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The coronavirus pandemic and associated supply shocks, surging demand for critical minerals against the backdrop of an accelerating global push to net zero carbon emissions, as well as rising geopolitical tensions on the heels of Russia’s invasion of Ukraine and the looming tech war between China and the West have catapulted the issue of securing critical mineral supply chains to top of policy agendas around the globe.

Concerns over China’s dominance over a large majority of the key critical mineral value chains has spurred efforts to decouple supply chains from China all over the globe.

Followers of ARPN are aware of U.S. efforts which include the invocation of the Defense Production Act for several critical minerals, the passage of the Inflation Reduction Act and partnership agreements with key allies as well as public-private partnership to bolster domestic critical mineral supply chains.

In Europe, the January 2023 announcement of the discovery of one of the largest rare earth elements (REE) deposits in Europe in the Kiruna mine located Sweden’s Lapland region was hailed by some as the advent of a new dawn for European resource policy, and European Union stakeholders hope that the recently released Critical Raw Materials Act, if passed, will jump start the reshoring process and “de-risk” the regional bloc’s reliance on China by streamlining the permitting process for raw materials projects and allow for selected “Strategic Projects” to benefit from support for access to financing and shorter permitting timelines.

However, as Luke Patey outlines in a piece on the European REE supply chain push for the China-focused online magazine The Wire, the process of “decoupling” is fraught with more significant real-world challenges than some would have thought considering the complexity of critical mineral supply chains, and especially REE supply chains.

For all the upbeat coverage of the Kiruna mine’s new deposit, Patey points to observers in the industry who are more cautious noting that China has “invested tens, if not, hundreds of billions of dollars in research and production to build up its industry over many years,” and cautioning that finding the REE deposits is “just step one.”

As he writes, “[t]he EU now faces the meticulous task of ticking off all nodes of the supply chain to turn its green aspirations into an industrial reality” – from mine to manufacturing – and the midstream steps of building out processing capacity, metallization and magnet making are all “steps that the EU is sorely lacking in.”

A visual of the geographical concentration of the REE permanent magnets value chain and final applications developed by the Center for European Policy Studies (CEPS) and modified by The Wire tells the story of China’s dominance:

Ultimately, Patey says:

“Reshoring, in other words, is more than just reclaiming the anchor of the supply chain. For Europe — and the U.S. — to succeed in their new critical mineral ambitions, they will need to build out links far beyond the mine.” 

He adds that while these efforts are underway “[t]he elephant in the room is that, even if they all succeed, doing all these steps on European soil does not automatically make them competitive with Chinese suppliers — both on price and on tech know-how.”

Meanwhile, efforts to build mine to manufacturing supply chains for critical minerals, and especially REEs, continue to run into the “not in my backyard” challenge — an issue that continues to permeate policy discussions on this side of the Atlantic as well. As Patey phrases it, “the rare earths supply chain blends together not only challenges of national security and industrial competitiveness, but also economic and ecological welfare,” and while the newly released Critical Raw Materials Act intends to address these challenges, critical mineral extraction still faces local resistance in many parts of the regional bloc.

It is a daunting challenge; however, it is one that stakeholders – here, across the Atlantic, or elsewhere – have to tackle comprehensively and swiftly.  China has already demonstrated its willingness to play politics with its resource leverage – and, as ARPN recently outlined, is gearing up to do it again as the weaponization of trade is back on the menu in U.S.-Chinese relations.

As the Wall Street Journal reports, a new OECD study has found that export restrictions on Critical Minerals have increased more than fivefold from January 2009 to December 2020, suggesting that “export restrictions may be playing a non-trivial role in international markets for critical raw materials, affecting availability and prices of these materials.”  

While this significant shift to export controls – according to the WSJ mostly in the form of taxes – has been noticeable and relevant, it may just have been the tip of the iceberg.

In the wake of a global pandemic, related supply chain shocks and with the Russia-Ukraine war raging on, the trade dimension of geopolitics has become the new frontier in the tech wars between Beijing and Washington, DC – a relationship in which conflict has been smoldering over the past few years, especially over Rare Earth Elements (REEs).

As we outlined in a recent post, Western nations have made decoupling from China – which has long held a strategic stranglehold over Critical Mineral supply chains – a priority and have pursued a strategy of “friendshoring.”

Observers were waiting to see if China would retaliate in response to the United States’ recently imposed set of sweeping controls on advanced semiconductors and semiconductor manufacturing equipment aimed at China and a related agreement with Japan and the Netherlands.

It may not prove to be a long wait.  According to Nikkei reporting earlier this month, China has since announced that it is considering prohibiting exports of certain rare earth magnet technology through updates to a technology export restrictions list last issued in 2020.

The looming export control ratchet and increasing tensions between China and the West are troubling South Korea – which has in the past walked a fine line between the United States and China – its “leading economic partner and increasingly dominant neighbor” – and has publicly balked at the U.S. effort to isolate China from semiconductor supply chains.

Regardless of that fine line, public opinion towards China has been souring in South Korea, and diplomatic relations with the country are also getting tense as Seoul summoned China’s ambassador to protest Beijing’s criticism of remarks made by President Yoon in an interview with Reuters on Taiwan.

The looming specter of China restricting technology exports has South Korea’s industrial sector worried, prompting the government to announce a “strategy to secure core minerals” to reduce its dependence on Chinese critical mineral imports for from the current 80 percent to 50 percent by 2030.

In the context of this strategy, the South Korean Ministry of Trade, Industry and Energy designated 33 as critical minerals and named 10 of those as strategically critical minerals, including the “battery criticals” lithium, nickel, cobalt, manganese and graphite and five types of rare earth materials considered crucial in 21^st century tech applications including the manufacture of semiconductors.  ARPN followers will note that Korea’s 10 “strategically critical minerals” list  – assuming the five REEs are those used in permanent magnets — squares up with ARPN’s “Super Criticals,” circa April 2022.

As part of a push to “expand and strengthen bilateral and multinational cooperation with resource-rich countries” a public-private delegation of officials from South Korea’s public and private sectors is currently visiting Chile and Argentina to “explore ways to boost cooperation on supply chains of lithium and other major minerals and the development of natural resources.” 

The country is also stepping up domestic and global investment.  Last month, South Korean President Yoon Suk Yeol announced that the government and companies including Samsung Electronics Co. would invest $422 billion into chip making and EV manufacturing projects in what Bloomberg calls “the nation’s most aggressive effort yet to win a heated global race for tech supremacy.”

Seoul is further looking to  provide $5.32 billion on financial support to its domestic battery makers looking to invest in infrastructure in North America, while also looking to upgrade its partnership with India with a focus on trade, investment and strengthening critical mineral supply chains.  To put South Korea’s $5.3 billion in context, at 1/12^th the size of the U.S. economy, that’s equivalent to the U.S. Government allocating more than $60 billion to Critical Mineral supply chains.

Whether or not China escalates export controls for critical minerals remains to be seen – though officials already finished taking expert comments on the planned restrictions reported by Nikkei earlier this month and the changes are expected to go into force this year – it is becoming increasingly clear that a “huge realignment” in the critical minerals space is underway, and its one that not only sees the West looking to reduce Chinese resource dominance, but also sees allegiances shift in Asia itself.

The Biden Administration has announced the “most aggressive” plan to curb tailpipe emissions to date, with new vehicle pollution standards proposed by the Environmental Protection Agency (EPA) and announced by the White House last week. If finalized, the proposed rules would require automakers to reduce carbon emissions by 56% in their 2032 models compared to 2026 models.  The expectation is [...]

The world breathed a collective sigh of relief when Chinese drills in the seas and skies surrounding Taiwan wrapped up without further incident this Monday. Nevertheless, tension between the U.S. and China over the island, which some analysts consider “the most dangerous standoff between global superpowers, even as the war in Ukraine rages,” remain high, and a recent development in [...]

Amidst growing tensions between the United States and China, the United States is stepping up its friend-shoring efforts in an attempt to diversify its critical mineral supply chains. Recent trade deliberations with Japan and the European Union have yielded a free trade Critical Minerals agreement to strengthen supply chains with Tokyo and will likely lead to a [...]

The Inflation Reduction Act (IRA), passed and enacted into law last year, is considered one of the landmark pieces of legislation to combat climate change and strengthen U.S. critical mineral supply chains. The package included funding for tax credits and rebates for consumers buying electric vehicles, installing solar panels or making other energy-efficiency upgrades to their homes, [...]

The time has come for the United States to get “serious about mining critical minerals for green energy,” writes Saleem H. Ali for Nature. Ali points to the inherent irony of the green energy transition — renewable technologies requiring vast and increasing amounts of metals and minerals like lithium, copper, nickel, cobalt, manganese and REEs, but [...]

When it comes to the metals and minerals underpinning the green energy transition, and specifically the EV battery revolution, much of the spotlight has fallen on lithium — and for good reason, as we will discuss in a forthcoming post.  However, as ARPN’s latest review of the “battery criticals” against the backdrop of the just-released latest iteration of [...]

 In this post, we continue our review of the “battery criticals” (lithium, cobalt, graphite, nickel and manganese) against the backdrop of the just-released 2023 iteration of the USGS Mineral Commodity Summaries.  Next up:  cobalt. With the material accounting for up to 20% of the weight of the cathode in a typical lithium-ion EV battery, cobalt was considered the highest [...]

We’re sticking with the visuals this week. In our last post, we featured a Visual Capitalist depiction of the lithium supply chain which underscored the urgency for the U.S. to build out our domestic lithium development capabilities. Our second featured graphic comes once more via Visual Capitalist, but this one takes a broader look at the [...]