadvanceresponsiblemineralsourcingbydevelopingandimplementingstandards,toolsandprogrammesforcompaniesandsuppliers.WhiletheRMIinitiallyfocusedonthe3TGminerals,whichareoftenassociatedwithhumanrightsabusesandconflict,itnowcoversallmineralsupplychains(RMI,2021).TheRMIincludesauditingandcertificationprogrammes,supplychainduediligencetoolsandcapacity-buildingprogrammesforsuppliers.TheGlobalBatteryAlliance(GBA),amulti-stakeholderinitiativelaunchedin2017bytheWorldEconomicForum,providesanotherframework,whichensuresresponsiblemineralsourcingandproduction,coveringareassuchashumanrights,labourpractices,environmentalmanagementandcommunityengagement.TheGBAseekstocreateasustainableandresponsiblebatteryvaluechainbyprioritisingthemitigationofsocialandenvironmentalimpactsrelatedtotheextraction,processinganddisposalofbatterymaterials.Ithasdevelopedasetofguidingprinciplestoreachthisgoal.Italsoworkstopromotetransparencyandtraceabilityinthesupplychain,andencouragesstakeholdercollaborationtodrivesystemicchange(GBA,2017).TheExtractiveIndustriesTransparencyInitiative(EITI)establishesaglobalstandardforthetransparentandaccountablemanagementofnaturalresources.TheEITIaimsforgreatertransparencyandseekstoreducecorruption,encouraginggovernments,companiesandcivilsocietyorganisationstoworktogethertodiscloseinformationontherevenuesgeneratedfromtheextractionofmineralsandotherresources.TheEITIgraduallyincludedenvironmentalissuesinitswork,revisingitsstandardin2019toalsoencourageimplementingcountriestodiscloseinformationonthemanagementandmonitoringofextraction’senvironmentalimpacts.EITI’sstandardiscurrentlyimplementedbyover50countries.121©MagnificalProductionsshutterstock.com©KriminskayaEkaterinagettyimages.comGeopoliticsoftheEnergyTransformationTheaboveinitiativesarefarfromtheonlyones.Table4.4showsotherselectedmulti-stakeholdergovernanceinitiativestogoverntransitionminerals.TABLE4.4Selectedmulti-stakeholdermineralgovernanceinitiativesCoverageFoundingorganisationsStandards/guidanceAllmineralInternationalCouncilonMiningandMetalsMiningprinciples/performanceexpectations/resources(ICMM)sustainabledevelopmentframework(ICMM,2022b)InitiativeforResponsibleMiningAssuranceStandardforresponsiblemining(IRMA)(IRMA,2006)MiningAssociationofCanada(MAC)TowardsSustainableMining(TSM)protocolsandframeworks(MAC,2004)DMTandEITRawMaterialsCERA4in1PerformanceStandard(CERA4in1,2017)InternationalFinanceCorporation(IFC)/PerformancestandardsonenvironmentalandWorldBankGroupsocialsustainability(IFC,2012)ResponsibleMineralsInitiative(RMI)ResponsibleMineralsAssuranceProcess(RMI,2018)LondonMetalExchange(LME)LME’sresponsiblesourcingrequirements(LME,2019)Copper(+lead,InternationalCopperAssociationTheCopperMark(TheCopperMark,2019)nickel,zinc,molybdenum)AluminiumFourteenfoundingcompaniesAluminiumStewardshipInitiative(ASI)(+bauxite,(ASI,2023)alumina)Steel(+iron)VariousstakeholdersResponsibleSteel(ResponsibleSteel,2018)TinInternationalTinAssociationandtheInternationalTinSupplyChainInitiative(ITSCI)Tantalum-NiobiumInternationalStudyCenter(ITSCI,2010)CobaltTheImpactFacility(aBritishnon-governmentalFairCobaltAlliance(FairCobaltAlliance,2020)organisation)andvariouscompaniesChinaChamberofCommerceofMetals,ResponsibleCobaltInitiative(RESPECTMinerals&ChemicalsImporters&Exporters,International,2016)andOrganisationforEconomicCo-operationandDevelopmentCobaltIndustryResponsibleAssessmentFramework(CobaltInstitute,2021)CobaltInstitute122CRITICALMATERIALS©cornfieldshutterstock.comPrivate,corporateactionsApartfrommultilateralandmulti-stakeholderinitiatives,manycompanieshavetheirownprogrammestosourcecriticalmaterialsresponsibly.Givenbelowaresomeexamples:nTeslawillsourceitscobaltandothercriticalmineralsonlyfromsuppliersmeetingitsenvironmentalandsocialstandards.Itisalsodevelopingnewbatterychemistriestoreduceitsrelianceoncobaltforitsbatteries.nApplehasdevelopedaresponsiblesourcingprogramme,whichrequiresitssupplierstofollowstringentenvironmentalandsocialstandards,andcoversseveralcriticalminerals,includingcobalt,tantalum,tin,tungstenandgold.AppleworkstopromoteresponsibleminingpracticesthroughitsparticipationintheRMI.nFordhasdevelopedasustainablematerialsstrategy,whichfocusesoncriticalmineralssuchascobalt,lithiumandrareearths.Itisworkingtoidentifyandaddressenvironmentalandsocialrisksinitssupplychainsandiscollaboratingwithsupplierstopromoteresponsiblesourcingpractices.nRioTintohasdevelopedaresponsiblesourcingprogramme,whichcoversseveralminerals,includingcopper,aluminiumanddiamonds,andfocusesonhumanrights,environmentalsustainabilityandcommunityengagement.Theprogrammeinvolvesworkingwithsupplierstoaddressrisksandimprovepractices.nBMWhasestablishedasustainabilityprogramme,whichfocusesontheresponsiblesourcingofcriticalmineralssuchascobaltandlithium.BMWworkswithsupplierstopromotesustainablepracticesandhascommittedtousingonlycertifiedsustainablerawmaterialsinitsproductsby2030.nVolkswagenhascreatedacomprehensivesustainabilityprogramme,whichfocusesontheresponsiblesourcingofcriticalmineralssuchaslithiumandcobalt.Volkswagenworkswithsupplierstoensuretheycomplywithitsenvironmentalandsocialstandards,anditalsoinvestsinnewtechnologiestoreduceitsrelianceoncriticalmineralsinitsproducts.nUmicoreensuressustainableprocurementofbatterymaterials(cobalt,lithium,nickel)throughaframework,whichincludestransactionandlogisticalsystems,qualitychecks,chemicalfingerprintingandstakeholderengagement.123GeopoliticsoftheEnergyTransformationHolisticapproachesExistingapproachestotheresponsiblesourcingofcriticalmaterials,especiallytraceabilityschemes,havelimitations.Tobeeffective,theseschemesmustestablishtrust,ensureauthenticityandminimisepotentialsystemloopholes(Sovacooletal.,2020).Presently,theseschemesareoftenvoluntary,andlackcohesionandrobustenforcementmechanisms.Traceabilityschemescouldbemademoreeffectivebypotentiallyincludingappropriatesanctions,penalties,compensationandremediationmechanismsinresponsetoviolations.Thiswouldlikelyrequiregreaterinvolvementfrompublicinstitutionsandgovernments.However,evenwithstrongergovernmentparticipationandenforcement,traceabilitysystemsalonehaveinherentlimitations.Theytendtoprioritisereputationalriskmitigationforcorporationsincriticalmaterialvaluechainsratherthantransformativesocialchange(Kügerletal.,2023;Sovacooletal.,2020)andare,thus,notcomprehensivesolutionstotheunderlyingissuesathand.Forinstance,onecriticalconsiderationinresponsiblesourcinginitiativesistheunintendedimpactonvulnerableparticipantswithinthesupplychain,suchasartisanalandsmall-scaleminers,whooftenfaceeconomicuncertainty,jobinsecurity,andbearadisproportionateburdenofhumanrightsviolationsandenvironmentalharm.Merelysafeguardingtheirlivelihoodsfallsshortofaddressingthesystemicproblem,whichrequiresengagingininclusivedialogueencompassingthefairdistributionofrisks,inputs,creativecontributionsandtheresultingvalue.Whilethereisaproliferationofregional,national,andindustry-ledinitiativesonhowtoaddressvarioussupplychainchallengesthereisstillnooverarchingintergovernmentalframeworktoaddressglobalsourcing,productionandtradeofcriticalmaterials.Withthegrowingimportanceofthesematerialsfortheenergytransitionandbeyond,co-ordinatedpolicyactionisbecomingincreasinglyimportant.AglobaleffortundertheauspicesoftheUnitedNationscouldplayakeyroleinensuringthatthecriticalmaterialvaluechainsarefair,equitableandtransparent.©xshotshutterstock.com124CRITICALMATERIALSPOLICYCONSIDERATIONSANDTHEWAYFORWARDIRENA’sGlobalCommissionontheGeopoliticsofEnergyTransformationnotedinits2019reportthatbottlenecksincriticalmaterialswereontheradarofpolicymakers(GCGET,2019).Criticalmaterialswerealreadyperceivedtobescarce-inpartbecause,likeallcommoditymarkets,thesemarketsarecyclical.Whendemandrises,supplytakestimetorespond,particularlyasnewminingprojectshavelongleadtimes.TheCommissionnotedthegeologicalabundanceandwidedistributionofmaterialreserves,recognisingthattheyareoftenexpensiveandpollutingtomineandproduce.ThisreportechoestheinitialobservationsfromtheCommission.Withthepressuretoacceleratetheenergytransitioninlinewiththe1.5°Cpathway,avastdeploymentofenergytransitiontechnologiesisrequiredby2030.IRENA’sWorldEnergyTransitionsOutlook(WETO)estimatesthatanaverageof1000GWofrenewableswillneedtobedeployedannually.WETOalsoemphasisesthatenablinginfrastructurewillbeessentialtoaccommodatehighsharesofsolarandwind,crossborderelectricitytrade,electrificationofendusessuchastransport,andgreenhydrogenproductionandtrade.Combined,thesetechnologiesaredramaticallyincreasingdemandforcriticalmaterials.Itiswidelyrecognisedthatthesupplychainsformanycriticalmaterialsareconcentratedinafewcountriesandinthehandsofalimitednumberofcompanies.Thisconcentrationcreatesvulnerabilitiesanduncertaintiesforbothconsumingandproducingcountriesthatcouldaffectthedeployment,costandsustainabilityofenergytransitiontechnologies.However,securityofsupplyisonlypartofthestory.IRENAhasconsistentlyurgedaholisticapproachtoallaspectsoftheenergytransitiontoproactivelyshapeoutcomesandmanagerisks.Thisisparticularlyimportantinthepursuitofcriticalmaterials,givenalegacyofpoorlabourstandards,displacements,pollutedwaterwaysanddegradedlandinthecommunitiesinwhichminesoperate.Moreover,thegrowingdemandforcriticalmaterialsopensnewopportunitiesfordevelopingcountriesrichinresources-especiallytocapturegreatereconomicvalue.Additionaleconomic,social,environmentalandgeopoliticalimplicationsmayalsoemergeascriticalmaterialmarketsexpand.Itisthereforeessentialthatthediversificationofcriticalmaterialssupplychainsisachievedbothquicklyandprudently.Someofthekeyconsiderationsforpolicymakersareoutlinedbelow.©SunshineSeedsshutterstock.com125GeopoliticsoftheEnergyTransformationComprehensive,economy-wideevaluationsofcriticalmaterialdemandareessentialtoidentifypotentialrisksandhelpavoidcompetitionbetweensectors.Countriesshouldcarefullyassesstheeffectsofsurgingdemandforcriticalmaterialsacrossalleconomicsectors,inlinewiththeirnet-zerostrategies.Currently,mostdemandforthesematerialscomesfromsectorsunrelatedtotheenergytransition,includingelectronics,aviation,defence,healthcare,andsteelandaluminiumproduction.However,thedemandlandscapeisquicklyevolvingwiththerolloutofrenewableenergytechnologies,batteriesandelectricvehicles.Furthermore,themodernisationandexpansionofgridsarecontributingtotheincreaseinmaterialuse.Intheshorttomediumterm,itwillbeimportanttomaintainvisibilityonhowthegrowingdemandformaterialsinenergywillimpactoveralldemandinordertoassesspossibletrade-offsandstrategies,andavoidcompetitionbetweensectorsandindustries.Nocountryalonecanfulfilitsdemandforallcriticalmaterials,socollaborativestrategiesthatbenefitallinvolvedneedtobedevelopedandimplemented.Giventheextensiveleadtimesforestablishingnewminesandprocessingplants,concentratedsupplychainsareexpectedtopersistinthenearfuture.Countriesshouldaimtodevelopdualstrategiestoensureco-operationtokeepmarketsfunctioningwhilealsoworkingtodiversifysupplychainsinthelongterm.Manybilateral,regionalandindustry-ledinitiativesfocusonsupplychainchallenges,whichcouldbeleveragedforco-ordinatedpolicyaction.Atthegloballevel,IRENA’sCollaborativeFrameworkforCriticalMaterialsisanestablishedplatformtoexchangeknowledgeandbestpractices,andco-ordinateactionstoensurethatmineralsandmaterialscontinuetosustainanacceleratedenergytransition.Comprehensiveassessmentsofcriticalmaterialsshouldbeconductedforeachmineraltofullygraspthedependencies,risksandinnovationsthatmayaffectsupplyanddemand.Despitethelonglistofidentifiedcriticalmaterials,notallareequallyimportantfortheenergytransition,noraretheircriticalityassessmentsconsistent.Forinstance,innovationhasresultedinanincreaseduseofsubstitutematerialsforthoseconsideredcritical,suchasneodymium,copper,andlithium.Policymakersshouldcontinuetofosterinnovationtodecreasedependencyonparticularmaterialsandtacklespecificchallengesassociatedwitheachone.alongtheentiresupplyanddemandchains.Regularrevisionsandevaluationsofcriticalmateriallistsarealsonecessaryduetotherapidinnovationsoccurringinproduction.©Phawatshutterstock.com126CRITICALMATERIALSGeopoliticalriskscanbemitigatedthroughenhancedinvestmentinresearchanddevelopment,whichwouldexpeditethecreationofalternativesolutions,boostefficiency,andexpandrecyclingandrepurposingoptions.Severalstrategiescanbeemployedtopreventmajorsupplychallengesleadingupto2050,withafocusonthisdecade.Keyamongtheseareproductdesignstrategiestominimisetheuseofcriticalmaterials,andtherecyclingandreuseofproductstoreclaimscarcematerials.Recenttrendsarepromising,suchasbatterymanufacturersminimisingtheirrelianceoncriticalmaterialsupplies.Policymakersshouldsupportinnovationsthatlowerdemandandfosteracirculareconomytoensurelong-termmaterialsecurity.Greaterdatatransparencyandoversightofcertaincriticalmaterialsarerequiredtomitigateuncertaintyinsupplyanddemandprojections.Thestartingpointshouldbethecollectionofmoredetailedinformationanddataonreserves,production,investment,andpricing,amongotherfactors,totrackcurrentsupplyandincreasemarkettransparency.Theadoptionofinternationalqualitystandardsandcertificationforkeyproductsinvolvingcriticalmaterialscouldalsofacilitatemarketformation.Thiseffortshouldbeaccompaniedbythedevelopmentandregularupdatingofdemandscenarios,providinggreatervisibilityintopotentialgapsandtheimpactsofinnovation.Anyshort-termpolicyactions,suchasstockpiling,shouldbecarefullyassessedtoavoidunintendedimpactsonclimateaction.Developingcountriescantapintotheirmineralresourcesandretainmoreeconomicvalue,formingthecornerstoneofadiversificationstrategythatalsocontributestoglobalequityandstability.Inadditiontopolicythatcanensuredomesticvalueaddedandpromotegreenindustrialisation,diversificationofsupplychainsmustincludeastrategyfortradeandcooperationbetweendevelopedanddevelopingcountries.Abalancedandco-operativeapproachinforeignpolicyengagementrequirestheimportingstatestosupportindustrialdevelopmentindevelopingcountriesbeyondextractivepatternsincriticalmaterialsupplychains.Thisentailsfosteringpartnerships,includingwiththeprivatesector,advocatingresponsiblesourcingpractices,supportingcapacitybuildinginproducingcountries,promotingtransparencyandaccountability,andinvestinginsustainableinitiatives.Theseconcretestepscanhelpimportingstatescontributetoequitableandsustainabledevelopment,ensuringamoreinclusiveandmutuallybeneficialapproachtoprocuringcriticalmaterials,whilesecuringthelong-termresilienceofmaterialsupplychains.Internationalco-operationiscrucialincreatingtransparentmarketswithcoherentstandardsandnorms,groundedinhumanrights,environmentalstewardshipandcommunityengagement.Theenergy-drivenmineralboomoffersachancetorewritethelegacyoftheextractiveindustry.Knownissuessurroundingminingpracticesneedaproactiveresponsefrombothnationsandcorporations.Importerandexportercountriesmustcollaboratetodevelopsupplychainsthatupholdclearstandardsregardinghumanrights,environmentalconcernsandcommunityengagement.Thesestandardsareessentialtohumansecurityandtheirabsenceisoneoftherootcausesofgeopoliticalinstability.Inthisregard,miningcorporationsshouldbeheldaccountablefortheresponsiblemanagementofextractionprocesses.Thisrequiresengagingininclusivedialogueencompassingthefairdistributionofrisks,inputs,creativecontributionsandresultingvalue.AglobaleffortundertheauspicesoftheUnitedNationscouldplayakeyroleinensuringcriticalmaterialvaluechainsarefair,equitableandtransparent.127GeopoliticsoftheEnergyTransformationREFERENCESAbraham,D.S.(2017),Theelementsofpower:gadgets,guns,andthestruggleforasustainablefutureintheraremetalage,YaleUniversityPress,NewHaven.AfricanClimateFoundation(2022),GeopoliticsofCriticalMineralsinRenewableEnergySupplyChains,TheAfricanClimateFoundation,CapeTown,https://africanclimatefoundation.org/wp-content/uploads/2022/09/800644-ACF-03_Geopolitics-of-critical-minerals-R_WEB.pdf(accessed17May2023).AfricanMineralsDevelopmentCentre(2018),DesktopReviewofAfricanGeologicalSurveyOrganisationCapacitiesandGaps,EconomicCommissionforAfrica,AddisAbaba,Ethiopia,https://archive.uneca.org/sites/default/files/PublicationFiles/desktop_review_of_african_geological_survey_organisation_capacities_and_gaps_2018.pdf(accessed15May2023).Agatie,C.(2023),"TeslaMightEnterMiningBusinessAfterAll,AsItMullsSigmaLithiumBuyout",https://www.autoevolution.com/news/tesla-might-enter-the-mining-business-after-all-as-it-mulls-sigma-lithium-buyout-210540.html(accessed6April2023).AgencyforNaturalResourcesandEnergy(2020),Japan’snewinternationalresourcestrategytosecureraremetals,AgencyforNaturalResourcesandEnergy,Tokyo,https://www.enecho.meti.go.jp/en/category/special/article/detail_158.html(accessed31March2023).Albemarle(2023),2023StrategicUpdate,https://s201.q4cdn.com/960975307/files/doc_events/2023/Jan/24/2023_01_ALB_Strategic_Update_PPT_Web.pdfAlbertin,Giorgia.,etal.(2021),TaxAvoidanceinSub-SaharanAfrica’sMiningSector,IMF,Washington,D.C.,https://www.imf.org/en/Publications/%20Departmental-Papers-Policy-Papers/Issues/2021/09/27/Tax-Avoidance-in-Sub-Saharan-Africas-Mining-Sector-464850.(accessed15May2023).Ali,S.H.(2009),Mining,theenvironment,andtheindigenousdevelopmentconflicts,UniversityofArizonaPress,Tucson.Anderson,R.W.,andGilbert,C.L.(1988),"CommodityAgreementsandCommodityMarkets:LessonsFromTin"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selectionofcriticalmaterials,namelycopper,graphite,nickel,cobalt,lithium,manganese,neodymium,dysprosium,iridiumandplatinum.Theseratioseffectivelydemonstratethedisparitybetweencurrentsupplyandfuturedemandforthesematerials.Thecalculationsarebasedondataobtainedfromcredibleexternalsources,encompassing2022supplyandprojectedenergyandnon-energydemandin2030forthesematerials.Furthermore,IRENAisintheprocessofdevelopingacomprehensiveanalysisofthedemand-supplygapspecificallytailoredforitsupcomingEVbatteriesreport.TableA1providesacomprehensiveoverviewofthecurrentandprojecteddemandandsupplyfigures,complementedbydetailspertainingtotheexistingreservesandresourcesforcriticalmaterials.TABLEA1CurrentandprojecteddemandandsupplyforcriticalmaterialsRawmaterialsDemand/DemandDemandDemandSupplyCurrentCurrentsupplyin2022in2030in2030in2030ReservesResourcesCobaltin2022inenergy[Mt/y]1inenergy[Mt/y]in2022in2022Copper[Mt/y]sector(%)sector(%)[Mt][Mt]DysprosiumGraphite0.18c[5]33%g[5]0.24–48%–56%0.24–8.30[1]25x[1]IridiumLithiuma0.48o[21][7]0.46t[8]ManganeseNeodymium25.70b[6]32%d[10]31–45i36%[10]30.34–2100v[1]Nickel39.50r[9]890[1]Platinum0.001436%k0.005–46%–57%0.0040–0.32–3[4][17](2018)[14]0.007[7][7]0.0041[7]1.30[4]800[1]NANatural1.25[5]21%e[12]4.3–5.9m79%[23]22.94[15]330[1]1000Synthetic2.28[19][19]3.48[19]NAtonnes7.9tonnes4.3%[8]24.95q[8]46.3%[8]13.7tonnes700[16][8]tonnes0.69[5]66%h[5]2.0–4.4p95%–99%1.30–2.90u138[1]522[1][22][7][8]22.00[13]0.60%i[11]22.50–6%[24]21.00–241700[1]>17200v26.0[9][9][25][2]0.038[17]18.9%i[18]0.065–28%–40%0.055–11.60–17–74[4]0.075[7]13.60[3][7]0.071[7]2.91[5]8.6%f[5]3.8–6.2n26%–38%3.00–100[1]300w[1][20][7]4.90s[8]161tonnes9%[27]213.156%[8]232.43220046000[16]tonnestonnes[8]tonnes[8]tonnes148CRITICALMATERIALS1Projectionsofdemandforcriticalmaterialsin2030comefromprojectionsdevelopedbyexternalsources.2Whilemajorityofgraphiteusedforthebatteryproductionisnaturalgraphite,ashareofnaturalandsyntheticgraphiteinbatteriesdiffersasaresultofvariousfactors,includingprice,availabilityandinherentbenefitsofeachtype.Sources:[1]USGS,2023;[2]USGS,2018;[3]Yaoetal.,2021;[4]Junneetal.,2020;[5]Fastmarkets,2023;[6]S&PGlobalIQ,2022;[7]Eurometaux,2022;[8]IRENAanalysis;[9]McKinsey,2023;[10]BNamericas,2022;Eurometaux,2022;IHSMarkit,2022;MineralsCouncilofAustralia,2022;S&PGlobalIQ,2022;Systemiq,2023;[11]BenchmarkMinerals,2019;[12]GovernmentofCanada,2022;[13]EuroManganese,2022;[14]JRC,2020;[15]WSJ,2023;[16]JohnsonMatthey,2022;[17]TheInstituteofEnergyEconomics,Japan,2022;[18]OEC,2023;[19]Mining.com,2021;MitchellandDeady,2021;NVM,2021;QYResearch,2023;[20]Eurometaux,2022;Garvey,2021;McKinsey,2023;MineralsCouncilofAustralia,2022;Mining.com,2021;NickelAsia,2022;Systemiq,2023;Vale,2022;[21]CobaltBlueHoldings,2022;Darbar,2022;Eurometaux,2022;Fu,2020;McKinsey,2022;Mining.com,2021;NVM,2021;Systemiq,2023;[22]Albemarle,2023;Eurometaux,2022;Lazzaro,2022;McKinsey,2022;NVM,2021;S&PGlobalIQ,2022;Systemiq,2023;[23]Els,2022;[24]MooreFinance,2022;[25]:JupiterMines,2023.Notes:CSP=concentratedsolarpower;EV=electricvehicle;PV=photovoltaic;Mt=megatonne.aReferstolithiumcarbonateequivalent(LCE).bReferstoinrefinedcopperdemand.cReferstorefinedcobaltdemand.dIn2021,32%ofrefinedglobalcopperconsumptionpertainedtoenergytransitionend-usessuchasT&D,wind,solarPV,EVandcharging,andenergystorage.Copperdemandfromenergytransitionend-usesisexpectedtopeakin2035withashareof42%.eReferstoallbatterytypes,notonlyEVandenergystoragebatteries.fReferstoenergytransitionrelatedend-usessuchasEV’s(8.11%)andenergystoragebatteries(0.40%).gReferstoenergytransitionrelatedend-usessuchasEV’s(33.00%).hReferstoenergytransitionrelatedend-usessuchasEV’s(60.40%)andenergystoragebatteries(5.30%).iReferstoElectrolyticManganeseDioxide(EMD)usedforLithium-ionbatteriesandAlkalinebatteries.Thisdataisfrom2019.jDemandfrombatteriesaccountsfor4%,demandfromNdFeBpermanentmagnetsaccountsfor80%ofdemand,fromwhich~6%comesfromwindenergyapplicationsand~12%fromEVmotors.kDysprosiumusedforwindenergyandmotorapplicationsaretakenintoaccountinthiscategory.lBasedon6differentforecasts.Theaverageforecastshowsacopperdemandof38.7Mtby2030.mBasedon3differentforecasts.Theaverageforecastshowsanaturalgraphitedemandof4.6Mtby2030.nBasedon9differentforecasts.Theaverageforecastshowsanickeldemandof4.8Mtby2030.oBasedon10differentforecasts.Theaverageforecastshowsacobaltdemandof0.35Mtby2030.pBasedon10differentforecasts.TheaverageforecastshowsaLithiumLCEdemandof3.19Mtby2030.qIRENAestimatesanannualelectrolysercapacityadditionof100GWby2030.Assuming40%ofelectrolysersarePEMand400kgper1GWofPEMelectrolysers,electrolyserswouldrepresentaniridiumannualdemandof16tonnesinadditionfromdemandfromothersectors.rBasedon5differentforecasts.Theaverageforecastshowsacoppersupplyof34.54Mtby2030.sBasedon7differentforecasts.Theaverageforecastshowsanickelsupply4.14Mtby2030.tBasedon11differentforecasts.Theaverageforecastshowsacobaltsupplyof0.31Mtby2030.uBasedon8differentforecasts.Theaverageforecastshowsalithium(LCE)supplyof3.14Mtby2030.v2,100.00(identifiedresources)3,500.00(undiscoveredresources)wIdentifiedland-basedresourcesaveragingapproximately0.5%nickelorgreatercontainatleast300milliontonnesofnickel,withabout60%inlateritesand40%insulphidedeposits.Extensivenickelresourcesalsoarefoundinmanganesecrustsandnodulesontheoceanfloor.xMorethan120milliontonnesofcobaltresourceshavebeenidentifiedinpolymetallicnodulesandcrustsontheseabed.yTotalglobalidentifiedresourcesaremorethan17billionmetrictonnesofmanganiferousmaterial.Anadditionalvastresourceofmanganeseliesontheseabed,mostlyininternationalwatersandatgreatdepths.149www.irena.org

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