With ambitious technological and financial cooperation, Western allies could produce enough critical minerals to meet climate goals.

In the aftermath of the COVID pandemic, nations quickly discovered the perils of an uneven distribution of production and processing capabilities in the guise of globalization. Phrases like "near-shoring" and "friend-shoring" led discussions of a green economy as remedies to the trade imbalance between the United States and the People's Republic of China (PRC). While exclusionary nationalism will only exacerbate the situation in the short term, a stabilizing solution in the form of teamwork between democratic countries is not only possible but is already in progress.

Calls for a Western-led critical minerals market have been growing ever since the Russian invasion of Ukraine and grew louder following the announcement of a derivatives trading desk at Ganfeng Lithium – the top Chinese producer with resources in Argentina, Australia, Mali, and Mexico – to stabilize and protect Chinese interests against financial risks.

The decision to establish the desk comes during a period of extreme volatility and geopolitical tensions in the lithium industry. Lithium prices have fallen over 70% in the past year after more than doubling to a record high in late 2022. The desk will trade instruments linked to commodities, equities, indexes, and rates to help lower the risks of cross-border investments and overseas market volatilities.

In April 2023, White House National Security Advisor Jake Sullivan spoke at the Brookings Institution, outlining the U.S. international economic agenda. He noted that the Biden administration faced challenges – intense geopolitical competition, a squeeze on the middle class, a weak American industrial base and vulnerable supply chains, an accelerating climate crisis, and rapid technological change.

Last month, Sullivan returned to Brookings to reflect on the progress and challenges of the past 18 months. As part of that ongoing agenda, the U.S. has been working on a standardized international marketplace between Western allies aiming to divert critical mineral processing and refinement away from China's domination of supply chains and key renewable energy technologies.

"That's why we are working with them to create a high-standard, critical minerals marketplace, one that diversifies our supply chains, creates a level playing field for our producers, and promotes strong workers' rights and environmental protections," Sullivan said. "We're driving towards tangible progress on that idea in just the next few weeks."

Notable movement

Though further details on the partnerships weren't forthcoming at Brookings, headlines have shown movement in the right direction.

Early last year, European Commission President Ursula von der Leyen announced that a key pillar of the EU's new industrial strategy would be global partnerships to access inputs needed for industry, building on existing EU initiatives, including the European Battery Alliance and the Critical Raw Materials Act, both of which aim to secure supply chains.

President von der Leyen also released a joint statement with President Biden, committing to working together to ensure that the supply chains of the future are reflective of shared values, "The United States and European Union are committed to addressing the climate crisis, accelerating the global clean energy economy, and building resilient, secure, and diversified clean energy supply chains. Both parties recognize that these objectives are at the heart of the U.S. Inflation Reduction Act and the EU Green Deal Industrial Plan."

"They laid out practical steps in the statement to achieve those goals – like aligning respective clean-energy incentives on each side of the Atlantic and launching a negotiation on supply chains for critical minerals and batteries," said Sullivan.

In May of this year, Biden and Canadian Prime Minister Justin Trudeau extended the Bilateral Energy Transformation Task Force to accelerate clean-energy supply and create middle-class jobs on both sides of the border.

The U.S. and Japan have also signed an agreement expanding cooperation on critical-mineral supply chains.

"Today's announcement is proof of President Biden's commitment to building resilient and secure supply chains," said Ambassador Katherine Tai, principal trade advisor, negotiator, and spokesperson on U.S. trade policy. "Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship. This is a welcome moment as the United States continues to work with our allies and partners to strengthen supply chains for critical minerals, including through the Inflation Reduction Act."

''[The critical minerals] sector is marked by extreme price volatility, widespread corruption, weak labor and environmental protections, and heavy concentration in the PRC, which artificially drops prices to keep competitors out of the marketplace. If we and our partners fail to invest, the PRC's domination of these and other supply chains will only grow, and that will leave us increasingly dependent on a country that has demonstrated its willingness to weaponize such dependencies. We can't accept that, and neither can our partners.'' Sullivan said.

Manuel-H for Pixabay

The White House faces challenges of intense geopolitical competition, a squeeze on the middle class, a weak American industrial base, vulnerable supply chains, and rapid technological change.

Will it be enough?

Ongoing research and exploration initiatives from both government and private sectors have resulted in several promising international resource finds.

At the international level, discussions have been ongoing about the potential for abyssal seafloor mining operations, promising a treasure trove of minerals but uncertain environmental consequences.

The U.S. Geological Survey this month announced world-leading measurements of lithium beneath the bedrock of Arkansas in a massive underground brine resource called the Smackover Formation extending under parts of Louisiana, Texas, Alabama, Mississippi, and Florida as well.

According to the Nordic Council of Ministers, the countries of Finland, Greenland, Norway, and Sweden are rich in rare earth elements as well as cobalt, graphite, lithium, and nickel reserves that remain largely unexploited and have a history of commitment to low-impact, sustainable mining practices, making them ideal industry sources.

In 2022, the U.S., Canada, France, Germany, Italy, Japan, the UK and EU launched the Partnership for Global Infrastructure and Investment to build clean energy supply chains between each other. The countries also signed the Minerals Security Partnership to produce, process, and recycle critical minerals, strengthening "joint industrial policy" to coordinate at the international level, build collaborative supply chains and work together to secure supplies of needed technologies and create markets in support of net-zero industries at home.

Studies done by the Net Zero Industrial Policy Lab at Johns Hopkins University have concluded that with sufficiently ambitious technological and financial cooperation, such democratic partnerships could produce enough critical minerals to successfully meet Paris Agreement targets.