supply chains

Against the backdrop of mounting geopolitical and ongoing supply chain challenges, countries are left grappling with the the mineral intensity of the sought-after global transition towards a net zero carbon emissions future.

In their quest to untangle complex critical mineral supply chains and reduce over-reliance on adversary nations, the extent of which was first brought to light in the coronavirus pandemic, nations are not only forming partnerships like the recently-announced Minerals Security Partnership (MSP), which Reuters’s Andy Home likens to the formation of a “metallic NATO,” they are also taking their own steps to secure supply chains for domestic manufacturers.

In the following, we’re taking a look at resource related activities in countries beyond ARPN’s usual purview (which of course is focused on the United States but sometimes includes our close allies Canada and Australia):

• Earlier in July, the United Kingdom released its first ever Critical Minerals Strategy, setting out, in the words of Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng, the UK’s “plan to secure our supply chains, by boosting domestic capability in a way that generates new jobs and wealth, attracting investment and playing a leading role in solving global challenges with our international partners.”

  The announcement comes only days after the launch of a Critical Minerals Intelligence Centre (CMIC), which seeks to “boost the country’s resilience and growth by providing up-to-date data and analysis on the supply of critical minerals,” and “develop evidence-based policies aimed at developing more robust critical mineral supply chains to the UK.”

• Germany, too, is taking steps to decouple from adversaries and bolster its domestic supply chains emphasizing domestic production, processing and recycling over imports.  Upon taking office, the new Federal Government  set itself the ambitious goal of presenting a comprehensive National Security Strategy within its first year. The process was kicked off in March of 2022, a few weeks after the Russian invasion of Ukraine, which served as an eye opener for Germans and Europeans in terms of their dependence on Russian energy supplies, particularly oil and gas. Consequently, Foreign Minister Annalena Baerbock has made clear that Germany must ensure that it cannot again fall victim to blackmail as it did over its dependence on Russian energy, and is looking for ways to reduce the country’s economic dependence on China, which is particularly high when it comes to supplies of Rare Earths.

  In the same vein, the German Federal Institute for Geosciences and Natural Resources (BGR), in partnership with the German Resource Research Institute (GERRI) has released a research paper calling for a “rethink” for German resource policy. Outlining that German resource policy rests on three pillars — imports, domestic development and processing, and recycling — the authors of the report call for strengthening the second and third pillar over the first one going forward.

• But it’s not just Western nations feeling the heat — South Korea, too, is starting to feel vulnerable over critical minerals.  The Korean National Assembly Research Service has said that “securing metal resources will be a key to energy security, and stressed the importance of plans to stockpile metal resources and diversify suppliers.”

  A founding member of the Mineral Security Partnership (MSP) led by the United States, South Korea is planning to “draw up related measures such as measures to stockpile more mineral resources,” after having neglected its resource policy over the past decade, according to researchers.

These are only a few examples of mineral resource policy developments beyond ARPN’s usual purview, but they all make one thing abundantly clear:  With geopolitical tensions rising, countries are realizing that critical mineral resource supply chains are vulnerable to manipulation or weaponization, and are taking steps to shore up their domestic development and processing capabilities.  All-of-the-Above increasingly appears to be the order of the day.  Friend-shoring is an important pillar of any resource strategy, but must be embedded into a comprehensive approach from mine to manufacturing and across all segments of the value chain.

Followers of ARPN are well aware that China has long dominated the global mineral resource wars on the development and processing fronts, and the United States in recent months has taken a series of unprecedented steps in an effort to decouple U.S. critical mineral supply chains from China.

A recent paper published by the American Chemical Society (ACS) zeros in on recycling of Lithium-ion batteries and shows that untangling the web of mineral resource dependencies is even more complicated than it looks on the surface, as China is not only the fat spider in the net when it comes to resource development and processing, but also has a leg up on the United States when it comes to recycling.

Writes Maria Virginia Olano in a recent piece discussing said paper for Canary Media:

“China is the global leader in recycling of lithium-ion batteries, far outpacing all other nations. As of late 2021, China had more than three times as much existing and planned lithium-ion battery recycling capacity as the U.S..”

Olano adds that China began promoting lithium-ion battery recycling via policy as early as ten years ago, and has since adopted a regulatory framework conducive to spurring the creation of an entire lithium-ion battery recycling sector, with a 2018 regulation requiring manufacturers to “collaborate with recycling companies to improve the recycling process.”

Meanwhile, in the United States, according to Olano, “lithium-ion battery recycling is a nascent industry, but it’s starting to develop.” Policy efforts are underway, but measures “that would support or even super-charge the industry have not yet been adopted.”

The Department of Defense’s report in response to last year’s Executive Order 14017, Securing America’s Supply Chains titled “Securing Defense-Critical Supply Chains” released this spring assessed supply chains in the defense industrial base and reached a similar conclusion:

Building upon the Department of Energy’s 2021 National Blueprint for Lithium Batteries and last year’s bipartisan infrastructure law, the report stresses Beijing’s global supply chain dominance “in all aspects of the lithium battery market” and, according to a legal summary, “identified a standards gap that creates a barrier to successful DoD leveraging of the $515 billion in active global auto industry investment in advanced battery technology.” The report, according to the summary, further concludes that “domestic preferences and other incentives built into DoD acquisitions are insufficient to generate the type of demand required to benefit from domestic battery production.”

Both the ACS study and the DoD report make clear that to succeed in the 21st century resource wars, we must be ready to engage on all fronts.

A piecemeal approach that leverages only certain aspects of the policy spectrum or only focuses on “friend shoring” or research and development is insufficient to meet the challenge. As the stakes continue to rise, the only path forward lies in the context of a true “all-of-the-above” approach from mine to manufacturing and beyond, across the entire value chain.

The mining industry, building on decades of innovation and the materials science revolution stands ready to meet the challenge. Now it is up to policy stakeholders to created the framework conducive to unleashing U.S. ingenuity and our nation’s resource potential.

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