Rare-earth Minerals: Who Owns the Global Technology Future
The global demand for rare minerals is growing, and there’s no denying it. Take a look at leaders of industry, and you’ll notice how many moves they’re pulling in order to make sure they have access to critical mineral sources.
The clean energy technologies are hanging in the balance, and whoever controls supply of said resources will control the markets. However, ownership comes with a series of problems — for example, traceability. Are the current systems fit for purpose, and do they meet the realities of global supply chains?
What’s at stake?
The equation is simple: no rare minerals equal no green energy, no modern technology and no national defense. The last point is especially important given the current political climate in Europe. Everyday life is now dependent on luxuries like computers and smartphones. Green energy can’t be harnessed without batteries for electrical vehicles or wind turbines. Cars can’t function without catalytic converters. As for the national defense argument? You can’t build fighter jets, rockets or even a radar without rare-earth minerals.
All in all, life doesn’t function the same way without this resource. Still not convinced of their importance?
The EU is currently importing 98% of magnets built on the rare earths in China. This is not a new topic of discussion either — the United States have been telling people about an imminent crisis as far back as the 2010s.
We’ve already seen China temporarily pulling the plug in 2023. All this to say that it’s not just rare metals, it’s about the future and who controls it.
Granted, these rare minerals are not exactly rare, but they are naturally found in such low concentrations that exploiting them proves to be somewhat difficult with current technology.
Of course, the whole process becomes even more difficult and raises a lot more risks if there’s no traceability involved.
The mining of these minerals is a long-term process, it’s very costly, and it’s complicated on account of the fact that they’re mixed in with other minerals with the same properties — which makes separation even harder to achieve.
Where are we right now?
Over half of the global rare minerals reserve is on Chinese territory.
The biggest mine is Bayan Obo, in Inner Mongolia.
Other points of interests are Brazil, Australia and India.
Even the US and EU are starting to look to China as a viable source, and they are pulling all the political stops in order to have access to the critical minerals.
According to recent declarations made by the Trump administration, a partnership with Kazakhstan is in the works, regarding the energy sectors, telecommunications and critical minerals.
On the other side of the pond, an EU statement shows that one of the four critical topics of discussion proposed to leaders in Central Asia is rare-earth minerals.
Of course, the best practices, new jobs in the mining industry and economical resilience are at the forefront of the conversation. Among the other topics we deem worth mentioning are better transport infrastructure, digital interconnectivity and clean energy development. This agreement would facilitate smoother commerce between Central Asia and the EU.
Speaking of development in the sector, Uzbekistan has just announced, at the beginning of March, that they aim to invest 2.6 billion dollars in their mining sector. This would be a great opportunity for both American and European investors. Shavkat Mirziyoyev, Uzbekistan’s President, has already signed an agreement with the French government for the developing of Uzbekistan’s national geological service.
There’s no shadow of a doubt that China will not back down. There’s a growing internal need for critical minerals, as their own production of green energy and microchips is growing steadily. As shown in a recent analysis developed by the Lowy Institute, China is already in control of almost all the domestic leasing contracts for rare-earth mining. However, several leaders in Central Asia realize the need for foreign investment and cooperation in their bid to secure a place on the global supply chain.
As we all know, President Trump is eyeing Ukraine’s resources: oil and gas are nice, but the real prize is rare-earth minerals. According to him, the accord they are trying to barter is worth hundreds of billions. It’s nothing new on his repertoire, either: in 2017 he signed an accord for securing domestic critical minerals and in 2020 he posed a real threat to Chinese domination in the sector.
Russia is also part of this race, having recently announced that they will produce close to 60,000 metric tonnes of lithium carbonate by 2030. This is quite the development since, traditionally, Russia used to import, not produce lithium.
As of right now, Russia is in the top five nations which hold serious resources of rare-earth minerals, but they contribute precious little to global production. President Putin is indeed encouraging the exploitation of said resources, going as far as proposing a collaboration with external partners, such as the US. So… what changed?
According to several experts, the war determined an embargo on imports and accelerated the need to extract these resources, even in the harsh conditions of the Siberian tundra.
Speaking of the war, Ukraine holds approximately 5% of the world’s mineral resources, with close to 70% of said assets located in the Donetsk, Dnepropetrovsk and Luhansk area, which are now technically under Moscow’s area of influence.
Kyiv wants to cede the resources to western allies, but only if it obtains serious security guarantees, in order to avoid further conflicts with Russia.
Trump’s and Zelenskyy’s accord has yet to be signed.
Romania’s role
What’s Romania’s role in all this?
Surely a small country such as ours doesn’t have a definitive say in the matter. Well, think again!
We sport some pretty alluring critical mineral resources, along with some rare-earths.
According to „Strategia Romaniei pentru resurse minerale neenergetice, orizont 2035” we are rich in essential elements used in the energy industry, as well as for electronics, aerospace technology and military equipment.
Seeing as the EU’s major issue is dependency on imports for rare-earths and critical minerals, Romania’s involvement in the supply chain can help turn the tide. This is both a strategic and economic opportunity that our country can seize and help with strengthening Europe’s security.
Only one little problem: Romania is not on the European Union’s radar, despite being able to provide both the raw materials and the know-how required to exploit them.
However, in order to move forward, we require both a national and European strategy that would help with joint investment in research and development, public and private partnerships, development of infrastructure and a friendly legal environment for exploitation.
In other words, Romania, and Europe as a whole, need to invest in traceability. Which brings us to the real hot topic…
Why is traceability so important for the critical mineral supply chains
The upside to having access to the above-mentioned resources is clear. However, great economic power comes with a toll, in the form of several risks that can have a serious impact on both societies and the environment.
Plus, the longer these risks are not addressed, the higher the possibility of disrupting supply for clean energy tech.
As such, traceability will play a significant role if we’re to meet policy and growth goals laid out before us. If implementation is correct, this process will allow for collection of data on product origin, the geographic path and the sequence of entities that have or had ownership over the product. Gathering all this data will allow companies to prove they are compliant with regulatory requirements and assure stakeholders of sustainability.
Both standardization (of data) and contextualization (of needs and exploitation practices) will be needed to support effective risk identification and management.
Lastly, traceability is not a goal in itself, but rather a tool that we have at our disposal and which we can deploy in order to meet broader economic and energy-related objectives.
Turning traceability into a reality
According to the report prepared by the International Energy Agency (IEA) and The Organization for Economic Co-operation and Development (OECD), these are the steps required in order to turn traceability into a reality.
- Determining the policy objectives and understanding the context of the supply chain
The states interested in growing mineral traceability should get their priorities sorted and definitely start with agreeing on the policy objectives that they need to achieve. One such example is the one provided by mineral-producing countries, which may benefit from traceability by supporting higher prices for the products that show strong performance throughout the supply chain.
On the other hand, some nations, which qualify as downstream or midstream, might be interested in traceability data as a means to inform risk assessments. In other cases, traceability might be used to support compliance with key industrial policies.
Of course, all this depends on the supply chain context, and that’s why they need a solid understanding of the mining activities in their respective territories, the proportion of mineral products imported versus domestically processed and the relevant domestic industries that use mineral products.
- Choosing the right products to focus on
Again, this is a matter of context and factors like economic profile and policy objectives have to be strongly considered before any course of action is adopted. For example, mineral producing countries might choose to focus on minerals that are produced in their own territory, and the large downstream and midstream producers might be more interested in making sure that the minerals which they import comply with ESG criteria.
- Determining which information to collect and share
Choosing the products should be followed by a phase where nations decide on what data should be processed and shared by operators. At a minimum, operators should be nudged to collect information on the origin, geographical path, physical evolution and chain of custody for each asset.
As a result, both government agencies and stakeholders will benefit from a clear view on the path taken by each exploited mineral. Miss out on any of the aspects mentioned above, and we’re talking about partial traceability.
- Choosing the operators
Again, with this step, the country’s economic profile plays a big role in the choice: nations that do not extract minerals will be inclined to follow a downstream philosophy by encouraging operators to gather traceability data from the actors found higher up the supply chain.
On the other hand, if the respective nation does extract minerals, then they need to focus on upstream partners and encourage them to deliver information down the supply chain.
- Promoting the development and use of inoperability protocols
The issue is quite simple: not all the operators use the same traceability system, so the data is inconsistent. One solution could be the development of a government-controlled platform where operators can exchange data, but this idea comes with a few issues. For example, in the case of cross-border supply chains, one operator might be required to use several platforms, which raises further problems for connectivity. Not to mention the cost for the operator and government.
As such, a better solution would be to develop interoperability protocols that promote traceability for operators and the product/information they are focusing on. Instead of using platforms, each operator should respect the same standards for collecting, sharing and validating information. Of course, this process should allow for flexibility in terms of software and technology where possible. Some information can be sensible, so the process would feature some sort of built-in protection for commercially sensitive data.
- Establishing trust mechanisms
Another important feature of the above-mentioned system has to be fraud prevention. Nobody is going to implement a system that is not accurate and trustworthy, so several safeguards will be of utmost importance.
Again, governments will have to get involved and issue verifiable credentials that will help operators prove their status as legal business owners.
Licenses and permits can be issued to various operators that comply with relevant regulations, while certificates of origin will help with exports.
- Creating incentives for increasing traceability
Encouraging operators to adopt said systems might prove difficult if there’s nothing of substance to be gained. As such, officials can choose between several options: financial support for developing tech infrastructure, tax credits for products that contain minerals sourced via specific countries, funding local operators, regulating market access and so on.
Of course, imposing a new way of doing things immediately might backfire, so the approach should be focused on the market and industry realities that each country faces.
- Engaging with stakeholders of foreign jurisdictions
For many resources, the supply chain spans several jurisdictions and involves more than one stakeholder. It’s a logical conclusion that operators have to collaborate cross-border in order to establish real traceability. This process can be limited by access to the relevant technology, a refusal to share information, or even data protection laws.
To bypass these issues, collaboration between stakeholders in different jurisdictions, as in producers, associations, mining associations and regulatory authorities will have to be streamlined. Among the solutions, the report mentions technical assistance initiatives, bilateral co-operation mechanisms and dialogue platforms.
Wrapping up
All this sounds nice, but the major actors in rare-earth minerals have to agree among themselves who owns what, and who gets to exploit it.
We have time to work on traceability strategies because we’re, sadly, still in competition mode. It remains to be seen where we end up.
