A supply chain crisis in minerals and metals is looming, writes Peter Bryant in The Intelligent Miner. Companies must act quickly and collaboratively to mitigate the impacts.
Downstream companies across the mining and metals value chain, ranging from utilities to automotive OEMs and their respective supply bases (including transformer and battery manufacturers), are heading directly into a supply chain crisis.
Electricity networks are highly dependent on minerals like copper, nickel, aluminum, and rare earth elements (REEs). Technologies like electric vehicles (EVs), battery storage, and renewables require 5-10x more minerals per unit of energy than fossil fuel systems.
The auto industry and other manufacturers rely on REEs, of which China controls nearly 70% of mining, 85% of refining capacity, and 90% of rare-earths metal alloy and magnet production. The growth of AI and data centres and the energy expansion the world is in the midst of is exacerbating things further.
China has played the long game with minerals, using strategic investments to control different parts of the supply chain on a mineral-specific basis, and as a result, currently dominates many mineral markets.
It has a different choke point on the supply chain of each key mineral, and we’ve seen it leverage that control in various ways.
For example, though copper is mined globally, more than half of its concentrate is refined in China. The country has rapidly expanded its processing capacity, giving it the ability to take zero conversion fees for smelting and thus crushing margins.
In the case of nickel, China’s investment of over US$20 billion into Indonesia, which has risen to the world’s largest nickel producer, means that China controls 55% of the nickel concentrate globally.
Last year it flooded nickel markets, suppressing prices and resulting in the collapse of the New Caledonian and Australian nickel mining sector. We’ve seen similar market-shaping activities with lithium as well, and there’s major concern around REEs.
Read the full article, including an overview of the headwinds and Peter’s suggested solutions for the supply chain, over at The Intelligent Miner.
