Will China, Australia, Chile... have their own "OPEC" for key minerals? China | Congo | Chile
On August 16th, the World Newspaper Syndicate website published an article titled "Will Key Minerals Have Their Own" OPEC "?" by Ludovik Subran, Chief Economist of Allianz Group in Germany. The full text is excerpted as follows:
We know that the future will be driven by metals, but it remains to be seen whether these metals will be blocked by an iron curtain. After all, most key metal minerals come from a few countries: China controls almost all heavy rare earth materials, Congo holds over 60% of the global cobalt market, and South Africa controls 71% of global platinum supply.
These metals and key minerals are crucial for green transformation as they are used in various products from electric vehicles to wind turbines. According to the International Energy Agency, the global market size for key minerals has doubled in the past five years, and due to the increasing demand for electric vehicles, batteries, low emission power generation, and the power grid, the market size is expected to double again by 2040.
Congo, Chile, Peru, China, Russia, South Africa, and even Australia will all benefit from the surge in demand for key raw materials. Given that all other countries are focused on ensuring their own supply, countries with abundant key mineral resources may follow the model of the Organization of the Petroleum Exporting Countries (OPEC) and strive to form an Organization of the Metal Exporting Countries (OPEC).
In addition, there are also discussions about expanding the capacity of BRICS countries to include other related emerging markets, especially mining producing countries. In this case, a metal cartel may cross the globe and unite some countries in Southeast Asia, some countries in Africa, and some countries in Latin America.
If mineral rich countries unite, they may shake the global market in three ways, starting with price manipulation. Like OPEC, OMEC can use production or export quotas to push up prices, which in turn can make clean energy technologies more expensive, potentially slowing down the pace of green transformation. In addition, a new cartel may seek to disrupt strategic supply in order to gain geopolitical influence over countries highly dependent on these metals. It can also reach exclusive trade agreements with strategically selected partners to further concentrate market forces and influence global supply according to its own wishes.
All these risks mean that countries perceived as "unfriendly" by this cartel may have difficulty accessing the necessary resources.
What complicates the problem is that many governments have been implementing new export restrictions on key raw materials. In the past decade, such measures have increased more than fivefold, especially in China, India, Pakistan, Argentina, Russia, and the United States. This situation poses a particularly significant threat to import dependent countries such as Japan, South Korea, and EU member states.
Another risk lies in the concentration of major supply chain enterprises. Although cobalt mines are mainly located in Congo, control over the supply of cobalt products has shifted from the Congolese government and Russian companies to Chinese and South African companies. Similarly, only one company headquartered in the European Union ranks among the world's top ten copper producing enterprises, with six companies from four countries accounting for approximately one-third of global copper production.
In the long run, in order to prevent further concentration of supply enterprises, it is increasingly necessary to diversify supply relationships and make more specific investments abroad. In a more direct solution, the quickest way is to increase the number of shareholders of major companies by supporting favorable trade policies and foreign investment policies.
For countries that heavily rely on imports for key minerals, in the long run, it is necessary to strengthen domestic production and recycling capabilities, promote sustainable mining practices, and invest in the development of recycling technologies. Reducing material strength and promoting the development of alternative new technologies will play a crucial role. For example, sodium ion batteries can alleviate the pressure of lithium supply. However, given the interests of global green transformation, the top priority is to maintain free, fair, and open trade.
