Critical minerals have become a buzz-word in contemporary foreign and domestic policy for all states. Likely because it has emerged as a major geopolitical issue wedged between the realist power struggles of US-China hyper-competition. At best this promotes dispersed and uncoordinated strategies across national economies and, at worst, could be the undoing of global efforts to decarbonise in time to meet mid-century net-zero targets.
So, what is all this fuss over critical minerals? The crux of the story is that they are vital for clean energy and advanced technology. Net zero emissions commitments made under the Paris Agreement have resulted in a global race to decarbonise national economies with renewable technology. This has placed mounting pressure on critical mineral supply chains such as lithium, cobalt, bauxite and copper. The International Energy Agency (IEA) predict that existing and announced energy policies will, at a minimum, double mineral requirements by 2040.
Aside from fundamental supply issues, decarbonisation may be jeopardised because critical minerals have graduated from the realm of trade disputes to that of ‘geopolitical arm wrestling’. There is an emerging fear surrounding supply chain concentration in rival or non-aligned powers, which has led to the weaponization of interdependence. This is seen to be a direct response by the United States to the increasing dominance and power of China, often exerted through economic statecraft. China currently dominates critical mineral and renewable technology supply chains. Subsequently, policy surrounding critical minerals in the US has begun to view interdependence as a liability, pushing decoupling and reshoring narratives in an effort to create ‘stable and resilient’ supply chains.
The US has placed pressure on its allies and ‘friends’ such as the UK, Australia, Canada, South Korea, Japan and Europe to follow suit, making decarbonisation more difficult. For example, some policies block US partners from engaging in their own domestic renewable transition because they are forced to work within siloed strategic alliances that overtly exclude China. Several initiatives are simultaneously underway. For example, the G7 (not including China) and G20 (including China) both have separate initiatives addressing critical minerals. The Quadrilateral Security Dialogue involving the US, Japan, India and Australia is also looking to direct critical mineral supply chains within the Indo-pacific region away from China. Further geopolitical tension and power struggles promote uncertain access to critical minerals, questioning whether nations can establish renewable technology in time to fulfil already ambitious climate commitments.
The securitisation and fragmentation of the global effort to decarbonise will work in opposition to the speed and coordination required for climate action by producing cumbersome and more expensive alternatives. In the race to decarbonise we just don’t have the time. Moreover, this power politics drowns out the needs of the developing world, contributing to far less equitable and inclusive climate solutions necessary for this transboundary issue.
This is not to say that I believe supply chain concentration is an ideal situation, particularly given a more assertive China. Rather countries cannot afford to make strategic and preferential plays in the renewable energy transition.
So how should we be doing it differently? Some have proposed that the world needs a globally recognised institution, such as the International Renewable Energy Agency (IRENA), to coordinate the decarbonisation race which currently looks like a geopolitical scramble. I would agree that more multilateral cooperation is required, but also argue that countries must continue to engage with China and not get lost in the bipolar power struggle.
This article was written by Isobel Logan who is an honour student at the University of Sydney. It draws heavily on the research by Sophia Kalantzakos, Indra Overland and Roman Vakulchuk published in early 2023.
Isobel is an intern with the Australian Institute of International Affairs NSW.