ASCI Connect

A decarbonized global economy requires a consistent supply of critical minerals, including lithium, cobalt, copper, nickel, and rare-earth elements. Like the fossil fuels that have powered the modern industrial economy, critical minerals are unevenly distributed in the earth's crust. Frequently, there is a geographic divide between where they are mined and processed versus where they are consumed as components in batteries, wind turbines, and other technologies. Source countries often are in the Global South, especially Latin America and Africa, and in China, which also has managed to capture much of the world's output through contracting or outright purchase of mines and other facilities. But as with oil and natural gas, critical minerals are consumed everywhere in the world, disproportionately in the wealthiest countries that boast the largest consumer markets and fastest energy transitions.

There is enormous interest within both producer and consumer countries in reorienting the global supply chains of such minerals. The United States and its allies and partners in East Asia and Europe want to move supply chains away from China, while producer nations want to add processing and manufacturing value to their operations so that they aren't only exporters of raw materials. A reset of global supply chains would require consumer countries such as the United States to envision new models of working with producer countries, and begin crafting equitable and mutually beneficial partnerships with them. Such partnerships could result in consumer countries securing their supply chains while producer countries build capabilities for processing and manufacturing critical minerals based on sound environmental, social, and governance principles. Doing so would benefit producer economies (and their local communities) beyond the gains provided by simple export of unprocessed raw materials.  

Keep an eye on whether policymakers in producer and consumer countries seize such an opening starting in 2024 and begin the hard-but ultimately worthwhile-work of reorienting global supply chains for critical minerals around new models. 

https://www.atlanticcouncil.org/content-series/atlantic-council-strategy-paper-series/the-top-risks-and-opportunities-for-2024/