Critical materials supply chains are becoming increasingly susceptible to geopolitical risks and disruptions, industry leaders said at the Resource Tomorrow conference in London.
“An ever-changing geopolitical environment will have a negative impact on the supply of minerals for the energy transition.” , said Rio Tinto Chairman Dominic Barton.
Increasing trade competition between China and the United States was cited as a major risk by Frank Giustra, the chief executive of private equity investor Fiore Group. Earlier this year, China restricted exports of critical minerals critical to electrification, such as graphite, gallium and germanium.
Latin American countries are also introducing stricter regulations, such as the mining tax reforms introduced in Chile and Peru, Giustra said.
According to JP Morgan, export controls on critical minerals have increased fivefold over the past 15 years.
The risk of resource nationalism could exacerbate and There is already a significant copper shortage.
Meanwhile, relatively new market participants are emerging in the mining industry, which are well positioned to achieve prominence in the next few years.
“The Middle East is performing well in east and west. We can see this in Saudi Arabia, which is partnering with China,” Giustra said.
Geopolitical dynamics are likely to impact trade flows and supply chains. For example, Russia's growing influence in African countries could change the structure of trade with the West.
In an increasingly multipolar environment, the use of currencies other than the US dollar to negotiate deals and trade agreements is growing, and there is also new talk about the so-called de-dollarization.
“We are seeing new bilateral trade agreements between countries that bypass the US mediator,” Giustra said.
For example, the Reserve Bank of India and the UAE Central Bank recently signed an agreement to use local currencies in bilateral trade.
“Since the war in Ukraine began, the US has been exporting inflation to low-income countries, and the global south is feeling its impact,” he added. "We'll see more of this as China tries to internationalize the yuan."
Delegates were told policymakers and private companies should work to diversify and build more resilient global supply chains, and collaborate with like-minded partners in international environment that is constantly changing.
