Welcome to the first of the DCDR PRO Research reports: long-form analysis of something that’s important to decision-makers, giving them the background and context on the issue along with some insight into how things might develop.

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Where possible, these reports also include applicable mitigation measures where there are across-the-board steps that every organization can implement. That way, you’ll understand the issue, can start determining what it means for your organization, and start taking action as quickly as possible.

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This report looks at the main suppliers of various essential elements and assesses the risks associated with each location and what the near-term situation might look like. This will help those more exposed to the production end of the chain to better identify and respond to the risks and opportunities they face. 

The last part of the report considers the non-operational issues associated with the extraction of these elements, which affects users and consumers further along the supply chain. Included is a framework for the ethical mining and sourcing of these elements to help organizations at every stage of the process source these minerals responsibly and manage the reputational issues associated with some producing countries.

I - Why are these important?

Rare earth minerals (REMs) and base metals are crucial for a wide range of applications, particularly in high-tech industries. These are the essential components that help us produce more than 200 products, ranging from smartphones and electric cars to advanced military equipment and many clean energy technologies. They are also vital for the production of high-tech materials used in industries such as petrochemicals, energy and transportation. 

These elements are essential to the world we live in today, and critical to our desire to move towards a highly connected, zero-carbon world.

However, the supply chains for these materials are complex.

In many cases, a single country dominates the production or supply of these elements. For example, China controls a significant proportion of all REMs produced, while the world's largest supply of cobalt is in the Democratic Republic of the Congo. This concentration presents two levels of supply chain risk.

First, there’s a single point of failure or bottle neck where one country is the main supplier of an element. An accidental -- or deliberate -- disruption to production is hard to overcome from other sources. 

Second, the internal and local conditions at the source have a knock-on effect at all stages of the supply chain. These include domestic or regional tension that physically interrupt supplies and drive up prices. However, environmental, social, and labor issues can also harm the supply of materials and affect the reputation of users, even those far removed from the source.

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II - Where these elements are found

There is some overlap between deposits of REMs and base metals but not as much as you might think. Here are the top five plus notable mentions for each category.

Top 5 Countries with Significant Reserves of Rare Earth Minerals (REMs)

1. China

Reserves: 44 million metric tons (MT)

Context: China not only has the highest reserves of rare earth minerals but also dominates global production, significantly influencing the rare earth market.

2. Vietnam

Reserves: 22 million MT

Context: Vietnam holds the world's second-largest rare earth reserves. Despite its large reserves, Vietnam's mine production is among the lowest, indicating potential for future development.

3. Brazil

Reserves: 21 million MT

Context: Brazil, tied with Russia for the third-largest reserves, has a low output of rare earth elements compared to its reserves, suggesting a significant untapped potential.

4. Russia

Reserves: 21 million MT

Context: Russia shares the third place with Brazil for rare earth reserves. Its production and development of these resources are crucial for diversifying the global supply.

5. India

Reserves: 6.9 million MT

Context: India has the fifth-largest reserves of rare earth minerals. With nearly 35% of the world’s beach and sand mineral deposits, India's role in the rare earth market could expand with increased investment and development.

Other Countries of Note.

Greenland and Tanzania are notable for their significant reserves of rare earth minerals that are not yet being extensively mined. Greenland, for instance, has reserves estimated at 1.5 million MT, similar to the United States, but its mining activities are minimal. Tanzania also holds considerable reserves, indicating potential for future exploration and development in these regions.

The USA and Canada also have significant reserves of rare earth minerals that are not yet being extensively mined.

References:

https://investingnews.com/daily/resource-investing/critical-metals-investing/rare-earth-investing/rare-earth-reserves-country/

https://www.statista.com/statistics/277268/rare-earth-reserves-by-country/

Top 5 Countries with Significant Reserves of Base Metals for Technology and EV/Green Energy Transition

1. Democratic Republic of Congo (DRC)

Key Metal: Cobalt

Context: The DRC is the world's largest producer of cobalt, a critical component for lithium-ion batteries used in electric vehicles (EVs) and various electronic devices.

2. Chile

Key Metal: Copper

Context: Chile is the world's largest copper producer, with copper being essential for electrical applications, including renewable energy infrastructure and EVs.

3. Australia

Key Metals: Lithium, Nickel

Context: Australia is a leading producer of lithium and has significant nickel reserves, both essential for battery production and EVs.

4. Indonesia

Key Metal: Nickel

Context: Indonesia is among the top producers of nickel, a critical component for stainless steel and lithium-ion batteries.

5. Russia

Key Metals: Nickel, Palladium

Context: Russia holds significant reserves of nickel and is a major producer of palladium, used in catalytic converters and fuel cells.

Other Countries of Note.

Afghanistan holds untapped reserves of lithium, essential for batteries in the green energy sector. The USGS estimates the country has deposits of 240 million tonnes of copper, one of the largest reserves in the world. However, geopolitical instability and lack of infrastructure hinder exploration and development.

Significant lithium reserves place Zimbabwe as a potential key player in the lithium market, essential for the EV industry. In nearby Zambia, KoBold Mining just announced the find of an estimated 247 million tonnes deposit at Zambia’s Mingomba site.

References:

https://www.statista.com/statistics/277268/rare-earth-reserves-by-country/

https://www.energymonitor.ai/sectors/extractive-industries/the-top-ten-critical-minerals-powerhouses-of-the-energy-transition/

https://www.bloomberg.com/news/articles/2024-02-05/bill-gates-backed-miner-finds-world-class-zambian-copper-deposit

https://www.cruxinvestor.com/posts/top-mining-nations-mapping-the-global-production-of-metals-from-lithium-to-rare-earths

III - Stability Assessments

Here are the baseline and near-term stability assessments for the main countries listed above.

(Profiles marked with an * indicate that the DCDR model is still developing a full country assessment as at the publication date of this report, meaning that the assessment included should be considered preliminary.)

🇦🇫 Afghanistan*

Current Stability Rating

Afghanistan is Unstable

Mid-term Forecast

**No projection yet

It is likely that upcoming events will continue to impact Afghanistan's political stability in the near future.

Afghanistan faces significant challenges that could affect its political stability. The country's ongoing economic crisis, characterized by a trade deficit and a vulnerable banking system, coupled with the Taliban's restrictive policies towards women's education and work, pose significant risks. International relations also play a crucial role, with the United States' withdrawal leaving a security and political vacuum. The response of the international community to the Taliban's governance and Afghanistan's economic crisis will have a significant impact. Overall, Afghanistan's political stability is in a precarious state and the assessment of instability is likely to persist in the near future.

🇦🇺 Australia*

Current Stability Rating

Australia is highly stable

Mid-term Forecast

**No projection yet

It is likely that these upcoming events will have some influence on Australia's political stability.

Australia's political stability faces potential impacts from the government's response to climate change, economic challenges, and geopolitical tensions with China. The election of Prime Minister Anthony Albanese has brought some positive changes in human rights and climate change targets, but concerns remain regarding Australia's support for fossil fuel industries. Economic challenges, including slowing growth and high inflation, could also affect stability. Geopolitical tensions with China may strain Australia's dominance in the region and its relationship with China. These events, along with global economic conditions and domestic policy responses may have a mixed effect on Australia's political stability.

🇧🇷 Brazil

Current Stability Rating

Brazil is unstable

Mid-term Forecast

The anticipated impact of the upcoming events on the situation in Brazil is Degrades.

This conclusion is based on the potential for political violence and polarization following the presidential transition, as well as economic challenges that could impact political stability if not managed effectively

Upcoming events that might affect the political stability of Brazil include the aftermath of the presidential transition following the election of Luiz Inácio Lula da Silva, as well as the potential for political violence and polarization. The previous administration under Jair Bolsonaro had been characterized by divisive politics and attempts to undermine trust in the electoral system.

The new government will need to address these divisions and work towards unifying the country. Additionally, economic challenges such as inflation, unemployment, and government debt could also impact political stability if not managed effectively. It is also important to monitor any legislative changes or major policy shifts that could lead to social unrest or political mobilization.

🇨🇱 Chile

Current Stability Rating

Chile is stable

Mid-term Forecast

**No projection yet

it is likely that these upcoming events will have some impact on Chile's political stability.

Chile's upcoming events have the potential to impact political stability. Economic challenges, political polarization, and ongoing constitutional reforms will shape the political landscape. Despite progress in resolving macroeconomic imbalances, a slight GDP contraction and uncertainty around private health insurance companies pose risks. Political polarization and fragmentation may lead to reform gridlock, and the rejection of a second constitutional reform could generate tension. The left-wing administration's focus on key reforms may face resistance. Human rights issues related to various groups, along with concerns about law enforcement, also need attention. The government's ability to manage economic challenges, navigate polarization, carry out reforms, and address human rights concerns will be pivotal in determining Chile's political stability in the future.

🇨🇳 China

Current Stability Rating

China is stable

Mid-term Forecast

The anticipated impact of the upcoming events on the situation in China is Degrades.

This conclusion is based on the following analysis: The government's efforts to maintain macroeconomic stability, its response to mass demonstrations in Hong Kong, and the deepening repression across the country are likely to exacerbate existing political tensions and lead to increased instability. The ongoing tensions with the United States and Australia, as well as the regime's efforts to control the damage caused by COVID-19, are expected to further strain international relations and impact domestic stability

🇨🇩 Democratic Republic of Congo (DRC)

Current Stability Rating

The DRC is unstable

Mid-term Forecast

The anticipated impact of the upcoming events on the situation in Democratic Republic of the Congo is Degrades.

This conclusion is based on the following analysis: The aftermath of controversial elections, ongoing security challenges in the eastern provinces, and tensions with neighboring Rwanda have the potential to exacerbate political instability and lead to increased unrest

🇮🇳 India

Current Stability Rating

India is stable

Mid-term Forecast

The anticipated impact of the upcoming events on the situation in India is Negligible Effect. This conclusion is based on the following analysis:

India has a robust democratic system with strong institutions that can often absorb and manage challenges. While the upcoming events have the potential to affect political stability, India's history of successfully managing similar events suggests that any impact on stability is likely to be limited.

🇮🇩 Indonesia*

Current Stability Rating

Indonesia is Stable

Mid-term Forecast

**No projection yet

Indonesia's political stability may be affected by upcoming events such as the 2024 presidential elections, economic growth and recovery, and its role in maintaining regional stability. The elections will have a significant impact on the political landscape, potentially involving a divide between Islamists and Nationalists. Economic growth and efforts to combat corruption and improve governance will also contribute to stability. Indonesia's foreign policy approach and its position on global issues, as well as its role in maintaining regional stability, will play important roles. Overall, the outcome of these events will shape Indonesia's political stability in the future.

🇷🇺 Russia*

Current Stability Rating

Russia is weak

Mid-term Forecast

**Preliminary assessment

Based on the assessment, upcoming events are likely to further weaken Russia's political stability.

The ongoing conflict with Ukraine, if there are significant military setbacks for Russia, could have ripple effects and exacerbate the humanitarian crisis. The upcoming 2024 presidential election introduces uncertainties, although the Kremlin's strong hold on the political agenda and control over the country's political landscape has been maintained. Economic challenges, including sanctions and the dependence on oil and gas, may also pose risks to Russia's stability. The geopolitical tensions, particularly in relation to NATO and global powers, could further impact Russia's political stability.

🇻🇳 Vietnam

Current Stability Rating

Vietnam is stable

Mid-term Forecast

The anticipated impact of the upcoming events on the situation in Vietnam is Negligible Effect.

This conclusion is based on the following analysis: Vietnam's stable political climate and controlled social unrest provide a resilient foundation to absorb potential leadership transitions and policy changes. While these events may prompt adjustments, the overall stability is expected to remain largely unaffected.

🇿🇲 Zambia*

Current Stability Rating

Zambia is stable

Mid-term Forecast

***No projection yet

Based on the assessment, these upcoming events pose certain risks to Zambia's political stability.

Zambia's political stability may be affected by upcoming events, including economic challenges, the governance approach of the new administration, and the potential for political violence. Economic challenges, slow growth, and high debt levels pose risks, while the new administration's approach to restoring stability will be crucial. The potential for political violence, as observed in past elections, adds to the vulnerability of the political landscape. Overall, the handling of these events and the response of the international community will influence Zambia's political stability in the future.

IV - Mitigating Non-Operational Threats

Many of the threats associated with the extraction of critical minerals (REMs and other base metals) are non-operational and not associated with the supply or the materials. Instead, these threats emanate from the conditions in which these minerals are extracted and the effect this has on the local population and environment. In turn, these issues affect the reputation of customers much farther down the supply chain, not dissimilar to how we view fast fashion today or how ‘blood diamonds’ were treated 20 years ago.

The framework below outlines some common sense measures that can be used to address many of these issues to ensure that the conditions at the source are fair and that damage to the environment is minimized. This does not eliminate all threats: this is hard, dangerous work at times and a degree of environmental damage will occur when extracting minerals from the ground. But this framework tries to ensure that damage, loss, and impact is minimized as much as possible.

Framework for the Ethical Extraction of Critical Minerals

1. Commitment to Transparency and Due Diligence:

a. Implement a comprehensive due diligence procedure to evaluate all potential suppliers and partners in the supply chain, ensuring adherence to responsible and ethical practices.

b. Conduct regular audits and assessments to ensure compliance with environmental, social, and governance (ESG) standards throughout the supply chain.

c. Publicly disclose information about sourcing locations, partners, and potential supply chain risks to promote transparency.

2. Respect for Human Rights and Indigenous Rights:

a. Recognize and respect the rights of all individuals affected by mineral extraction, including indigenous communities, by engaging in meaningful consultation and obtaining free, prior, and informed consent.

b. Implement policies and procedures to prevent and address issues related to forced labor, child labor, exploitative working conditions, and human rights violations in any part of the supply chain.

c. Establish mechanisms to address and remediate grievances or disputes related to human rights and indigenous rights.

3. Environmental Stewardship:

a. Adhere to strict environmental standards for the extraction, processing, and transportation of REMs to minimize negative ecological impacts.

b. Engage in sustainable practices, such as responsible land use, water conservation, waste management, and biodiversity conservation.

c. Collaborate with local communities and environmental organizations to support initiatives promoting environmental sustainability and ecosystem protection.

4. Responsible Resource Management and Profit Sharing:

a. Promote responsible resource management to minimize the potential negative impacts of the "resource curse" by aiming for value addition and sustainable economic development in the countries where REMs are sourced.

b. Strive for fair profit sharing with local communities, contributing to their economic growth and development.

c. Support capacity-building programs, education, and vocational training to enhance local participation and empowerment in the REM supply chain.

5. Collaboration and Engagement:

a. Foster strong relationships with local communities, civil society organizations, and relevant stakeholders throughout the supply chain.

b. Engage in ongoing dialogue and consultation to understand and address the concerns and aspirations of local communities.

c. Collaborate with industry associations, governments, and NGOs to share best practices, promote transparency, and align efforts in responsible sourcing and ethical mineral extraction.

d. Establish a multi-stakeholder body or advisory council consisting of representatives from local communities, civil society organizations, industry experts, government agencies, and academic institutions to ensure diverse perspectives and collective decision-making.

6. Continuous Improvement:

a. Regularly review and update the guidelines based on emerging industry trends, best practices, stakeholder input, and evolving international standards.

b. Invest in research and development to explore innovative and sustainable mining and processing technologies to minimize environmental impacts and enhance efficiency.

By adopting and implementing these guidelines, stakeholders in the REM supply chain can work towards the ethical extraction of minerals, promoting sustainability, equity, environmental stewardship, and respect for human and indigenous rights. These guidelines should be customized and adapted to the specific needs and context of each company and integrated into their policies, internal procedures, and supply chain management systems.

Disclaimer

The contents of these reports are intended solely for informational and educational purposes. While we strive to source our information from reliable and accurate sources, and exercise diligence in minimizing errors—whether human or technical—please note that these reports include forward-looking statements. Such statements are speculative by nature and may not materialize as anticipated. As circumstances and risks vary for each individual or entity, we strongly recommend consulting with a qualified professional to address your specific needs and concerns.

These reports also contain material generated by generative AI. Where possible, sources are cited but please email [email protected] if you identify unattributed quotes.

DCDR.io / Tarjuman LLC disclaims any liability for losses, damages, or injuries resulting from the use of these reports. This includes, but is not limited to, direct, indirect, incidental, punitive, and consequential damages, as well as any errors or omissions contained in the reports.