While the world is gearing up for transitioning to net zero emissions within the next 3-5 decades, an assessment by the International Energy Agency (IEA) says minerals and metals needed to manufacture clean energy technologies to achieve climate goals are mostly controlled by one country—China.

These raw materials are critical in the production of climate control technologies like renewable power, carbon capture, battery solutions, electric vehicles, hydrogen production etc.

If supplies are inadequate or unavailable, clean energy transitions could become more expensive, be delayed or be less efficient, warns IEA's Critical Minerals Policy Tracker report published last week, analysing nearly 200 policies and regulations from 25 countries and regions worldwide.

The report observes that currently China accounts for 87% and Malaysia (12%) of Rare earths in processing of selected minerals and fossil fuels used in climate technologies (data as of 2019). China accounts for 58% of Lithium processing (key to new battery solutions), followed by Chile (29%) and Argentina (10%). In the case of Cobalt, China's share is 65%, followed by Finland (10%) and Belgium (5%).

Similarly, China leads in processing of Nickel and Copper, the most critical raw material in renewable energy solutions. That country accounts for 35% of Nickel processing, followed by Indonesia (15%) and Japan (8%). In the case of Copper processing, China accounts for 40%, followed by Chile 10% and Japan (6%). Natural gas, a fossil fuel, is a key fuel for climate transition and in LNG exports, currently Qatar leads with 23% global share, followed by Australia (22%) and the US (10%).

However, the data reveals China is not the top producer of many of these critical raw materials. In the case of Lithium in which China is the largest processor with 58% global share, among top producing countries in extraction of this selected key raw material, Australia accounts for 52% share, followed by Chile (22%) and China (13%). About 69% of Cobalt is extracted from DRC (Democratic Republic of the Congo), followed by 4% each in Russia and Australia, but China is the largest processor with 65% share.

In the case of Nickel in which China processes 35% of global production, Indonesia is the leading extractor with 33% share, followed by Philippines (12%) and Russia (11%). About 28% of Copper is extracted from Chile, followed by 12% in Peru and 8% in China, but China is the leading processor with 40% share. In the case of Graphite, China has global monopoly with 64% of total extraction. Same is the case of Rare earths, with 60% extraction is from China, where 87% of global processing is happening.

The report also identifies antimony, arsenic, germanium, gold, hafnium, iridium, iron, magnesium, niobium and tungsten as minerals designated by at least one country, but not needed in large quantities for energy transitions.

The IEA report says this high level of concentration means the system is particularly vulnerable to disruptions – caused by geopolitical events, global pandemics, earthquakes or other weather events, or shutdowns associated with adverse environmental, social or governance incidents (such as regulatory interventions following corruption allegations). Policy strategies can ensure market preparedness for supply disruptions.

Among the prominent examples of international collaboration structures expressly targeting security of supply, the United States convened a new Minerals Security Partnership (MSP) in June 2022, initially involving Australia, Canada, Finland, France, Germany, Japan, Korea, Sweden, the United Kingdom, the United States and the European Union. The MSP aims to strengthen security of supply through information-sharing, greater investment in secure critical mineral supply chains, and the development of recycling technologies, says IEA.

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