Trade update: Are critical minerals getting more critical?

by Christian Siviere

In these days of trade disruptions and intense global competition, let’s look at critical minerals. As the name indicates, they are very important for industry.

Christian Sivière runs Solimpex and is an international trade consultant and lecturer.

Critical minerals are resources deemed essential to the economy and whose supply may be disrupted. The “criticality” of a mineral can change with time as society evolves. For example, salt was once a critical mineral.

Today, we are concerned about minerals needed for electrification. Because the mining and processing of these minerals is dominated by China, their supply could be subject to disruption.

The U.S. Energy Act of 2020 defines a “critical mineral’’ as any non-fuel mineral, element, substance or material with a high risk of supply chain disruption and serving an essential function in energy technologies. It lists the minerals critical for energy, called the “electric eighteen’’: aluminum, cobalt, copper, dysprosium, electrical steel, fluorine, gallium, iridium, lithium, magnesium, natural graphite, neodymium, nickel, platinum, praseodymium, silicon, silicon carbide and terbium. The U.S. secretary of the interior also maintains a list containing fifty minerals.

Most are raw minerals, though some are processed: aluminum is made from bauxite, a name that comes from a small French town called Les Baux, where the material’s property was first discovered in the early 1800’s. The aluminum produced in Canada is made from bauxite imported mainly from Guinea, West Africa, the world’s largest bauxite producer. Silicon is made from mixing and superheating quartz with a carbon source, so the raw material may be local.

Both industrial processes devour a lot of energy. Making aluminum consumes about 10 times the energy required to make steel. The production of silicon requires very high temperatures, also making it energy intensive.

Sometimes one wonders if these factors are taken into account when we look for solutions to reduce our carbon footprint.

Last month, our federal government announced plans to accelerate critical mining and boost our energy security by slashing the time it takes to develop new critical minerals mines, by providing faster permit processes.

Ottawa focuses on six minerals, key to making electric vehicles and wind turbines: lithium, graphite, nickel, cobalt, copper and rare earth elements. Rare earths are a group of chemically similar metallic elements that are not especially rare but tend to occur together in nature and are difficult to separate from one another. There are 17 rare earth elements. Rare earths are critical for the production of magnets, a vital component of any electrical machine.

China accounts for 60 percent of the world’s extraction of rare earths and 90 percent of the processing. To maintain its quasi-monopoly, China introduced a ban on exports of rare earth extraction and separation technologies in December 2023.

Earlier this year, the World Trade Organization published a report on the role critical minerals play in the production of clean energy technologies. Over the last 20 years, trade in these minerals increased from US$53 billion to $378 billion.

The report mentions that a battery for an electric vehicle requires 200 kilos of critical minerals, and 70 percent of global demand for cobalt comes from the battery sector.

Worldwide imports of critical minerals have risen significantly, particularly the platinum group metals, rhodium, iridium, ruthenium and osmium. These recorded annual growth of 72 percent since 2017. Helium and lithium also recorded impressive growth rates of 53 percent since 2017.

Imports of copper have increased 12 percent in the last five years, with China representing nearly 60 percent of the total. The most traded mineral is copper, representing 26 percent of total mineral imports, followed by unwrought aluminum at 20 percent. Following these, rhodium and palladium emerge as the most traded minerals, at 30 percent of the world’s total.

Chile is the world’s leading exporter of critical minerals, accounting for 11 percent of global exports, followed by South Africa (10 percent), with Australia, Peru and Russia at six percent. For earths, stone and ores, South Africa has a 14.3 percent global share, just ahead of Australia, followed by Guinea, thanks to bauxite.

Peru is the fourth-largest exporter, thanks to zinc, tin and molybdenum. Chile is the world’s leading copper exporter, with 25 percent of global exports, followed by Peru at 19 percent and Indonesia at nine percent. Seventy percent of worldwide graphite extraction and close to 100 percent of processed graphite production happen in China.

These figures give us an idea of the supply challenges facing these industries, particularly due to current geopolitical tensions, including Russia’s continuing invasion of Ukraine and the Hamas-Israel conflict.

One has to wonder, though, if drilling more holes into the ground to produce greener energy is the solution to save the planet.

Should we not, instead, try to consume less energy? How about driving fewer cars and promoting public transit solutions? The best-selling vehicles in Canada and the US are not fuel-efficient sedans or compact cars, they are pick-up trucks, followed by large SUVs.

And speaking of energy consumption, the constant rise of e-commerce is obscene. Amazon’s growth may have peaked but new players like Temu and Shein are gaining market share in North America, with fast-fashion leading their growth. Even if the trucks that deliver the merchandise are electric and the Temu/Shein fulfillment centres use clean energy, all requiring more critical minerals, is this really sustainable?