🌱 Why are governments concerned with critical raw materials?
Critical raw materials – such as cobalt, nickel, and lithium – are needed for the production of batteries and renewable energy technologies. Yet, the demand for critical minerals is expected to exceed the supply over the next decade. According to a recent report from McKinsey, the demand for lithium and rare earth elements will overtake the supply by as much as 30% to 40% by 2035. For copper, the demand will overtake the supply by as much as 10% to 20% by 2035.
🌱 What is the Minerals Security Partnership?
The Minerals Security Partnership (MSP) was launched in 2022. The partnership is a coalition of 14 nations and the European Commission. Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the UK, and the US are members of the partnership. The group also has a forum through which it gathers together and collaborates with mineral-producing countries – such as Kazakhstan, Namibia, Turkey, Ukraine, and Uzbekistan.
🌱 What does its joint finance network do?
The joint finance network of MSP was launched on 23 September 2024. The new finance network aims to “strengthen co-operation and promote information exchange and co-financing” around the securing of critical raw materials. Through its finance network, the MSP hopes to weaken China’s market dominance in critical raw materials and “overcome investment shortfalls that have hindered the development of supply chains for key strategic materials […] outside of China”.
🌱 What role does China play in the critical raw material market?
Due to “subsidies, easier access to financing, superior processing technology, lower costs and tolerance for laxer environmental standards”, China has taken up a key role in the project development and global supply chains of critical minerals. Notably, Chinese companies control 90% of the global processing capacity for rare earths. Chinese companies also control more than half the processing capacity for cobalt, nickel, and lithium minerals. Moreover, through Chinese-backed investment, Indonesia has come to hold 55% of the global market share for nickel. China and the US are currently engaged in a “tech rivalry” or “trade war” involving critical minerals and electric vehicles. The US has – for example – put in place export restrictions on advanced technologies, such as semiconductors. China has, in turn, hit back by restricting the exports of minerals, such as antimony, gallium, and graphite.
🌱 What does the MSP fund?
The MSP aims to move private investors and mining companies to invest more in the critical raw material sector. One of its objectives is to give “lower-income countries in particular [an] alternative to China when it comes to financing”. MSP partner governments move “development finance and export credit agencies to work with private industry to support critical minerals projects”. They have supported 10 critical minerals projects to date and “a further 30 critical minerals mining projects are being evaluated by the MSP”. Most recently, the partnership pledged to financially support a huge nickel project in Tanzania. Through the Kabanga nickel project in Tanzania, the MSP hopes to reduce both China’s and Indonesia’s control of nickel supplies.
Read more about the Minerals Security Partnership here:
- https://www.ft.com/content/2984ae03-df15-420b-89cc-9ad8337014a9
- https://www.miragenews.com/new-minerals-security-partnership-finance-1322400/#google_vignette
- https://www.middleeasteye.net/news/turkey-joins-western-critical-minerals-club-amid-eu-china-rivalry