As the clean energy transition accelerates, critical minerals such as cobalt, lithium, and rare earth elements have become buzzwords in business, international relations, and sustainability.

Yet amid the scramble for these well-known resources, another metal – antimony – has quietly emerged as another keenly contested resource. With China’s recent announcement of export restrictions on this metal, the challenges of balancing supply and demand are intensifying, raising concerns over supply chain vulnerabilities and fuelling a new form of competition among great powers.

Antimony, a lustrous silvery-grey metalloid, is scarce in nature and unevenly distributed globally. It is, however, critical for producing high-tech and defence products, including flame-retardant materials, certain semiconductors, and superhard materials. As with many critical minerals, China dominates the global antimony supply chain. The country holds the world’s largest deposit, accounting for approximately 32% of global antimony resources, yet it produces more than 48% of global output.

China’s move to restrict the export of antimony, ostensibly to safeguard “national security and interests”, is set to take effect on 15 September. While these restrictions are not explicitly targeted at any specific country, the geopolitical implications are significant. China has gradually reduced its antimony production over the past few years to limit strategic stockpiling. As a result, the announcement has driven up prices, potentially disrupting global supply chains. The impact is particularly acute for the United States, which sourced 63% of its antimony imports from China.

China’s export control of this critical metal might appear a calculated move within the broader framework of resource nationalism. Beyond safeguarding strategic resources and preventing over-exploitation, these controls reinforce China’s leadership in the global antimony industry, enhancing its influence over the international allocation of this critical mineral. This move, thus, is not just about acquiring and protecting resources; it is also about denying rivals a strategic advantage.

Antimony is one of the few elements classified as a “critical” or “strategic” mineral by countries including the United States, China, Australia, and Russia, as well as the European Union, underscoring its special geopolitical value. Following similar restrictions on germanium, gallium, graphite, and rare earths, China’s export control of antimony marks another move to leverage its dominance in global supply chains. This action serves as a response to US efforts to limit the availability to China of critical technologies such as high-end chips .

China’s anitimony announcement has not gone unnoticed by markets. In Australia, the response has been notably positive. Larvotto Resources, a leading exploration and pre-development company focused on high-demand commodities including antimony, saw its share price surge as it possesses the rights to operate the Hillgrove Gold-Antimony Project, the eighth-largest in the world. The assumption is that Australia will fill the market gap left by China. In an effort to counter China’s dominance in critical mineral supply chains, the United States had forged partnerships with resource-rich countries including Australia.

However, China’s export restrictions target antimony oxides with a purity of 99.99% or higher, as well as other high-purity antimony compounds (99.999%). Producing such high-purity chemical compounds requires advanced processing technologies, and export controls with this high-purity threshold are likely aimed at restricting the export of high value-added antimony products and advanced processing technologies. These ultra-pure products are used in specialised industries, including high-end electronics, optics, and defence applications.

Australia’s ability to mitigate the risks associated with China’s dominance remains limited. China is a net importer of antimony metal. Currently, 86% of Australia’s antimony exports are sent to China for processing. Investing in processing capacity and infrastructure for lower-grade antimony products may offer limited strategic value for the United States, as these products will still be available under China’s restrictions. Conversely, developing high value-added processing technologies to produce high-purity antimony products carries significant risks, particularly if China decides to retaliate in trade or lift these restrictions. In the latter case, even if alternative processing technologies become available in Australia, the market – including the United States – may still turn to China for more cost-efficient products, potentially rendering Australia’s investments obsolete.

Navigating these dynamic complexities and maintaining an independent policy in the face of great power competition will be a true test of political acumen for Australian policymakers.

The competition over antimony is merely the latest manifestation in the great power rivalry that centres on technological supremacy. Each side is manoeuvring to secure critical materials and technologies, define future systems, and outpace the other in innovation.

The underlying issue is a deepening lack of trust between these global powers. This mistrust fuels the tug-of-war over resources, with nations viewing control over materials as crucial for maintaining technological dominance.

However, this relentless pursuit of supremacy comes with significant downsides: fragmented global supply chains, rising resource nationalism, and intensified trade restrictions. Cooperation gives way to competition, and technological progress risks becoming a zero-sum game.

To read the article as it was published on the The Interpreter webpage, click here.

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Critical raw materials (CRMs) are the bedrock of the world’s renewable energy systems. As economies around the world are committing to decarbonization, demand for critical minerals—the key components of clean technologies powering the green transition—is swiftly outpacing supply: the International Energy Agency (IEA) forecasts that the global energy sector’s requirements for energy transition minerals could quadruple by 2040. Confronted with growing competition for control over critical mineral supply chains, governments worldwide have implemented new policies, marshaled funding, and forged alliances to protect their access to these essential materials.

Although concerns over CRM supplies were raised as early as 2008, supply chain insecurities exposed during the Covid-19 pandemic and the challenges of reducing the EU’s energy dependencies in the aftermath of Russia’s invasion of Ukraine catapulted the issue of reliable access to energy transition minerals to the top of the EU’s political agenda.

The need to reduce dependencies on the EU’s access to CRMs figured prominently in Ursula von der Leyens political guidelines which were presented to the European Parliament on July 18th. She underscored the need to create a secondary market for CRMs, but also underlined that the EU need to diversify its supply and aggregate its demand as well as a need to boost European investment in the sector.

While we are still awaiting Mario Draghi’s report on the EU’s competitiveness, access to CRMs are also expected to be a central theme here. Speaking on April 16, 2024, Mario Draghi, the former president of the European Central Bank, thematized the urgency of securing Europe’s strategic autonomy in critical raw materials value chains. In a world where global superpowers such as the United States and China are turning to protectionist policies to shore up their CRM supply, the EU, Draghi underlined, needs “a comprehensive strategy covering all stages of the critical mineral supply chain.” 

The Critical Raw Materials Act (CRMA), which entered into force on May 23 of this year, is the EU’s initial attempt to build such a strategic approach. The regulation focuses on measures the EU can implement domestically to increase its raw materials resilience: ramping up extraction at home, increasing circularity and recycling efforts, and fostering innovation in alternative technologies. By 2030, 10% of all the EU’s annual consumption of strategic raw materials is to be extracted domestically and 40% is to be processed within the EU. At least 15% of the EU’s annual consumption is to come from recycled sources. According to observers, these targets set by the EU are widely ambitious and will most likely not be achieved by 2030.

The EU, however, will never be entirely self-sufficient in supplying the critical raw materials it requires and will always rely on CRM imports. Even in the best-case scenario where the CRMA’s goals are reached, 90% of the extraction and 60% of the processing of the EU’s yearly requirements will still occur overseas. Currently, geospatial concentration of supply chains leaves Europe’s critical raw material supply—and with it, Europe’s climate ambitions—vulnerable to supply disruptions, external shocks, and the tactics of trade wars.

For a handful of CRMs, the EU is almost solely dependent on a small number of third countries. For example, 98% of the EU’s supply of borate comes from Turkey and 63% of the world’s cobalt is extracted in the Democratic Republic of Congo (DRC). China’s stranglehold over global CRM extraction and, especially, refinement is a serious concern. For example, 100% of the rare earth elements used in permanent magnets are refined there. As the EU and US attempt to loosen China’s grip on CRM value chains, China is becoming more and more assertive in using its dominant position to defend its control of the market. In 2020, China ranked as the country with the most export restrictions on minerals, and, in 2023, introduced additional restrictions for graphite and for rare-earth mineral processing technology. Even the EU’s recently announced plans to impose tariffs on electric vehicles produced in China—an attempt to curb Chinese dominance at the downstream end of the critical mineral value chain—provoked Chinese authorities to open anti-dumping probes into European pork and French spirits in what was widely seen as a retaliatory response.

To secure a reliable CRM supply, the EU must reduce these dependencies. Thus, the CRMA establishes that, by 2030, not more than 65% of the EU’s annual consumption of each strategic raw material at any stage of the value chain is to be sourced from a single third country. This brief, which builds on Tænketanken EUROPA’s previous works, seeks to unpack the strategies deployed by the EU in pursuit of this diversification target. 

Why trade is not enough

There is an ongoing political discussion both within the Commission, but also among Member States, as to whether the EU can secure its critical mineral supply chains through mere import diversification or whether the EU also needs to build up industrial capacity in third countries. So far, the EU has been pursuing strategies along both these vectors, completing trade and investment agreements to increase its network of preferred trading partners and signing strategic partnerships to create investment opportunities overseas.

Industry forecaster, Benchmark Minerals, estimates that at least 384 new graphite, lithium, nickel, and cobalt mines will have to be opened by 2035 to meet global demand for electric vehicle battery materials alone. To secure true stability of supply, the EU thus cannot rely solely on increasing its number of trading partners but must be proactive in ensuring European engagement in supply chains on competitive terms.

Since mining and processing are capital intensive processes, accompanied by a slew of associated environmental and business risks, attracting investment in mineral projects poses a challenge the EU must overcome. The EU must think beyond its current strategies, which though feasible are not sufficiently innovative, to develop tools that will both incentivize and protect European stakeholder involvement.

Reducing dependencies through development: The EU’s Strategic Partnerships

The EU’s raw materials strategy has emphasized the creation of Strategic Partnerships on Raw Materials Value Chains, which are formalized in memoranda of understanding (MoUs) and pledge to facilitate investment in CRM value chains abroad. The EU has forged 13 such agreements with mineral-rich countries outside of the Union since 2017, with more agreements in the pipeline.

The partnerships aim to promote economic development in cooperating countries in mineral extraction, processing, and related infrastructure, scaling up global CRM output. Being non-legally binding, the MoUs are practical: they are easy to set up, quick to push through the internal machinery of the EU, and they satisfy a political appetite for official statements of cooperation. They are followed by more concrete, though still not legally binding, roadmaps identifying projects and laying out a step-by-step approach to achieving the goals of the partnership, which the EU and its partners agree to design within six months of the Strategic Partnership’s signing.

By opening up opportunities for EU investors to establish a foothold in third countries, the strategic partnerships constitute a means of establishing a European presence in global CRM supply chains. In the MoUs, the EU promises prioritized funding for projects through the EU Global Gateway, the EU’s foreign investment policy initiated in 2021. Global Gateway has earmarked a total of €300 billion to clean energy and infrastructure projects worldwide. Deploying Global Gateway funds and a Team Europe approach, under which the EU pools resources from the EU, Member States, and other actors such as development finance institutions and the European Investment Bank, the EU hopes to stimulate private sector investment in partnering countries. However, investors will need more concrete incentives than the Partnerships alone, not least because the Strategic Partnerships, as non-binding compacts, do not create the clear and enforceable legal guarantees necessary to support investments.

Reducing dependencies through trade policy: Understanding the EU’s exclusive competence FTAs

In addition to forming Strategic Partnerships, the EU has doubled down on efforts to bring pending trade agreements with resource-rich countries across the finish line, in a move to diversify its critical mineral supply by increasing trade privileges in CRM markets worldwide. While FTAs are broad arrangements that cover relations across a range of economic sectors, critical raw materials can be a driving force behind these agreements. All new EU trade agreements since 2015 have contained a dedicated chapter on Energy and Raw Materials.

Trade agreements have limited power to stimulate imports of critical raw materials into the EU because there is little scope for country-specific tariff reductions on CRMs. 92% of EU CRM imports do not pay import duties, whether because of tariffs set at zero or trade agreements already in force. The remaining CRM imports are covered by a tariff ranging from 2-7% for unprocessed and 3-9% for processed goods. As such, there is little scope for significant further reduction. However, the EU’s FTAs can be understood as reflecting a shift away from traditional trade liberalization methods and towards increasing opportunities for EU companies in sourcing SRMs overseas, much like the Strategic Partnerships, although FTAs are legally binding accords.

However, trade agreements might help restrict protectionist CRM policies implemented by mineral exporting countries. Such measures pose a worrying barrier to trade in critical minerals. In newly developed FTA provisions, the EU has included additional rules which aim to address defensive CRM trade strategies adopted by resource-rich countries and to close gaps in existing WTO regulations. Recent FTAs have also sought to open foreign markets to EU investors in the extractive industries of FTA partners, for example by securing preferential access for EU investors to trading opportunities and ensuring non-discriminatory procedures in the authorization of exploration and production licenses. 

Since 2017, the EU has crafted more agile FTAs—slimmed down agreements designed to fall under exclusive EU competence which can enter into force with only the consent of the EU Council and European Parliament. In this way, the EU has managed to accelerate the exhaustive ratification procedure associated with traditional trade agreements. However, the EU’s newest trade agreements, including the deals with mineral-rich Chile, New Zealand, and Vietnam, are unable to secure full protection and security for EU investors once they are operating in foreign markets: because investment protection counts as an area of shared competence, these FTAs must leave out provisions protecting EU investors against the expropriation of their investments.

Though offering a promising way of expediting FTA ratification, the inability of exclusive competence FTAs to secure investment protection makes these agreements weak supports for the Strategic Partnerships’ investment push. The EU’s current Strategic Partners are predominantly countries where no trade agreement with investor protection articles is in force, whether because negotiations have been on hold, as is the case in the DRC and Zambia, or because ratification is embattled, as is the case with the MERCOSUR country, Argentina.

Investment protection: The missing piece in the EU’s strategy

Neither exclusive EU competence FTAs nor Strategic Partnerships include robust, legal-binding, investment safeguarding measures, which, though controversial, can be crucial prerequisites for investor engagement. It is only with fully-fledged, shared competence trade and investment agreements that the EU has the ability to ensure legally binding investment protection mechanisms, including the shielding of EU investments against discriminatory judicial and administrative procedures and the safeguarding of investors against expropriation or nationalization of their investments. These rules have bite: Investor State Dispute Settlement (ISDS) provisions grant EU investors standing to sue the EU’s trading partners directly. Remedies include financial compensation or restitution of expropriated property. Due to investment risks in many of the EU’s partnering countries, investment protection provides the stability essential for the kind of investment in raw materials value chains that the EU hopes to foster. ISDS procedures, however, are increasingly coming under fire for enabling private companies to sue governments when climate policies or local opposition affects their profits. Should the EU’s trading partners grant EU investors the right to ISDS procedures, they would expose themselves to substantial risk of lawsuits and weaken their leverage to take further measures to protect the environment, as well as protected and indigenous land. As EU-level investor protection measures will not materialize soon, mechanisms for de-risking investment will have to be installed on a project level basis, including guarantees from the Multilateral Investment Guarantee Agency (MIGA) of the World Bank, from national export credit agencies, or the private political risk insurance market. 

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The Organization of the Petroleum Exporting Countries, OPEC, was established in 1960, with five founding members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. OPEC’s primary objective was to unify petroleum policies and secure fair prices for its member countries, which has since expanded to include 13 core members. According to current estimates, 80.4% of the world’s proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle east, amounting to 67.1% of the OPEC total.1 Central to OPEC’s power is its ability to leverage its collective influence to manipulate global supply and demand dynamics, thereby influencing prices. Reductions in production create market scarcity, driving prices upward, while increases result in a surplus, leading to price decreases. Decisions on production quotas are made during OPEC meetings, where member nations negotiate and coordinate their strategies. 

The United States is on the cliff of its third energy revolution in 100 years. 

Up to this point, renewables have only played a minor role in US power generation; in order to fulfill the promises of a net-zero emissions scenario by 2030, 2040, or 2050…wherever the target is now! 

The shift from a fuel-intensive to a material-intensive energy system powered by renewables will rely on a supply chain for critical minerals and rare earth metals controlled by only a handful of countries. 

Where is this fuel coming from?

The materials necessary for our smart phones, high technology devices, consumer and industrial batteries, electric vehicles, renewable energy infrastructure, all require the metals and rare earth elements whose supply is currently controlled by a small group of countries, led by China.

China has emerged as a dominant force in the processing of these raw materials into usable forms, driven by domestic resource availability, cost-effective labor, and advanced processing technologies. An underlying reason for China’s preeminence is the hesitation of many countries to engage in environmentally impactful processing activities associated with critical minerals. The processing journey from raw materials to refined forms involves extraction, beneficiation, smelting, and refining; processes that generate waste, release pollutants, and have adverse ecological effects on the environment. China’s willingness to engage in processing activities, albeit with varying environmental standards, has allowed it to become a global bottleneck in the green-energy metal supply chain.

This bottleneck extends to both processed raw materials and finished goods (wind turbines, electric vehicle batteries, and battery energy storage systems) contributing to China’s dominance in the sector. As the world strives for renewable energy solutions, the reliance on China for processing and manufacturing introduces potential vulnerabilities in supply chains, affecting availability and affordability.

Where are the clean-energy technologies manufactured?

Answer: China

To recap, China controls a portion of the mine supply, a significant majority of the processing, and an even more significant majority of the manufacturing of clean-energy technologies. They are vertically integrated; a term that describes a business strategy in which a company owns or controls different stages of the supply chain of a product or service.

So what will the largest consumers of renewables and clean-energy technologies, the US & Europe, do if China decides to turn off the spout for say, a raw material…we’re about to find out. 

On July 4th (of all days) China announced a curb on exports of Gallium and Germanium, two of the rare earth elements critical to chipmaking and electronics. 

It’s not just a China problem…the risk of a new OPEC is real.

Argentina and Chile has the world’s second- and third-largest reserves of Lithium, respectively. Those countries, along with their neighbor Bolivia, make up the “Lithium Triangle”. The US imports roughly 91% of its lithium from the Lithium Triangle, primarily Chile. 

At the end of April 2023, Chile’s President announced the nationalization of its lithium reserves, which could signal the imminent rise of protectionist measures on a global scale, with a focus on these core green energy metals and rare earths. Our reliance on lithium is set to grow even further. Recently, MIT scientists created a solid-state lithium battery that surpasses the performance of current battery technologies5. As newer technologies demand even greater quantities of lithium, the US is likely to accept the nationalization of, and its short- to medium-term dependence on, Chilean lithium, while exploring alternative sources in countries with more favorable business environments. 

As the world accelerates its shift towards renewable energy, the concentration of green-energy metal reserves and processing capabilities in a limited group of countries raises concerns about pricing power and supply chain resilience; this could give rise to a new cartel of metal exporting countries, OMEC. 

The United States, Europe, and other developed nations, as major consumers of these materials, will have to deal with this group…but it’s likely that China will be setting the price for now. 

To read the full insight, please click here.

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The door appears to be open for the United States or other EU trading partners and like-minded countries to join, although the term club is also being applied to negotiations over trade deals—such as the limited US-Japan free trade agreement—designed to manage trade between major economies that are also critical mineral importers. But many of the top producers of critical minerals are not developed economies. Countries like Bolivia, the Democratic Republic of the Congo, Guinea, and Indonesia are key exporters and/or have massive exportable mineral resources.

Decarbonization is not the only impetus behind the proposed Brussels buyers club. Both the European Union and United States view China’s dominance of critical mineral supply chains as a national security issue, because these minerals are key inputs to modern military technology. Access to strategic resources—the resources necessary to field modern militaries and the economies that sustain them—has always informed national security strategy; the issue has been given increased urgency by disruptions of energy supply chains stemming from Russia’s invasion of Ukraine and weaponization of its oil and gas exports and reports that China is considering banning certain rare earth mineral and magnet exports in response to US and Dutch export controls on leading-edge semiconductors and fabrication equipment to China.

The proposed buyers club could yield several benefits for the European Union, including preventing outbidding between EU-based purchasers, sending more accurate and transparent demand signals, and facilitating coordination with broader economic and security priorities. But for reasons ranging from intra-EU politics to challenges inherent to running cartels, such a buyers club may be politically and economically unworkable. And if successful, it would shift an important share of the economic benefits of green energy transitions from mostly developing and middle-income economies to the European Union, undermining putative commitments to just energy transitions at the global level.

Supply chains for critical minerals desperately need widening to meet projected global demand and tackle climate change mitigation. A purchasers club would not be a step in the right direction.

Cullen S. Hendrix is senior fellow at the Peterson Institute for International Economics (PIIE), nonresident senior research fellow at the Center for Climate & Security, and a specially appointed research professor with the Network for Education and Research on Peace and Sustainability (NERPS) at Hiroshima University.

To read the full policy brief, please click here.

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The Indo-Pacific Economic Framework (IPEF) is one of the most promising international economic negotiations for addressing supply chain issues. Launched by the Biden administration in May 2022, IPEF is a blueprint for U.S. economic engagement in the region with 14 partners representing 40% of global GDP. Of its four pillars, the Supply Chain Pillar has attracted considerable attention. In many ways, this area is a clean slate, paving the way for creative thinking on rules and cooperation mechanisms to minimize disruptions.

IPEF negotiators are making meaningful on their supply chain work, with early harvest agreements possibly being announced in late May this year, around the time of the APEC Ministers Responsible for Trade (MRT) meeting in Detroit, Michigan. With this in mind, we recommend a series of proposals to strengthen and expand the work of IPEF, both on a sector-wide basis and on critical minerals and materials, which could serve as a pilot for work in other sectors.

We recommend important elements that should be included in an “early warning system” and “crisis response mechanism” to make these tools as robust and impactful as possible. We also suggest that IPEF members agree to World Trade Organization plus rules to deter the imposition of export restrictions and facilitate customs processing and essential cross-border movement of products and people during times of supply chain shortage. Finally, we underscore the benefits of supply chain connectivity and co-investment opportunities that can be generated through work in this pillar, especially for the developing country members of IPEF.

Regarding critical minerals and materials, we offer several recommendations to cooperate on supply chain mapping, as well as streamlining and harmonizing regulations and standards. Furthermore, we suggest developing a “swap system” to be drawn from the financial “currency swap” mechanisms as a collective response that encourages countries to share their stockpiles during times of severe supply crises. Finally, we propose that Washington negotiate critical minerals and materials agreements similar to the one recently signed with Japan to make other IPEF members eligible for electric vehicle tax credits under the Inflation Reduction Act.

Our recommended policy proposals will take time to implement and could be taken up in phases. For 2023, we propose focusing on sector-wide outcomes and starting work on critical minerals and materials, which could continue into 2024. Next year would also be an opportune time to build on the cooperation mechanisms to make them more beneficial and relevant. It may also be worthwhile to consider a market access component to this effort. The IPEF Supply Chain Pillar provides a promising opportunity for the United States and its regional partners to set a new course in reshaping more resilient and secure supply chain networks.

Han-Koo Yeo is a non-resident Distinguished Fellow at the Asia Society Policy Institute (ASPI). Prior to joining ASPI, he capped off almost three decades of public service as Trade Minister of the Republic of Korea.

Wendy Cutler is Vice President of the Asia Society Policy Institute (ASPI) and Managing Director of the Washington D.C. Office. She joined ASPI after nearly three decades as a negotiator in the Office of the U.S. Trade Representative.

To read the full issue paper, please click here.

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