A strong sense of urgency and anxiety pervades the recent debate on the supply security of energy, minerals and raw materials, both in Europe and the United States. Recent policy initiatives show that concerns about energy, minerals and raw materials have risen to the top of the political agenda. Moreover, studies in both Europe and the United States have identified sets of 'critical minerals' that have generated much attention and concern.
Worries about the dependency upon rare-earths coming from China, lithium from South America and other materials used in high-tech products are dominating the debate. It appears that inadequate supplies of these materials could severely impact Europe's industry and economic competitiveness. Since such technology minerals are also used in clean energy technologies, there are also concerns that a limited availability of resources might hamper a European transition to a cleaner energy system.
Moreover, the way in which other countries are perceived to operate in resource markets, both energy and minerals, has raised fears about the changing character of global resource markets. Investments in the energy and minerals sectors in resource-rich countries face political scrutiny and sometimes touch upon diplomatic sensitivities. Some commentators have even suggested we are on the verge of a new era of 'resource wars'.
In two 'twin' briefing papers, "Critical Thinking about Critical Minerals" and "Resource Security Risks in Perspective", published by the Clingendael International Energy Programme (CIEP) and the German Geological Survey (BGR), the fierce debate about resource security is addressed and critically examined.
Although it remains to be seen as to how the future of global resource markets will unfold and how the governance of such markets will develop, it is important to note the historical parallels that exist between earlier periods of tight resource markets and contemporary concerns over access, prices and resource availability. This is not the first time that such concerns have surfaced, and awareness of the historical context can provide a source of nuance and reflection. In fact, as the authors point out, periods of severely constrained markets are an almost inevitable characteristic of the 'hog cycles' of capital-intensive resource sectors.
Moreover, a thorough analysis of criticality studies notes how these studies tend to result in short-lists of critical minerals that mainly consist of technology minerals: specific minerals that are used for high-tech appliances and that are often mined in only small volumes. The authors argue that for these materials the economic impact of a supply disruption seems rather exaggerated. There is also a tendency to interpret resource sector developments largely in strategic terms, whereas the economic factors that drive many market developments are often underestimated. Especially for smaller mineral markets that are only just developing, dominant producers are not always as structural or problematic as they appear. High resource prices do not always lead to severe competitiveness issues and, to a certain degree, they can even have positive effects by making economies more robust in withstanding price shocks while incentivising resource efficiency, substitution and recycling. Finally, policy responses to resource security concerns - such as strategic stockpiling and promoting domestic production - are evaluated.
As a region that is strongly dependent upon the import of energy and minerals, Europe rightly sees the assurance of sufficient and affordable supplies as an essential issue. Yet in the current debate, concerns and risks are often thrown out of proportion relative to what a more objective assessment would infer.
The analysis presented in the two briefing papers suggests that a large part of this debate revolves around misconceptions and a skewed portrayal of facts, which increases the risk of exaggerated policy responses. Rather than alarmism, the authors propose a balanced approach to energy and mineral resource security.
Download the first briefing paper "Critical Thinking about Critical Minerals"
Download the second briefing paper "Resource Security Risks in Perspective"