Critical minerals: The global race is on
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So we've got a sort of hazmat suit coming out now. We've just got to zip down the front.

Hello and welcome to Business Daily from the BBC World Service. I'm Sam Fenwick. I'm going to put a mask on next. Hood on, hair tucked in, zipped up, struggling to sleep. Yes, I'm fully suited in protective gear because this week on Business Daily we're digging into one of the fastest growing and geopolitically sensitive sectors in the world, critical and rare earth minerals.

As you know, we're looking for rare earth all the time. Rare earth is called rare for a reason. You might have heard the phrase mentioned in speeches, trade deals and even diplomatic standoffs. But what exactly are critical minerals? Why do we need them so urgently? And who controls the supply? The race to secure critical minerals is on and we're following it this week on Business Daily.

The sound you can hear is the blade of a wind turbine slicing through the air, a symbol of the world's push away from fossil fuels and towards clean energy. But powering that turbine and the green transition it represents takes more than just wind. It takes minerals, dozens of them. Lithium, cobalt, nickel, rare earth elements.

They're found in wind turbines, in batteries of electric cars and smartphones, and in the vast energy storage sites known as gigafactories. Around 50 of these elements are now officially classed as critical minerals. Critical because they're essential to modern technology, but their supply is vulnerable. Maybe it's geopolitical tension. Maybe it's limited reserves. Maybe there just isn't an alternative.

And what's considered critical depends on where you are, shaped by a country's industries, its dependencies and its strategic priorities. The starting point has to be the things that we're trying to do with the energy sector. Tim Gould is the chief economist at the International Energy Agency.

It's an intergovernmental organisation that advises its 31 member countries, including the US, the UK and much of Europe, on global energy security, sustainability and policy. We're trying to create a different kind of energy system, one that allows us to move to a safer and more sustainable way of managing our energy needs. And what that means is that we're going to be using a lot more electricity and that electricity is going to be produced from different sources than the ones we've had in the past.

And as we move towards that new kind of energy system, we come to a different set of mineral needs for energy because we use a lot more batteries. And batteries require elements such as lithium, such as nickel, such as cobalt, manganese, graphite. We're also going to need a lot more copper because copper is at the heart of a more electrified system. And there are also some technologies that we need like energy.

or electric motors that require some very specific equipment

elements, which we're calling rare earth elements. We don't call them rare earth elements because they're particularly rare. What makes them rare is the difficulty of getting them out of the ground. Yes, the difficulty of extracting them, the difficulty of separating them out from other elements. And as with many of these things, the production and refining processes for those elements at the moment is in a handful of suppliers. And those

minerals and metals that we're talking about, where do we find them? Where are they predominantly mined? So copper, for example, plenty in Latin America. There's production also in some African countries. Cobalt is an example of a very concentrated extraction process. So around two thirds of the world's cobalt comes from a single country, which is the Democratic Republic of Congo.

Lithium deposits are quite broadly dispersed around the planet, but you've got big production in Latin America, Australia, a handful of other places. Nickel, the up-and-coming producer of nickel is Indonesia, where we've seen a very large expansion in nickel production over the last few years. The International Energy Agency has mapped out where the world's most important minerals are found and where they can be found.

And while demand for all of them is expected to rise over the coming decades, prices in the short term have been anything but stable. Geopolitical tensions, supply chain bottlenecks and speculation where traders bet on future price movements have all added to the volatility. Ellie Saklatvala keeps a close eye on all of this. She tracks the prices of critical and rare minerals at the market intelligence firm Argus Media.

She says part of the challenge is that the market itself isn't always easy to read. Most of the critical minerals do not have exchanges. They don't have derivatives, futures, etc. You do for some of the base metals, but for most of them, we're really talking about quite opaque markets.

In order to get transparency, you have companies like Argus who independently, day to day, are verifying, talking to the market and constructing price indexes which are tracking physical trade. And the pricing can be extremely volatile. If we think, for example, about the famous battery metals like lithium or cobalt,

In the past few years, we saw a very, very steep rise in the lithium market in particular. Prices went to astonishing levels, which I think in our view at Argus, we thought the market had perhaps overheated. What we've seen in the past year or so is a steep downward correction. Do you think that in some respect, investors misread the situation?

My personal view is that, yes, there was a little bit of over-optimism about how quickly the electric vehicle revolution would take place and the green energy transition as a whole. I think there's been a slight tempering of the mood around the clean energy transition globally, even though I should say the long-term projections for battery metal demand have

and pricing is still strong. That current mismatch between hype and reality has had real consequences. Some car makers are scaling back. Honda, for example, has lowered its EV targets because demand hasn't matched expectations. But they're not walking away. Companies are still securing access to key minerals like lithium and nickel, aware that long-term demand is likely to grow.

And for other critical minerals, the picture is very different. Some of the critical minerals are very closely involved in the aerospace industry. We use them to make commercial planes, for example, but they also feed into the military aerospace. And there, for various different reasons, demand has been going up and up.

And meanwhile, it's actually quite difficult to increase production of some of those critical minerals. So if you look at a product like hafnium or rhenium, we've got prices right now far higher than they used to be several years ago. From global markets to the factory floor, the demand Ellie's talking about is playing out in places like this battery manufacturing plant.

As the world moves to electrify transport and clean energy systems, the pressure is on to produce more and more batteries. To make battery making effective, you want to run very quickly. Demand for batteries is expected to almost triple over the next 15 years. And what you really sense here, beyond the noise and the automation, is the sheer urgency of it all. The world is trying to catch up fast.

Production lines like this one at the Battery Industrialisation Centre in the UK can be built in a matter of months. And I'm being shown around by Richard LeCain, the centre's chief technical officer. On the screen just before you enter this room, it says minus 50 degrees Celsius. Dewpoint minus 50 degrees. It's telling us that it's extremely dry in there. Probably drier than any place on Earth.

Before we step inside the dry room where the batteries are assembled, I'm masked, suited up and sent through an air shower. It's a blast of high-pressure jets designed to blow off any dust, particles or moisture that could lead to contamination. The materials that we use are very hydroscopic, which means they absorb water very readily.

Once they absorb that water, it will make it have poor performance. This place helps businesses and start-ups develop their battery tech and scale up production. It's based near Birmingham in the heart of the UK's car-making region, built to support the industry as it shifts to electric. We can make tens of thousands of cells per week. We can make millions of cells per year. This facility is designed to be...

gigafactory model. So companies that want to increase their technical readiness level and want to go on the journey of commercialization and industrialization and want to learn about their materials, their technology, their chemistry. But the buy-in for doing that is very high. The capital equipment that you need is big. You need a lot of space for it. It takes a lot of energy. It's very expensive. You need people to run it. It

If you are not ready to have that kind of investment, you can come here. And you can't make a battery without critical minerals.

Richard runs me through some of the essential ingredients. So what we have in this display cabinet are a lot of glass jars, and what they have in them is the beginning materials of an anode and cathode electrode. Some of them are a bit more flaky, some of them look a little bit more granular, some of them look like they settle more than others. This is this black powder here. That's nickel, 60%.

manganese 20% and cobalt 20%. So this is what we would refer to as NMC 622. Six nickel, two manganese, two cobalt. So that is the active material and that is what's responsible for determining the energy of the cell.

So all of these materials will get mixed together. And I think, guess what we have here is the actual slurry mix here. So that's when you have the solvent together with all the powders and you make this black paste, this black liquid. These pastes and powders might not look much, but they're the building blocks for our future economies. This is Business Daily from the BBC World Service.

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I'm Sam Fenwick, and today, and all this week, we're looking at critical minerals and the crucial role they're playing in global trade, investment, supply chains, and even politics. Don't tell us what we're going to feel. We're trying to solve a problem. Don't tell us what we're going to feel. I'm not telling you. Because you're in no position to dictate that. Remember this. You're in no position...

traveled to Washington, D.C., to finalize a landmark deal on critical minerals with the U.S. President Donald Trump. The two leaders met in the Oval Office and expectations were high, but the talks didn't go to plan. Disagreements over U.S. security guarantees for Ukraine led to an abrupt end to the meeting and the deal was left hanging.

But the importance of the deal and the strategic value of securing access to Ukraine's mineral resources for the U.S. meant that negotiations quietly continued behind the scenes.

And two months later, this happened. This partnership represents the United States taking an economic stake in securing a free, peaceful and sovereign future for Ukraine. This partnership establishes a fund that will receive 50% of royalties, license fees and other similar payments from natural resource projects in Ukraine. The agreement established a jointly managed investment fund aimed at rebuilding Ukraine's economy with profits from critical minerals playing a key role.

Under the deal, the US gets preferential access to new mining projects, while Ukraine keeps ownership of its resources and avoids taking on new debt. Zelenskyy hailed the agreement as truly equal.

Here's Yuriy Sak from the Ukrainian Ministry of Strategic Industries. It signals a clear commitment of the United States to a free, prosperous and independent Ukraine. And that in itself is a strong sign that the United States will remain Ukraine's strategic partnership in this. And it's not just Ukraine the US is partnering with. Washington's also struck a major deal with the United Arab Emirates, which includes a new agreement to boost galleon production in Abu Dhabi.

It's used in semiconductors and defence tech. And a $4 billion investment to build the first aluminium smelter in the US for more than 40 years. The US is also in talks with the Democratic Republic of Congo, home to some of the world's richest reserves of cobalt and copper, exploring a deal which could exchange military support for access to critical resources. But why now? Why is the US making these deals at this particular moment?

Well, part of the answer lies with China, which dominates the processing of many of these critical minerals and hasn't hesitated to use that dominance as a geopolitical tool. As Ellie Stachladvala, expert in non-ferrous metals, explains. I think there's a slight misnomer right now that a trade war has suddenly begun. If you're sitting in the metals world, this has been rumbling for quite some time.

China has put export restrictions on very specific critical minerals. They've had an export control on hafnium, for example, for several years. Hafnium goes into the aerospace industry and also electronics. It can be used to make chips, the semiconductors. But then within just the past two years, China has also put export controls on gallium and germanium, which are really important for electronics.

China also put an export control last year on antimony, which is a really niche material, but it's really important. Its primary function is to make fire-retardant materials. So think about every building that you're in. Anywhere that you put fire-retardant materials need antimony. And then more recently, on the 4th of April, two days after Donald Trump did his big Liberation Day, China put an export restriction on certain rare earths.

and high-performance rare earth magnets. And that is a really potent export restriction that could cause huge disruption within this year. And so what have those bans done to the prices of these minerals? They have caused prices to rocket outside China. There is an absolute scramble going on right now for...

for any fresh material and buyers are offering to pay more and more. That scramble is exactly what the International Energy Agency is worried about. It says growing geopolitical tensions, especially China's export restrictions, could lead to serious shortages if countries don't act fast to secure and diversify their supply chains. Here's the IEA's chief economist Tim Gould again. China does have a very strong position in these supply chains.

And so the potential unavailability of these resources is a big worry from a security of supply perspective. And that's why this is such an important issue for the International Energy Agency. We've set up a critical minerals security programme, which looks with member countries at what sort of measures they can take to try and mitigate some of those risks. And what have you said?

I mean, other than getting more of this stuff out the ground, what other options are there? So there are various elements in play. You know, some of them are longer term around increasing supply and also looking more on the demand side, technology innovation. I mean, ways to substitute in other elements that may be more plentiful in their supply. But there's also some very short term issues there about what to do in the case of a disruption. There may be a case in some areas

for stockpiling some of these metals and minerals in order to have some sort of emergency reserve in case of a shortfall. The International Energy Agency says the world needs to act fast to build resilience, diversify supply and prepare for shocks. Because right now, if something goes wrong in China, the ripple effects could be felt across the entire world. So

So how did we end up here? How did China come to control so much of the world's critical mineral supply chain? That's what we'll explore in tomorrow's programme. We'll trace how that dominance was built and whether anyone else stands a chance of breaking it.

Thanks for listening to today's Business Daily. I'm Sam Fenwick. The producer was Lexi O'Connor. And if you'd like to get in touch about this series or anything else that you've heard on Business Daily, you can contact us on email.

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