Critical minerals today and in 2030: an analysis of OECD countries
Raw materials are essential for the global economy and future development depends on their continued supply. Like fossil fuels, minerals are non-renewable. In general, their deposits in the Earth’s crust are also geographically clustered, making security of supply a potential risk. In many cases, the exhaustion of economically competitive minerals deposits in industrialized countries has made supplies increasingly dependent on the political stability of mineral-rich emerging economies. At the same time, increasing demand from these emerging markets, new technologies that require large amounts of rare minerals , low substitutability in applications and low rates of recycling have made economies more vulnerable to potential supply disruptions. Consequently policy-makers in several OECD countries and regions have developed reports that assess the vulnerability of their respective economies to disruptions in the supply of minerals. A common aim of many of these studies is the identification of a list of so-called ‘critical minerals’, defined as minerals for which the risk of disruptions in supply is relatively high and for which supply disruptions will be associated with large economic impacts.
The purpose of this report is to perform for the first time an analysis of critical minerals for the OECD countries as a whole. In addition, this is done not only today, as previous reports have done, but also in 2030, in order to form an initial picture of how possible trends in economic development will affect which minerals are critical in the long-run future. 51 different minerals are included in our analysis. Three measures of mineral supply risk are used: substitutability, recycling rates and the concentration of production in countries that are judged by international datasets to be relatively politically unstable. Physical scarcity is not considered to be a source of supply risk, certainly in the short term. While the non-renewable nature of minerals is an eventual constraint on what can be extracted, reserves are generally large and market mechanisms work to alleviate the problem. Potential disruptions are instead perceived to come from the nexus of production concentration and geopolitical risks. It is also rather unlikely that physical scarcity will affect supply risk in the period up to 2030, but the report does allow for such a scenario by introducing to the index of supply risk a measure of the number of years to forecast depletion of reserves. Vulnerability to supply risk – i.e. the ‘economic importance’ of a mineral – is more challenging to estimate and there is no consensus among existing studies. This report looks at how each mineral is used in different sectors, as well as how economically important these sectors are for the economy.
The analysis identifies around 12 to 20 minerals or minerals groups, which are critical in the OECD today. Minerals like the rare earth elements (heavy and light), germanium and natural graphite have a particularly high supply risk, while minerals such as barytes, tungsten and vanadium are particularly economically important. Looking out to 2030, a stronger role is assumed for the physical availability of reserves in determining where production takes place, which results in increased supply risk for barytes, borate, phosphate rock and molybdenum. Also, the economic development along a baseline scenario that assumes continued reliance on fossil fuels for energy does not change significantly the pattern of economic importance of the various minerals concerned. Future work should evaluate whether this also holds true for a pathway towards green, low-carbon growth. Lastly the report shows what improvements in the substitutability of minerals and in their recycling rates would be sufficient today and more importantly by 2030 to mitigate supply risks and vulnerability to them. This could be a focus for public support for R&D in the OECD. The results are highly mineral-specific, with some minerals requiring huge increases in substitutability and/or recycling from a low base, while others require only small improvements.