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As the focus on critical minerals in global trade increases Asia House Senior Advisor Daniel Worrall highlights the current dynamics impacting supply chains for a range of key commodities. With contributions from Matilda Buchan, Research Analyst.

Key takeaways

  • Critical minerals will be crucial for the industries of the future, providing the essential components for renewable energy, defence, and data processing. But there remains a lack of integrated and balanced multilateral strategies for their management.
  • China is and will continue to be a key player in critical mineral production, processing, and supply chains. Investments and co-ownerships with other resource-endowed countries will bolster China’s influence.
  • Following the February general election, Indonesia is doubling down on its strategy to put minerals-based industrialisation at the heart of inward investment and economic growth plans.
  • Meanwhile, importing countries are pursuing strategies to reduce their supply chain risks, seeking supplier-country diversity, encouraging domestic production, encouraging the recycling of critical minerals, and establishing international governmental partnerships.
  • Meaningful multilateral cooperation on critical minerals supply chains and extraction standards remains a possibility, potentially via United Nations meetings on climate action. But geopolitical tensions remain a barrier.


A significant number of articles and reports have been published in recent years on the importance of critical minerals, along with potential risks in their supply chains. This is unsurprising considering demand for minerals and metals such as lithium, copper, cobalt, nickel, and rare earths, is expected to more than double by 2030 as countries seek to decarbonise their energy systems, invest in new defence technologies, and expand data/digital based industries. The construction and use of electric vehicles, wind turbines, solar panels, advanced radars, and data centres all require access to scarce and in many cases geographically concentrated mineral inputs.

While there is no definitive definition of what constitutes a critical mineral, multiple governments have released independent lists of what they view as nationally critical based on domestic industrial demand and supply expectations. There are notable overlaps: seven minerals currently appear on all published government lists, namely cobalt, gallium, lithium, platinum, neodymium, dysprosium, and terbium.

The role of trade and key Asian markets

In January 2024, World Trade Organization (WTO) analysis found that annual trade in energy-related critical minerals had increased from $53 billion to $378 billion over the past 20 years. While trade flows are mineral specific, at a macro level the key mining countries of minerals and rare earths are China, Democratic Republic of Congo (DRC), Australia, Chile, and Indonesia, with processing concentrated in China and Indonesia.

China will be a central player in critical minerals at least for the medium term. It currently accounts for around 60 per cent of the world’s rare earth mining production, but close to 90 per cent of processing and refining. In addition, China is also an active international investor in new and existing mining projects across Asia and Africa – for example, in cobalt-producing mines in DRC – often with direct or indirect state support.

Access to critical minerals and know-how has not been immune to increased geopolitical tensions. In 2023 China imposed export controls on gallium, germanium, and graphite (used in electronic circuits, semiconductors, and batteries, respectively). In December it said it was banning the export of technologies used in rare earth extraction and separation. While “national security” has frequently been given as the rationale, these actions are most likely in response to U.S. foreign policy and specific U.S. and partners export restrictions in other areas, e.g. microchips.

China accounts for 98 per cent of the world’s gallium raw production, 92 per cent of germanium, and 66 percent of graphite.

Indonesia’s mined production of nickel has more than doubled since 2020 and is expected to reach 1,994 thousand metric tons by the end of 2024, surpassing the second largest producer (Philippines) sixfold. Indonesia has also reinstated measures (including a raw material export ban primarily impacting unprocessed exports to China, Australia, and Europe), to incentivise domestic downstream mineral processing. A significant proportion of mining and refining is through ventures and co-ownerships with Chinese partners. This has led to claims of Chinese supply chain control, accusations that China is offshoring its emissions, and calls to block Indonesian nickel projects from accessing U.S. Inflation Reduction Act funding. Concerns have also been raised regarding Indonesian labour and environmental protection practices, including in a recent ABC News report. These allegations have led some industry participants to distinguish between “clean” and “dirty” nickel. A differentiated approach could allow those with mines and processing facilities in jurisdictions with more stringent regulation to charge a “green premium” which could partially offset the worldwide market price impacts of Indonesia’s rapid ramp-up in supply, or seek to use regulatory mechanisms to support production of nickel with lower embedded environmental and labour impacts.

The production and supply of niche critical minerals is very different from what is found in global oil markets, yet there have been several calls for an OPEC or OPEC+ type approach to global critical minerals supply to maximise economic return to producer/processor countries. However, the diversity of minerals and their lack of interchangeability means any cartel-type approach to critical minerals would probably need to be on a mineral-by-mineral basis. Nonetheless, given Indonesia’s significant and expanding role in worldwide nickel supply, any potential agreement between Indonesia with their Southeast Asia neighbours of the Philippines and New Caledonia would give that group a near 70 per cent of world nickel supply based on 2024 supply forecasts.

Indonesian Minister of Investment Bahlil Lahadalia struck a defiant and confident tone at a major news conference in Jakarta on 18 March 2024, stating that Indonesia will continue to emphasise investment into industrial production based on domestic mining products into the next presidential administration, due to start in October 2024 under newly elected Prabowo Subianto Djojohadikusumo. Lahadalia also alluded to pressures being placed on Indonesia to remove bans on exports of unrefined minerals, emphasising Indonesia’s commitment to policies designed to relocate industrial production of minerals to Indonesia in the face of international pressures.

While Japan does not have a significant critical minerals resource base, it does have a long history of domestic minerals processing through companies such as Nippon Steel, and of EV battery production through Panasonic. Japan has sought to build strong partnerships across the critical minerals supply chain, recently signing formal agreements with the United Kingdom and United States. The Ministry of Economy, Trade and Industry is active internationally in producing markets to secure resources. In 2023, for example, there were visits to five African nations and agreements signed with DRC, Namibia, and Zambia.

Government response in consumer countries

Consumer-government responses to the concentration of critical minerals supply chains have been varied. Where there is an in-market undeveloped resource many have sought to incentivise and increase domestic production, and also sought to process what critical minerals are produced onshore. This is in addition to investments in minerals and metals recycling, and seeking to utilise technologies that require less of the most supply constrained critical minerals.

Underlining this, the past few years have seen critical mineral strategy launches in the European Union, United States, Australia, Canada, the United Kingdom, and the Group of Seven industrial nations in general. The International Energy Agency’s Critical Minerals Policy Tracker highlights nearly 200 policies and regulations from 25 countries and regions worldwide.

A common theme of government action has been seeking to achieve supply chain security through source-country diversity, often through the deployment of financing and diplomatic support. While this approach has been successful for some critical minerals, in conjunction with demand stimulating new supply side options, such as new lithium mines in South America, the current dominance of a few nations in supply and processing makes supply source diversification challenging.

Several nations are now looking to countries with underdeveloped resources, such as Papua New Guinea, as a source of future supply and use domestic legislation, such as the U.S. Inflation Reduction Act, to stimulate minerals development in countries that are not “foreign entities of concern”.

More interventionist options exist, although they have not publicly received serious consideration in consumer countries. These include the establishment of nationalised critical mineral reserves, either from domestic production or via imports. Such a reserve(s) could act to smooth market demand shortages and price spikes, in the way the U.S. Strategic Petroleum Reserve and China’s National Food and Strategic Reserves Administration have been used. A further step worth considering is the establishment of enhanced minerals buyer power via a centralised, multi-consumer buying agency run through either private or government apparatus (working within WTO rules) to provide a counterweight to the concentration of supply for key minerals. An example here would be the establishment in 2022 of China Mineral Resources Group as a Chinese government-backed entity to purchase iron ore for domestic steel mills.

Bilateral and multilateral international partnerships continue to feature heavily in action planning and can act as enablers for private sector engagement and investment. As a consumer country the United Kingdom is active in this space and, in addition to recently co-chairing the U.S.-led Minerals Security Partnership, is building several critical minerals partnerships, including with Canada, Australia, Japan, and Saudi Arabia. Nusrat Ghani, UK Minister of State for Industry and Economic Security at the Department for Business and Trade and Minister of State for the Investment Security Unit at the Cabinet Office, has led the UK’s approach on critical minerals. She recently provided an exclusive briefing for Asia House Corporate Members on the UK’s policies and strategy in this area.

ASEAN and APEC, the latter of which includes most critical minerals producers, processors, and consumers within its membership, are also providing important platforms for multilateral discussions, including on mining environmental and social standards. However, considering the importance of critical minerals to energy transition it is perhaps overdue that the topic received attention only at COP28 in December 2023 with the UN Secretary General, António Guterres, establishing a Panel on Critical Energy Transition Minerals.

Opportunities for international collaboration

The disparity between critical mineral producers and consumers presents challenges and opportunities for both parties. Given the global nature of the critical mineral challenge, there is significant scope for increased international collaboration to help ensure a demand and supply position that reflects the objectives and needs of all stakeholders.

  • There is an opportunity for governments of consumer countries to encourage, incentivise, and unblock diverse domestic and international supply sources for nationally required critical minerals and rare earths on a mineral-by-mineral basis. This approach can focus on mapping domestic and international supply sources and supporting new means of accessing them through deployment of finance, outward investment, facilitating knowledge-sharing and encouraging technological innovation.
  • There is a need to prioritise the sustainability of critical mineral extraction, which can further encourage non-resource countries to invest in domestic minerals/metals recycling as a supply source. In many cases consumer government action may involve going beyond the use of promoting the “market frameworks” that such countries have relied upon with other commodities, and a shift to more direct resource access support or managing national stockpiles.
  • While continuing to pursue national objectives, including downstream value capture and mineral resource management, there is an opportunity for governments of producer countries to work with international agencies to influence and establish global regulatory standards and support the deployment of best practices in safety, stakeholder engagement, and environmental management. Where critical minerals are required to address shared global challenges, such as climate change, there is an opportunity to work in partnership across the supply-chain, including with international miners and consumer governments, to help ensure global targets are met.
  • As many of the challenges critical minerals can unlock are global in nature (including the energy transition and digitally enabled global growth), there are opportunities for multilateral organisations such as the UN, WTO, APEC, and ASEAN to act as mechanisms to facilitate international cooperation. Multilateral organisations can work with host and consumer countries’ governments to develop an integrated approach to resource development and supply, while also championing best practices in mineral extraction, processing, and transportation. The recent establishment of the UN Panel on Critical Energy Transition Minerals creates the potential for a worldwide forum for all stakeholders to discuss the critical minerals and rare earths supply chain.

Recommendations for Business

Businesses of all sizes and positions in value-chains should seek to fully understand their supply-chains and the risks within them relating to critical minerals and components containing them. For larger manufacturing companies, there is an opportunity to diversify sources of supply, and potentially bring influence further up the value-chain to signal forward demand for specific critical minerals and potentially secure supplies through offtake agreements, shared financing, and co-development models.

For those companies in the extractives sector, technical innovation, commercial materiality, allocation of internal resources, and sustainable external partnerships will remain key to success. Considering the 10-plus years it typically takes to develop a new mine or deploy innovative new technologies, a winning strategy will be to take a long-term approach to understanding what critical minerals will be needed, and the best way to profitably supply them including through recycling and reprocessing, while building strong relationships with all stakeholders.