With global pressures on supply chains continuing to mount, the United States and allied countries announced the formation of a new initiative to bolster critical mineral supplies during last month’s Prospectors and Developers Association of Canada convention.
The Minerals Security Partnership (MSP) comprises the United States, Canada, Australia, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom and the European Commission, and seeks to “ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments.”
With demand for critical minerals underpinning the green energy transition and other key 21st century tech sectors forecast to skyrocket, the MSP will “help catalyze investment from governments and the private sector for strategic opportunities —across the full value chain —that adhere to the highest environmental, social, and governance standards.”
Similar cooperative announcements have been made in the past, but the MSP, in the words of Reuters’s Andy Home, may signify a “tectonic realignment with far-reaching implications” as it — against the backdrop of Russia’s war on Ukraine and mounting tension with China — is “defined as much as anything by who is not on the invite list — China and Russia.”
“China’s dominance of key enabling minerals such as lithium and rare earths is the single biggest reason why Western countries are looking to build their own supply chains.
Russia, a major producer of nickel, aluminium and platinum group metals, is now also a highly problematic trading partner as its war in Ukraine that the Kremlin calls a ‘special military operation’ grinds on.
A previously highly globalised minerals supply network looks set to split into politically polarised spheres of influence.”
In essence, according to Home, “a metallic NATO is starting to take shape, though no-one is calling it that just yet.”
With the era of globalized trade patterns in strategic commodities over, as Canada’s Deputy Prime Minister Christian Freeland has phrased it, “friend-shoring” may well become “the big economic and geopolitical issue” going forward, and may end up topping our “word of the year” list for 2022.
However, as we have frequently argued — most recently in our latest post — friend-shoring alone is not a panacea. It will not obviate domestic production and processing, as some would have you believe. It is a crucial piece of the puzzle, but the only viable path to success in the long run lies in a comprehensive “all-of-the-above” policy approach from mine to manufacturing which encompasses fostering cooperation with allies and scaling up research and development while at the same time building out domestic production and processing capabilities along with recycling and closed-loop technology.