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Critical Mineral Supply Chains

Jun 28, 2024

Critical Mineral Supply Chains

The issues surrounding critical mineral supply chains are complicated, variable, and constitute an area of high priority for economic and national security.

Broadly speaking, critical minerals (including rare earth elements) are those that have essential uses and vulnerable supply chains. Of particular interest are those that play a role in the manufacturing of any product that is considered vital to our national economic security such as those used in semiconductors, EV batteries, and wind turbines. Supply chain encompasses everything from extraction, to processing, to manufacturing, to recycling and reuse of materials, and everything that takes place in between. Shortages or bottlenecks at any stage can impact production of important products and their availability to the users who need them, causing direct or indirect impact to our economy.

According to the International Energy Agency, although the prices of critical minerals plummeted in 2023, supply chain risks are created by predicted future demand for critical minerals combined with lack of diversification in supply chains. Here are some of the driving factors:

  • Developing technologies, especially in the clean energy sector, are often dependent on critical minerals. As new technologies develop, and demand for them increases, which minerals are needed and in quantities fluctuates.
  • Specific minerals have specific supply chains in which there are limited mineral quantities, limited geographical locations from which materials are sourced and limited facilities at which they are processed.
  • Some of the largest known stores of critical minerals are in developing countries. For example, according to the International Monetary Fund, 30% of reserves are estimated to be in countries in Sub-Saharan Africa.
  • After mining, most critical minerals are exported to China and China is the dominant region for critical mineral processing.
  • ESG (Environmental, Societal, and Governmental) concerns exist along the supply chains that can impact governmental and corporate decisions about investment, partnerships, policies and regulations, and what counts as acceptable suppliers or service providers.
  • Trade tensions could restrict U.S. access to upstream mineral supply chains and downstream derivative goods supply chains (e.g., solar PVs) that pass through China.
  • According to an IEA report from 2023, the U.S. is a major importer of critical minerals and has limited domestic production for 31 critical minerals and no domestic production for 12 critical minerals.

Numerous risk mitigation strategies are available, however, and are being pursued through government, industry, higher education, and economic development organizations.  These strategies can help to create efficiencies in production of critical minerals, better manage international supply and demand, and address ESG concerns:

  • Improvements in extraction, environmental protection, processing, and recycling processes
  • Exploration for critical minerals and workforce training to support exploration
  • Innovation of materials and technologies not dependent on critical minerals (alternative materials and technologies)
  • International tech transfer and information sharing programs
  • Effective forecasting of critical mineral needs and expansion of processing facilities
  • Stockpiling of critical minerals and vital subcomponents used in important manufacturing industries
  • Domestic and international supply chain diversification
  • Trade missions and investments in international partnerships
  • Cooperation with other nations for equitable and frugal use.

At Kansas Department of Commerce, we grasp the complexity of the issues and the importance of critical minerals for Kansas. We are also aware of the potential ripple effects of supply chain shortages. Currently, we are working with partners to stay abreast of the needs of Kansas businesses and to create programs that support access to critical mineral supply chains as well as to related supply chains that are important to our economy and quality of lives of our residents.

Our Global Resources sub-division has just launched a 2-stage supply chain assessment that applies to supply chain generally, not exclusively to critical minerals. Participate in the preliminary survey here.

Links for further reading:

Laurie Pieper, Ph.D., CGBP

Assistant Director, Global Resources

International Division, Kansas Department of Commerce

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