Critical Minerals Export Restrictions on Rise - OECD

The global transition to a green economy faces a serious challenge as the supply of critical raw materials struggles to keep pace with growing demand, warns a new policy paper from the Organization for Economic Co-operation and Development (OECD).

The report, Raw Materials for the Green Transition: Production, International Trade and Export Restrictions, emphasizes the need for a substantial increase in production and international trade of these materials in order to meet net zero CO2 emissions targets.

Driven by the aftermath of the COVID-19 pandemic, trade tensions, and the ongoing impact of Russia's invasion of Ukraine, the prices of materials like aluminum and copper have soared to record highs. Although the production and trade of critical raw materials have expanded significantly in the last decade, this growth is insufficient to meet the projected demand for metals and minerals necessary for a global shift from fossil fuels to renewable energy technologies.

Among the materials with the largest production volume expansions are lithium, rare earth elements, chromium, arsenic, cobalt, titanium, selenium, and magnesium. However, these increases still fall short of the four- to six-fold rise in demand expected for the green transition. Meanwhile, global production of some critical raw materials, such as lead, natural graphite, zinc, precious metal ores and concentrates, and tin, has declined in the past decade.

OECD Secretary-General Mathias Cormann stated, "Policy makers must closely scrutinise how the concentration of production and trade coupled with the increasing use of export restrictions are affecting international markets for critical raw materials. We must ensure that materials shortfalls do not prevent us from meeting our climate change commitments.”

Export Controls on the Rise

Concentration of production has become more pronounced, with China, Russia, Australia, South Africa, and Zimbabwe among the top producers and reserve holders. While the trade of critical raw materials remains relatively well diversified, there is increasing concentration of imports and exports amongst countries, which may lead to supply chain disruptions.

Since the OECD began collecting data in 2009, export restrictions on critical raw materials have seen a five-fold increase. Today, 10% of global exports in these materials face at least one export restriction measure. China, India, Argentina, Russia, Viet Nam, and Kazakhstan have issued the most new export restrictions during this period and are also the countries with the highest shares of import dependencies for OECD nations.

The OECD warns that the trend toward increasing export restrictions could have significant effects on the availability and prices of critical raw materials, potentially jeopardizing the global green transition.

For more information on Raw Materials Critical for the Green Transition: Production, International Trade and Export restrictions, visit www.oecd.org/trade/topics/trade-in-raw-materials/.