Critical Minerals
Overview
Critical minerals refer to mineral resources that are essential for national strategic sectors such as advanced technology product manufacturing, renewable energy transition, and defense industries, and that pose significant supply chain risks due to limited supply or concentration in specific countries. Major countries are pursuing various strategies including resource diplomacy, stockpiling, and recycling technology development to secure critical minerals, which has become a core element of 21st-century economic hegemony competition.
Main Content
Definition and Scope of Critical Minerals
Critical minerals are defined by each country based on economic importance and supply vulnerability, and generally include lithium, cobalt, nickel, graphite, rare earths, tungsten, molybdenum, gallium, and germanium. Major countries such as the United States, the EU, South Korea, and Japan have published their own lists of critical minerals; as of 2024, South Korea has designated 33 types, the United States 50 types, and the EU 34 types.
Characteristics of Major Critical Minerals
- Lithium: Key material for electric vehicle batteries. Major producers include Australia, Chile, and China. Reserves are concentrated in South America, including Bolivia and Argentina.
- Cobalt: Used in battery cathodes and superalloys. The Democratic Republic of the Congo accounts for over 70% of global production, with ethical issues such as child labor.
- Rare Earths: Essential for permanent magnets, lasers, and military equipment. China accounts for 60% of global production and 90% of processing.
- Gallium and Germanium: Used in semiconductors, LEDs, and infrared sensors. China accounts for over 80% of production; export controls in 2023 triggered a supply chain crisis.
- Graphite: Key material for battery anodes. China accounts for over 70% of global production and over 90% of processing.
Supply Chain Risks and Geopolitical Factors
The supply of critical minerals is extremely concentrated in specific countries, making it vulnerable to geopolitical risks. China has weaponized export controls by leveraging its dominant position in rare earths, graphite, and gallium; notable examples include export restrictions on gallium and germanium in 2023 and the introduction of an export permit system for graphite in 2024. Additionally, cobalt from the Democratic Republic of the Congo and lithium from Chile face potential supply disruptions due to political instability or resource nationalism.
Economic Importance and Industrial Impact
Critical minerals are foundational materials for future industries such as electric vehicles, secondary batteries, semiconductors, wind turbines, and military equipment; supply instability directly affects the competitiveness of entire industries. As of 2024, the global critical minerals market is estimated at approximately $320 billion, with projections of over 10% annual growth through 2030. In particular, demand for lithium for electric vehicle batteries is expected to increase more than tenfold by 2030 compared to 2020.
Response Strategies of Major Countries
- United States: Diversifying critical mineral supply chains through the Inflation Reduction Act (IRA), strengthening cooperation with Australia and Canada, and leading the Minerals Security Partnership (MSP).
- EU: Enacting the Critical Raw Materials Act (CRMA), targeting 10% domestic mining, 40% processing, and 15% recycling of strategic minerals by 2030.
- South Korea: Expanding critical mineral stockpiles (from 100 days in 2024 to 180 days by 2030), resource diplomacy with Australia and Africa, and investment in recycling technology R&D.
- Japan: Securing stakes in overseas mines through JOGMEC, developing rare earth substitute materials, and building a waste battery recycling system.
Environmental and Social Challenges
Critical mineral mining causes environmental destruction, water pollution, and ecosystem damage; in particular, lithium mining leads to groundwater depletion in desert regions, and cobalt mining raises social controversies such as child labor. Accordingly, ESG standards such as the OECD Due Diligence Guidance and the EU Battery Regulation are being strengthened, and recycling technologies and substitute materials are being actively developed.
Latest Trends
From 2024 to 2025, the following major changes are observed in the critical minerals sector. First, China's tightened graphite export controls have prompted emergency responses from battery industries in South Korea and Japan, accelerating the development of graphite mines in Africa, including Mozambique and Madagascar. Second, the United States and the EU have formed a critical minerals consultative body within the Indo-Pacific Economic Framework (IPEF) to reduce dependence on China and are expanding mineral trade through FTAs with Australia and Canada. Third, lithium prices, after a sharp decline in 2023, have shown a recovery trend from the second half of 2024, while moves toward lithium nationalization in Chile and Argentina are increasing investment uncertainty. Fourth, recycling technologies for recovering lithium, cobalt, and nickel from waste batteries are entering the commercialization stage, with the global recycling market expected to surpass $15 billion by 2025. Fifth, next-generation battery technologies that reduce the use of scarce minerals, such as sodium-ion batteries and lithium-sulfur batteries, are gaining attention, with some electric vehicles expected to adopt them starting in 2025.
Related Topics
- [[Rare Earths]]
- [[Electric Vehicle Battery]]
- [[Supply Chain Security]]
- [[Resource Nationalism]]
- [[ESG Management]]
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