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While gallium and germanium may not be widely known to the average consumer, their importance has recently been highlighted due to China’s announcement that it will restrict their export starting from August 1. These chemicals play a crucial role in solar panels and optical fibers, making them essential for the green transition and the development of new technologies. The restrictions imposed by China serve as a reminder that the western world must prioritize efforts to secure critical metals and minerals.
The demand for key resources like lithium, copper, cobalt, and nickel is projected to more than double by 2030 as the global race to build electric vehicles, wind turbines, and solar panels intensifies. Investment in the development of these raw materials increased by 30% last year, surpassing $40 billion, according to a report by the International Energy Agency. Accelerating the extraction process is crucial since mining projects can take several years to come to fruition.
If all planned projects are successfully executed, the IEA predicts that the supply will be sufficient to meet national climate commitments by 2030. While this may offer some comfort, it also exposes three inconvenient truths that the western world must address promptly.
Firstly, China holds an astonishing degree of control over critical mineral extraction and refining. Chinese companies doubled their investment spending last year, significantly surpassing the average increase seen in western mining groups. Additionally, China accounts for approximately 60% of the world’s lithium processing. As China strengthens its grip on critical minerals, concerns arise about its potential to manipulate the market similarly to how Russia has done in the past, causing unease among western economies.
Secondly, the western mining sector alone cannot solve the shortages of critical minerals. Price volatility poses risks to extraction, and the lack of price transparency for certain rare raw materials further complicates the situation. China’s competitive advantage, backed by state support, allows it to remain competitive even during periods of low prices. High interest rates also hinder progress. Governments can mitigate risks through initiatives such as price insurance and public-private partnerships, as exemplified by France’s €2 billion investment fund announcement.
Diplomatic efforts are equally important. The western world cannot solely rely on promises of environmentally and socially responsible mining practices to build relationships with resource-rich nations in the developing world. Trade deals and support for infrastructure projects serve as incentives. Furthermore, the western countries should further explore mineral deposits within their territories. Canada, Australia, and even the unassuming Cornish region in Britain possess significant lithium reserves that are now being developed. However, the slow permitting process and opposition from Nimbys (Not-in-My-Backyard) pose challenges.
Lastly, effective coordination among western partners is crucial. Joint financing initiatives can bring scale to projects, and the exploration of untapped seabed resources offers potential for new rare metal deposits. However, environmental standards regarding seabed mining remain undecided. Research partnerships also show promise, such as the recent discovery of the effectiveness of sodium, a more abundant alternative to lithium, in energy storage batteries.
In the past decade, the western world has recognized the threat of climate change. Now, it must also recognize the importance of securing the materials that power the green transition.
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