Developing Countries Yet To Explore Critical Minerals: IRENA Report

A latest report by the International Renewable Energy Agency (IRENA) on critical minerals claims that several developing countries hosting critical mineral reserves are yet to explore them fully. The agency mentioned its latest findings on critical minerals in its report titled ‘Geopolitics of the Energy Transition’. 

The report said that developing countries with higher reserves for several critical minerals could use the same to aid in their increased share in the processing and manufacturing of end products. 

“Developing countries currently account for much of the global production of the materials needed for the energy transition, and their share in reserves is even greater, but not fully explored. For example, Bolivia has 21 million tonnes of lithium reserves – more than any other country – but it produced less than 1% of world supply in 2021. Countries can utilize their mineral resources to draw in industries involved in the middle stages of production (processing) or even in the end stages (battery and electric vehicle manufacturing),” the report said. 

It also said that with higher participation in such opportunities, several of these developing countries could realize their new opportunities in supply chains. “A key question is whether the energy transition supports developing countries to not just increase their exports of primary ores but also to move up the value chain and attract higher-margin activities such as mineral processing. Processed materials like steel and alumina do not just command significant price premia over unrefined ores; they also reduce the input cost of infrastructural and industrial projects, spurring local economic development,” the report said. 

The IRENA report said that it reviewed 35 lists of critical minerals from several countries and found that 51 materials used for the renewable-based energy transition appeared on at least one list. It said that critical material supply disruptions globally would not impact the energy security in countries but affect the energy transition process. The report said that the world does not have a scarcity of reserves for energy transition minerals but limited capabilities for mining and refining them. It also pointed out the higher concentration of mining and processing landscape of critical materials.

“In the mining of critical materials, dominant positions are held by Australia (lithium), Chile (copper and lithium), China (graphite, rare earths), the Democratic Republic of Congo (cobalt), Indonesia (nickel) and South Africa (platinum, iridium). This concentration becomes even more pronounced in the processing stage, with China currently accounting for 100% of the refined supply of natural graphite and dysprosium (a rare earth element), 70% of cobalt, and almost 60% of lithium and manganese,” the report said. 

The report also said that many large multinational corporations and state-owned or controlled enterprises operate across multiple countries and possess the resources and skills to develop complex mines. Thus, these activities have been largely confined to a few companies controlling a significant portion of global production and trade. “The top five mining companies control 61% of lithium output and 56% of cobalt output,” the report said.

The IRENA report also said that the disruptions in the supply chain of critical minerals could be linked to geopolitical fluctuations. However, they would not face the higher volatility risk of oil and gas. 

“Interruptions in the supply of minerals can affect multiple industries and reverberate throughout the economy. Supply shortages and related risks could arise, particularly in the short to medium term, as demand for selected materials increases and mining and processes remain concentrated. In the medium to long term, trade flows for critical materials are unlikely to lend themselves as easily to geopolitical influence as oil and gas. This is because reserves of such materials are abundant, geographically widespread and can be processed in many locations,” the report said.