Quick Win No. 4
Enhance critical minerals supply chain diversity through trade, transparency and global standards
The world is on the cusp of a transformative shift as the growth of clean energy and digital technologies propel humanity toward a minerals-based economy. This transformation holds the promise of a more sustainable and interconnected future, but it will also be highly material intensive. Meeting the burgeoning demand for these materials will necessitate an unprecedented expansion of mining activities. Experts estimate that the demand for lithium-ion batteries alone could require more than 300 new mines by 2035. Emerging green technologies will further accelerate demand for critical minerals needed for the generation and transmission of more renewable energy.
The global critical mineral supply chain is an opaque labyrinth that obscures the origins, true costs, and labor practices involved in the journey of raw materials. After being pulled from the earth, minerals change hands and cross borders dozens of times as they are transformed into the chemicals and metals eventually incorporated into finished products. This opacity, combined with market incentives to reduce costs, has opened the door to unscrupulous actors willing to do anything in the pursuit of cheap production, while hindering the ability of responsible players to compete.
Amid growing geopolitical rivalries, supply chain concentration, and the substantial economic opportunities of the emerging energy system, myriad stakeholders have taken notice of this global race to the bottom, resulting in a wave of protectionist trade policies. U.S. tariffs, for example, aim to protect domestic industry against unfair competition, but fail to address the fundamental competitive disadvantage a race to the bottom creates. Resource-rich countries employ other strategies, like export bans, to capture more value-added supply chain steps within their borders. These measures can disincentivize responsible actors along the value chain, from miners and refiners to manufacturers and end-users, and may prove ineffective at safeguarding mineral-producing countries from exploitation.
Unilateral actions have limited influence in diversifying critical mineral supply chains. As long as countries exploit the opacity in supply chains, flooding the market with cheaper minerals produced without regard for the environment or working conditions, these dynamics will persist and responsibly produced, higher-cost goods will not be able to compete.
Trade policies that shift the focus from ad hoc voluntary standards to enforceable statutory requirements can limit the flow of irresponsibly produced goods and encourage responsible mineral production. Through international cooperation, guided by the WTO Agreement on Technical Barriers to Trade and enforceable responsible mining standards, consumer countries can influence markets’ behavior without erecting significant trade barriers. Such shared commitments can address the challenges posed by critical mineral supply chains and foster a sustainable energy transition.
