PhD student in Supply Chain Management
University of Grenoble Alpes (UGA)
Blandine Ageron (Photo)*
Grenoble Alpes University (UGA)
*Faculty member of the Business Science Institute.
Article originally published on The Conversation France.
Since the end of 2019, the SARS-CoV-2 pandemic has challenged several fundamentals of our supply strategies and methods. Certain innocuous and non-strategic products, such as masks or resuscitation beds, have become high-stakes products that have created significant tensions in supply chains. This situation shows, on the one hand, that a product that is not at stake at a given moment can quickly become essential and therefore very critical, and on the other hand, that many countries have realized the consequences of their strong dependence on certain countries, notably China.
Beyond the current health situation and medical products, questions arise more generally for all critical products, i.e., necessary and essential to a country, in a context of economic dependence. With the ecological transition and the exponential growth of connected objects, developed countries need rare metals more than ever before to supply electronic industries, offering products such as smartphones, computers or electric cars.
However, most developed countries do not have access to these rare metals and must therefore source them from other countries, notably China, which is currently the major player. These supplies raise geopolitical, ethical and environmental issues. The current pandemic context has had a major impact on these supplies and has led different countries to devise and implement different strategies to secure them as much as possible.
What are these metals?
Rare metals represent about 40 elements of the periodic table. They are produced in small quantities and are necessary for a large number of industries. Their rarity is not necessarily due to their low content in the earth's crust, but rather to the complexity of their extraction. In fact, a distinction must be made between reserves, which are actually exploitable, and resources, i.e. all the deposits containing the sought-after minerals in the earth's crust. Rare metals are generally found within conventional ores. Some of them come from zinc, copper or nickel mines. Among these metals, we find indium, gallium and cobalt.
Among these rare metals, there are the famous rare earths. Some of them are highly sought after for their magnetic properties and are mainly produced and extracted in China, which can generate geopolitical conflicts. Contrary to what their name suggests, rare earths are not so rare, but their content in deposits is often very low and they are therefore difficult to exploit.
Rare earths. Clockwise from top: praseodymium, cerium, lanthanum, neodymium, samarium and gadolinium.Peggy Greb, USDA/Wikipedia
Critical metals are named for the situation we would be in if they were to run out. They can be specific to each company, state or region. Among these critical metals, we distinguish strategic metals that are critical for vital sectors. The defense and energy industries use metals that are strategic because they are essential to their activity, for example uranium, particularly in France, which is a strategic metal for the nuclear industry.
Conflict minerals are metals of which a minority comes from territories under tension. We speak of the 3TGs (for Tantalum, Tungsten, Tin and Gold) to which cobalt is often added. They are called "conflict minerals" because their exploitation can participate in the financing of armed groups, or be based on child labor or forced labor in illegal artisanal mines.
Where are the rare earths in the periodic table of elements? Wikimedia, CC BY-SA
Each of these metals or minerals is at the heart of strong current issues for each major region, economy or country, as illustrated by the issues of rare earths in China, conflict metals in Europe and rare and strategic metals in the US.
No tension for China
China, the world's largest producer, miner and importer of rare earths, saw its production drop slightly at the beginning of the pandemic, due to industrial suspensions at production sites, labor shortages due to quarantine and logistical issues. Prior to the pandemic, China was using its rare earth processing facilities at less than 40% of capacity, some of which had been closed in previous years due to increased environmental controls. Prices have not risen sharply and demand is still there.
Attempting to emancipate the United States
The United States had already decided to emancipate itself from China for the production of its strategic metals. The Covid-19 crisis accelerated this strategy regarding the opening of mines and the creation of processing sites. Under the Trump administration, this quest for independence from China was a priority. Since the arrival of Joe Biden, China has further threatened to reduce its exports to the United States, to target and weaken the U.S. military industry.
In response, heavy investments are being made, including at sites such as Round Top Mountain in Texas, which is believed to be home to 16 of the 17 rare earth elements and 11 of the 35 critical metals such as uranium and lithium. This mountain, known as the largest rare earth deposit in the U.S., could provide the U.S. with a 130-year supply of strategic metals.
However, it takes nearly 20 years to develop such a deposit. The American strategy for these metals does not only concern extraction, but also research and development to find methods of recycling or substituting strategic metals.
Traceability of metals in Europe
In Europe, all states are committed to the traceability of conflict minerals. Since January 1, 2021, the European Union has imposed full traceability of these metals, just like the United States, which implemented it in 2010 through the Dodd-Frank Act.
At the heart of this strategy is the Democratic Republic of Congo (DRC) with the province of North Kivu, a region bordering Rwanda and Uganda. Indeed, the DRC has been known for decades for metal trafficking involving issues of armed conflict. At the time, gold and diamonds were already in the spotlight, but now, with the explosion of new technologies, metals such as tantalum and tungsten are being targeted. The new EU law "requires European companies involved in the supply chain to ensure that their imports of these minerals and metals come exclusively from responsible sources and are not conflict-related.
While the SARS-CoV-2 virus was a catalyst for international tensions over certain critical and/or rare metals, the strategies of the major powers were already different before the crisis. The explosion of new technologies will continue to generate increased needs and highlights the challenges of regionalizing supply chains.
Article translated from French with https://www.deepl.com/translator
Blandine Ageron's articles on The Conversation France.
Blandine Ageron's books & articles via CAIRN.info.