Clean technology and critical mineral supply chains are highly geographically concentrated, the International Energy Agency warned in its World Energy Outlook for 2023 and called for international partnerships to diversify supplies and address potential vulnerabilities.
“Energy transitions also bring new risks to energy security,” the IEA said, adding, “One set of risks relate to supply chains for clean energy technologies and critical minerals. Supply chains for both are highly geographically concentrated. Diversified investment to meet growing demand can help, but international partnerships will also be necessary”.
According to the IEA, solar PV plants, wind farms, and electric vehicles generally require more critical minerals to build than their fossil fuel-based counterparts. A typical electric car requires six times the mineral inputs of a conventional car and an offshore wind plant requires 13 times more mineral resources than a similarly sized gas-fired plant.
Since 2010, the average amount of mineral resources needed for a new unit of power generation capacity has increased by 50% as the share of renewables in new investments has risen.
According to the United States Institute for Peace, or USIP, China is a major strategic threat as it dominates global critical mineral supply chains, accounting for 60% of worldwide production and 85% of processing capacity. The danger of the Chinese Communist Party effective control over the market has become even more apparent as demand for critical minerals – which power the world’s clean-energy technologies, consumer goods, and defense applications – is skyrocketing.
According to the USIP forecasts, in the coming decades, the world will need many times more cobalt, copper, lithium, and manganese, among other minerals, than what is currently being produced, posing a strategic challenge for the West.
On November 7, China’s Ministry of Commerce asked exporters to report rare earths, including compounds and alloys, and their export destinations, Nikkei Asia reported. Observers say the new rare-earth export restrictions, which are set to run through the end of October 2025, tighten Beijing’s grip over the strategic materials, further politicizing global energy trade as demand for strategic minerals needed for green energy production increases and may be a negotiating tactic ahead of a planned November summit between Chinese President Xi Jinping and his Chinese counterpart, Joe Biden.
Seeking to advance critical minerals security by reducing the risk of supply chain disruption and boosting clean energy transition, US Under Secretary of State for Economic Growth, Energy, and the Environment Jose W. Fernandez and Special Representative for Global Partnerships Dorothy McAuliffe announced on November 2 the Minerals Investment Network for Vital Energy Security and Transition, better known as MINVEST, a new public private partnership with the nonprofit SAFE’s Center for Critical Minerals Strategy signed by Fernandez and SAFE Founder, President, and CEO Robbie Diamond.
Assistant Secretary for Energy Resources Geoffrey Pyatt said the partnership supports the State’s broader energy security and clean energy transition policies.
The MINVEST Partnership will promote public-private dialogue and spur investment in strategic mining, processing, and recycling opportunities that adhere to high environmental, social, and governance standards, the State Department said in a press release, adding that these activities are central to the United States’ critical minerals strategic goals, including the Department of State’s commitment to the Minerals Security Partnership, of which the United States is a founding member.
The partnership, facilitated by the Office of Global Partnerships, highlights how public and private sector actors can come together in pursuit of common goals, in this case, to bolster critical mineral supply chains to ensure a more sustainable future, the State Department said. The partner, SAFE, is a nonpartisan, nonprofit, mission-driven organization dedicated to diversifying fuel sources and supply chains needed for energy, transportation, and defense critical to the West’s security and economic competitiveness.
SAFE launched the Center for Critical Minerals Strategy in 2021 to promote diverse, secure, sustainable supply chains from mining and processing to manufacturing and recycling that support the US and its partners’ transition to a technology-backed green economy.
US and Norway discuss critical minerals
The US and Norway met on October 30 for the high-level US-Norway Energy and Climate Forum to advance key bilateral priorities and joint interests, including diversification of supply chains for the green transition, such as for critical minerals.
The US was represented by high-level officials, including Pyatt, while Norway’s delegation was headed by Petroleum and Energy Minister Terje Aasland.
Norway and the US are committed to further investment in renewable energy sources and to strengthening cooperation to meet our respective green transition targets, the State Department said, noting that the two countries produce and process critical minerals and are members of the American-led Minerals Security Partnership, which catalyzes public and private investment in responsible critical minerals supply chains globally.
“Norway has an ambition to be a world leader in profitable, prudent, and sustainable utilization of its seabed mineral resources. Norway is the number one exporter of cobalt to the United States and is an integral part of the European supply chain,” the US State Department said, adding that the two countries aim to diversify and collaborate on building secure and robust supply chains for the green energy transition.
EU to reinforce critical raw materials supply
On 14 November, the European Parliament and the Council reached a political agreement on the Critical Raw Materials Act (CRMA). The Act sets out a series of comprehensive actions to ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials. This is essential for the competitiveness of Europe, including for green and digital industries as well as defence and aerospace, the EU Commission said welcoming the political agreement, adding that the new rules help to increase domestic capacities for critical raw materials along the supply chain, complementing initiatives to diversify their supply through international partnerships supported by the Global Gateway facility.
The agreed benchmarks specify that the EU should have the capacity to extract 10%, process 40%, and recycle 25% of its annual consumption of strategic raw materials by 2030.
The Act also ensures that efforts to build secure and sustainable critical raw material value chains, through Strategic Projects in the EU or in third countries, are made in compliance with high environmental, social and governance standards. According to the Commission, the Act also introduces an effective monitoring of critical raw materials supply chains, and an obligation for large companies to perform risk assessments of their supply chains. It also foresees the coordination of strategic raw materials stocks among Member States.