Geopolitics offers mixed support to critical metals supply: conference

The geopolitical environment offers mixed support to the energy transition: major strategies aimed at bolstering the supply of critical metals that underpin it represent unilateral measures, rather than global solutions to global challenges, according to the 1st Critical Metals and Minerals Conference in London March 22-23.

On one hand, net-zero targets and energy transition are top-down, politically-driven policy ideas that are going to create unprecedented demand for critical materials, not necessarily driven by the market itself, Jack Bedder, Founder and Director of Project Blue, a UK consultancy on the critical materials for energy transition, said.

"On the other hand, the same international agenda rolls apart with trends like US-Sino decoupling, a war of Russia and Ukraine, rising protectionism and return to spheres of influence as opposed to a more globalized outlook," he said

While China is working out new strategies for consolidation and development after two decades of extraordinary growth, the US has set its course clear with the Inflation Reduction Act.

Bedder said the IRA represents the most muscular US foreign policy in a decade that is going to have implications for America's enemies, and allies alike.

Europe has set out with its Green Deal, and last week unveiled its Critical Raw Material Act, which includes sourcing 10% of mine supply from within European borders and processing 40% of critical materials domestically by 2030. In addition, the plan mentions central stockpiling and a central buying agency as well, according to Bedder.

Unilateral, even protectionist

The IRA and the Critical Raw Materials act, as well as other strategies forged by the UK and other counties, represent unilateral and even protectionist measures that these nations are taking on their own to secure their own critical minerals supply, Joseph Mansour, a critical minerals lead at the UK's Department for Energy Security and Net Zero, said.

"No matter how successful [these strategies are], the role of China in critical minerals supply chains -- although it will change somewhat -- is not going to go away completely," Mansour said, adding that properly engaging with China remains a priority.

Japan example

To better adapt, countries like the UK could draw on the experience of Japan for example, which has succeeded to diversify its rare earth supply, reducing reliance on China from 92% to 58% over the course of just over a decade, Mansour said.

Aside from China, Europe and the US, there are other countries and regions which will be important for critical materials supply. This will be defined by their relationships with China versus the West going forward, according to the panel.

"China has a lot of ownership in the mining of nickel in Indonesia, mining of cobalt in the Democratic Republic of Congo. With regards to critical materials it pretty much has things sewn up on the African continent," said Nick Pickens, Global Mining Research Director at Wood Mackenzie.

Africa is featured prominently in China's foreign policy, including its "Go Out" policy or the "Belt and Road" infrastructure endeavor, which bolstered China's investments in Africa to $30 billion in 2016. This investment has since fallen back, according to Project Blue.

Interest in Africa

US president Joe Biden's administration has recently deepened its engagement with Africa: it posted an African leaders' summit in Washington in late-2022, Treasury Secretary Janet Yellen visited the continent in January, while Biden himself will go to sub-Saharan Africa later in 2023, noted Bedder.

The coming two years will see a host of presidential elections in key critical materials producing countries, including in Argentina, the US, Mexico, the UK, Russia, Congo, South Africa, Indonesia and India, and panelists agreed it will be worth watching how these countries' policies evolve with regard to their mineral endowments, and whether these policies will be geared toward China or the West.