As clean energy technology becomes the latest frontier for geoeconomic rivalry, the security of supply chains for rare earths and critical minerals—essential materials for clean energy—has become a global strategic issue. The fragility of global supply chains revealed by COVID-19 and rising competition from China have only heightened the importance of supply chain security for critical minerals.
This report compares strategies and actions taken by the United States, European Union, and Japan, illuminating key economic, security, and geopolitical factors behind these evolving approaches to enhance the security of critical minerals supply chains. Key observations include:
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The security of critical minerals supply chains is a strategic issue, in light of the expected exponential demand growth led by clean energy technology deployment around the world.
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Sustained political commitment to technological innovation is essential to managing the growing competition over resources and clean energy manufacturing value chains.
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China’s development of midstream and downstream capacities has turned it from a supplier of raw minerals and materials to a key consumer of them. China’s commanding position along critical minerals supply chains is a key factor that shapes other economies’ strategic responses.
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Different economies are motivated by different concerns reflecting the heterogeneity in their resource endowment profiles and industrial structures. The United States appears most concerned about import dependence that can be exploited geopolitically, while the European Union and Japan appear primarily concerned with the effects of supply disruptions on their industrial competitiveness.
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Recent efforts to strengthen critical minerals supply chains include the United States’ development of midstream capacities, the European Union’s orchestrated support for its battery sector, and Japan’s stockpile modernization and resource development abroad.
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Competition over critical minerals supplies is also rising between import-dependent economies. Such competition could hinder effective international partnerships that might otherwise mitigate existing risks to supply chains.