The West is worried about having to pay dearly for the energy transition due to tariffs and rising tariffs on critical raw materials
– Thirteen thousand different trade restrictions. China’s export of critical raw materials in 2020 is hampered by many obstacles. This is an increase of 500% compared to ten years earlier, in a trend that worries analysts. The technological transition depends to a large extent on how well-oiled the commercial channels between production centres and consumption centres on the planet are.
And it is China in this picture that holds the best cards. According to an OECD analysis, the dragon is continuing its policy of increasing export bottlenecks, which raise the market costs of raw materials and increase the price of the transition to clean energy. In addition to Beijing, India, Argentina, Russia, Vietnam and Kazakhstan introduced new export restrictions on critical raw materials in the period 2009-2020. They are the same countries from which OECD members import the main share of these materials. Hence the concern of the organization.
Over the past decade, lithium, rare earth, chromium, arsenic, cobalt, titanium, selenium and magnesium have seen the greatest growth in production, with volumes increasing from +33% for magnesium to +208% for lithium. However, this trend is well below the increase needed to meet the needs of the green transition, which is expected to result in a demand of 4-6 times higher than the current one.
“The challenge of achieving zero net emissions will require a significant increase in the production and international trade of critical raw materials – said the OECD Secretary-General, Mathias Cormann – Policymakers need to carefully examine how the concentration of production and trade, coupled with the increasing use of export restrictions, are influencing international markets for essential raw materials. We must ensure that material shortages do not prevent us from meeting our commitments on climate change“.
The OECD results reflect a scenario in which mining companies are faced with multiple difficulties because governments rich in mineral resources but less industrialized than the global North have decided to renegotiate tariffs, put vetoes to the export and demanded that a greater quota of production and working of the minerals is carried out on their territory, in order to avoid to undersell these materials to high value and with a strong demand, to the rich and industrialized West.