Can Western Countries Secure Enough Critical Minerals Through “Friendshoring”?
In the near future, Western nations will have a growing need for critical minerals to meet the demand for mineral-intensive technologies such as electric vehicle batteries.
One proposed solution to address this demand and reduce geopolitical risks is the concept of “friendshoring.” This involves partner countries sourcing critical minerals from each other instead of relying on adversaries like China. For instance, Australia and the European Union recently signed a memorandum of understanding to enhance collaboration in critical mineral supply chains.
“The West” in this context includes countries participating in the Mineral Security Partnership, such as Australia, Canada, European nations, Japan, the United States, and others. While these countries have substantial reserves of critical minerals, they need to develop more mines to access them.
The profitability of a mine plays a crucial role in determining whether it will be built. Factors such as mineral prices, operating costs, and deposit quality influence a mine’s economic viability. Western countries have already discovered and are mining many of their large-scale, high-grade deposits, while regions like Africa may have untapped reserves.
The trend of mining companies preferring to develop large-scale deposits in non-Western jurisdictions is evident in the copper industry. Most major copper projects in the coming years are expected to be commissioned in countries like Chile, Brazil, and the Democratic Republic of the Congo.
While some mining companies may consider developing less profitable deposits in Western countries, challenges like higher costs and lower mineral prices can make such ventures economically unviable. However, sustained high mineral prices could make mining in Western countries profitable.
To support the friendshoring of critical mineral mines, Western governments could provide incentives for mineral exploration, offer mine development loans, and increase demand for domestically produced minerals through tax credits and tariffs.
In conclusion, while Western countries may face obstacles in securing enough critical minerals, government support and strategic initiatives can make friendshoring a viable option for enhancing mineral security.
Biography:
Gregory Wischer is a non-resident fellow at the Payne Institute for Public Policy at the Colorado School of Mines and at the Northern Australia Strategic Policy Centre at the Australian Strategic Policy Institute.
Shubham Dwivedi is a Faculty Fellow at Georgetown University’s Science, Technology, and International Affairs program.