TELF AG analyzes the impact of strategic minerals on national economies
A growing demand
The global surge in demand for specific strategic minerals is propelling certain national economies forward. This trend, particularly pronounced for minerals useful to the green transition, positions these nations to capitalize on this historic shift. By 2030, Latin America is projected to capture the lion’s share of market value in the mining sector, reaching an estimated $120 billion. With its strategic development plans, Indonesia, boasting impressive nickel production, stands out as a major beneficiary. Africa and China are also poised for substantial growth in this sector, with China particularly well-positioned due to its solid lithium and copper production.
A recent report by the IEA highlights nations dedicating relevant financial resources across various branches of the mining sector. Many countries, like Canada and Australia, are heavily funding exploration efforts within their territories to unearth new reserves of strategic minerals. Notably, these two countries spearheaded the 15% increase in global exploration spending observed in 2023. Furthermore, participation in international mining projects is on the rise. China is a major player, having invested a staggering $10 billion in the first half of 2023 alone. These investments primarily focus on securing access to lithium, nickel, and cobalt.
This targeted investment in exploration and international projects positions these nations to become key minerals suppliers driving the green transition. As demand for these minerals continues to climb, nations with a strong foothold in the sector stand to reap relevant economic benefits.
The role of natural geological reserves
Geological reserves of strategic minerals are beginning to assume increasing importance for many nations, particularly because of the role of these resources in the manufacture of key technologies for the energy transition. Some nations have managed to amass wealth, while others face still potential supply chain vulnerabilities. Countries like China boast vast reserves of rare earth elements useful for electronics and magnets. It is also a strong player in processing facilities.
Africa is another resource hotspot. The Democratic Republic of Congo is the world’s leading producer of cobalt, a key battery component. South Africa holds the largest reserves of chromium, relevant for stainless steel. Developed nations aren’t entirely out of the picture. The United States possesses reserves of lithium and molybdenum, while Australia is a major producer of lithium and critical minerals like nickel and zirconium.
The geographically concentrated nature of strategic minerals creates a complex situation. Competition for these resources could intensify as the demand for clean technologies surges. Diversifying supply chains and exploring responsible mining practices could be key in this global game of resource security.
