Major economies are struggling to develop their own responses to rare earth and critical minerals restrictions through domestic policies and international deals. Near-term responses must ultimately give way to long-term strategic action. In the clean energy transition, critical minerals cannot go the way of oil and gas.
Recently, Beijing has announced tight restrictions on rare earth exports. The applications of copper, lithium, nickel, cobalt and rare earth elements in solar panels, wind turbines, electric vehicles, standalone batteries and semiconductors are well known. What is less understood is how countries and companies define their severity. For some, it depends on the strategic importance of key industries and availability in the event of supply risks.
Others fear that criticality arises from the risk of weaponization. The risks are further increased by the increasing intensity of mineral production and processing. For others, especially those with vast reserves, minerals hold the promise of economic growth. For companies facing huge capital expenditure to prospect and develop mines, minerals come with a premium on policy clarity, price stability and opportunities for collaboration and risk-sharing. In short, a critical mineral means different things to different constituencies. What the Quad Foreign Ministers meeting in Japan has in common is the important and transformative role these minerals play in emerging technologies.
The energy transition must be fair, equitable and just, leaving no one behind. Administration of critical minerals must evolve in response to this context. As the US and China gain control of these key minerals, the world cannot make the same mistake with critical minerals that it did with oil and gas. It needs a global framework to address sourcing and policy coordination.
We think about critical minerals in three ways: demand, supply, and the bilateral deals through which demand and supply are matched. In this framing, a country either promises a significant supply of critical minerals (such as Chile or Argentina), or generates large demand for the minerals (such as US EV manufacturing or India’s clean tech and battery needs). Such a lens could promote competition to grab mineral resources at the expense of others. For fossil energy, the Organization of the Petroleum Exporting Countries (OPEC) has tried to control supply, while the International Energy Agency has historically tried to provide protection for the major energy demanders, namely the advanced economies. These parallel governance arrangements regularly conflict over the dynamics of energy markets. If critical minerals go the same route, exporters may impose restrictions to drive up prices, while buyers will attempt to control mines and sources of supply. The resulting uncertainty will adversely impact emerging economies with growing energy demand but acute shortages of mineral resources.
The world must end this race to the bottom with a rules-based architecture for critical minerals. It begins with a shift from demand-and-supply to opportunities, risks, and platforms for collaboration.
Four opportunities can be identified for both the suppliers and demand side. The first is data transparency for countries and companies. For example, India has developed a public national geology data repository through which any mining company can analyze geological data and propose mineral exploration options. Exploration data should be standardized to improve data consistency and aggregate granular mineral exploration data.
The second is cooperation on exploration, exploration technologies and exploration of alternative sources. A G20 study found that just 15 countries hold 55–90% of global reserves of critical minerals needed for low-carbon technologies. Diversification of sources cannot happen without conscious efforts in technological cooperation. One approach is to conduct a reverse auction just for exploration. Virtual models of the Earth’s crust can also be created using AI and remote sensing. Another area of cooperation is in responsible offshore exploration.
The third opportunity is co-development of mineral processing technologies. Countries with large mineral reserves and mining companies have a mutual interest in the development, deployment and transfer of advanced technologies for exploration and production. A recent study by the Council on Energy, Environment and Water (CEEW) shows that India already processes seven critical minerals on a commercial scale, but will need to increase R&D, recycling and new processing centers to remain competitive in global value chains.
Fourth, mineral recycling can create local and flexible supply chains. This can significantly reduce dependence on imports. For example, recycling of solar waste and modules can lead to the recovery of silicon, copper, tellurium, and cadmium. India’s recently announced Critical Minerals Mission has a special focus on the circular economy of minerals.
The above comes with risks, starting with arbitrary nationalization and restrictive local regulations. The second risk is that companies may not be able to easily exit projects after investing heavily in capital expenditure. Then comes the risk of inadequate physical infrastructure (mining infrastructure, railways and ports) to transport the minerals without disruption.
To reduce risks, political support is needed to build confidence in critical mineral supply chains. The world needs collaborative forums and rules of the road – at a minimum, a set of voluntary principles. In September 2024, a panel on critical energy transition minerals recommended coordination on economic issues across mineral value chains, the need for a global traceability, transparency and accountability framework, and funding to deal with abandoned mines. At the Baku COP, Heads of Government reiterated the need to recognize sovereignty over natural resources, while also emphasizing the need for fair/equitable distribution of benefits, responsible mining practices, social license to operate, technology cooperation and diversification of sources.
This is where micro-party forums are likely to emerge as platforms for dialogue and action. Some initiatives are already emerging. The Mineral Security Partnership (MSP) is an alliance of 14 economies that account for more than 50% of global GDP. India was the first non-G7 country to join the MSP and it aims to include producing countries in Africa, South East Asia and South America. Quad members are exploring the possibility of engaging with mineral supplying countries as a joint effort rather than pursuing bilateral deals alone. Additionally, in 2023, India’s presidency of the G20 proposed voluntary high-level principles for cooperation on critical minerals for the energy transition. There is a Minerals Strategy Group in Africa; A summit is scheduled to take place in October 2025.
All these efforts should ensure internationally acceptable and adequate security while promoting an environment of cooperation rather than uncontrolled competition. There is a need for a level of harmonized standards for mineral exploration and exploitation. Furthermore, while markets can focus on technology choices, governments can set parameters and performance standards to balance economic, social and environmental imperatives. Source countries should be supported to manage the “resource curse” and, instead, build capital reserves for economic diversification and value addition. Domestic governance of critical minerals should include clear and consistent regulations, fair competition and pricing, and equitable sharing of revenues for communities and companies. Furthermore, active efforts for technology co-development as well as alternative models for risk-sharing and reducing the cost of capital should be explored. Finally, promoting a circular economy can create new job-intensive economic opportunities and reduce environmental damage.
The raw materials needed for a net zero world are important not only because of the risks in securing them or the benefits some countries may receive. Fair, transparent, equitable and efficient global governance of critical minerals is an essential condition for our common sustainable future.
Arunabha Ghosh is the CEO of the Council on Energy, Environment and Water (CEEW) and Special Envoy to COP30 representing South Asia. Views expressed are personal
