Policy-driven approaches shaping the critical minerals landscape and self-sufficiency

Establishing sustainable critical minerals supply chains

Critical minerals have surged into the spotlight due to their pivotal role in modern industries such as renewable energy, electronics, and defence. These minerals are indispensable in various high-tech applications, from batteries to electric vehicles. The increasing demand for these minerals has raised concerns about their scarcity, geopolitical implications, and environmental impacts. Events like the Covid-19 pandemic have highlighted vulnerabilities in the global supply chain, emphasising the need to secure access to these critical resources. Furthermore, as nations strive to advance their technological capabilities and transition to cleaner energy sources, ensuring a stable and sustainable supply of critical minerals has become a top priority on the international agenda.

Countries around the globe are increasingly recognising that reliance on a fragmented and concentrated supply chain presents significant risks—ranging from supply disruptions to environmental degradation and ethical dilemmas. In response, governments are crafting sophisticated legal frameworks and policy instruments designed to encourage domestic production, promote research and development in extraction and processing technologies, and stimulate recycling efforts. These legislative efforts are about mitigating vulnerability and capturing the economic, environmental, and strategic benefits of leadership in the critical minerals sector.

Through a blend of incentives, regulatory reforms, international partnerships, and investment in innovation, these legislative pathways offer a roadmap for countries to enhance their critical minerals supply chains. This multifaceted approach reflects the complexity of the challenge at hand, requiring coordination across different levels of government, industry, and international borders.

SFA (Oxford) delves into how these policies are being shaped, their impact on global supply dynamics, and the future directions nations might take to ensure their economic and strategic interests are safeguarded in the rapidly evolving landscape of critical minerals.

The necessity of a critical minerals policy

Governments meticulously curate lists of critical minerals, strategically aligning them with their long-term industrial needs. This process involves considering various factors that determine a mineral's criticality, such as its rarity, geopolitical stability, and indispensability in emerging technologies. These lists serve as blueprints for ensuring a stable and sustainable supply of essential resources crucial for driving economic growth, technological advancement, and national security initiatives. By identifying and prioritizing critical minerals, governments can proactively address potential supply chain vulnerabilities and leverage opportunities for innovation and strategic partnerships in the global mineral market.

China's substantial dominance in rare earth element processing underscores its significant role in the global mineral supply chain. Notably, China holds control over crucial processing facilities for key metals vital for the energy transition, giving it substantial leverage in global markets. Additionally, China's control over the output of a substantial portion of various critical commodities further consolidates its influence in the global mineral landscape.

Rare Earth prices experienced a notable peak in response to reports of a Chinese export restriction, reflecting the significant impact of China's dominant position in the global Rare Earth element market. As the primary producer and exporter of Rare Earth elements, China's policies and decisions regarding export quotas and restrictions hold immense sway over global supply and pricing dynamics.

China's dominance of rare earth metals processing

Source: SFA (Oxford)

Factors affecting critical minerals policy development 

Crafting a critical minerals policy is a nuanced endeavour, pivotal for its far-reaching effects on the economy, national defence, and ecological integrity. Such a policy demands comprehensive integration within a mosaic of national and international frameworks, aiming for a resilient, sustainable, and just supply chain of these indispensable resources.

The process of formulating a critical minerals policy is complex. It is intricately interconnected across diverse sectors for economic prosperity, and its successful implementation hinges on embedding the policy deeply within various layers of governance, both domestically and globally. This is essential to guarantee a secure, sustainable, and fair provision of these vital resources, ensuring they contribute positively to global development and security agendas.

Several countries have adopted critical mineral strategies

Brazil launched a national strategic minerals policy in 2021 that aimed to promote the implementation of mining projects considered strategic to the country’s development. It also established a government committee for assessing and identifying strategic minerals, i.e., mineral ores, which the country highly depends on, minerals used in high-technology products and processes, and minerals essential to the domestic economy.

India adopted a national mineral policy in 2019 to promote the in-country mining sector, reduce dependence on imports and bolster the ‘Made in India’ policy framework. The country launched a critical minerals list in 2023 comprising 30 critical minerals determined by the Centre of Excellence for Critical Minerals (CECM).

The EU reached a provisional agreement in November 2023 on the Critical Raw Materials Act, where it identified its 5th list of critical raw materials (34 were included). It also had a list of strategic raw materials linked to 15 technologies mapped to strategic sectors supporting the EU’s industrial goals. The regulation aimed to strengthen the EU critical minerals value chain, diversify the EU imports of critical minerals, improve monitoring and mitigating supply disruptions and ensure a high level of environmental protection. The regulation sets targets for mining, processing, recycling and reliance on 3rd party country sources. It also promotes more streamlined permitting processes, strategic stockpiling, international partnerships and joint purchasing.

Japan introduced an International Resource Strategy in March 2020, which covered oil and LNG security, critical minerals and climate change. An essential pillar of its critical minerals strategy was reinforcing its stockpiling system for 34 different types of metals as authorised by the government organisation Japan Oil, Gas and Metals National Corporation (JOGMEC). In addition to a stockpiling system, the country’s resource strategy includes the development of bilateral and multilateral international agreements and investment in research and development for technology and recycling.

South Africa released an Exploration Strategy and Implementation Plan for the Mining Industry in April 2022. The purpose was to attract foreign investment for exploration in pursuit of new geological discoveries and promote the responsible development of the country’s mineral resources according to strong ESG principles. The country plans to invest more in exploration projects to accelerate discoveries and improve and streamline the permitting process. The government also has identified a list of critical minerals.

Countries have strived to create competitive business environments for critical mineral development.