Avoiding weaponized dependency: Raw materials are the new gold rush

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  Quantumrun Foresight
• September 5, 2023

Insight highlights

Nations and businesses scramble to protect themselves from overly depending on imports for raw materials. The US-China trade restrictions and the Russia-Ukraine conflict have revealed how dangerous it is to rely on these exports and how fragile these alliances can be. Governments may need to prioritize resource security and invest in domestic industries or forge international partnerships to secure access to critical raw materials.

Avoiding weaponized dependency context

In the wake of rising geopolitical tensions and resource weaponization, nations and businesses urgently seek self-reliant alternatives. The US-China technology trade restrictions are encouraging China to fortify its domestic industries, but this introspection may pose significant challenges to its labor-dependent economy as global giants like Apple and Google shift production to India and Vietnam. At the same time, the Russia-Ukraine conflict has unveiled a heavy reliance on Russian exports of essential tech materials such as aluminum and nickel, instigating a global scramble for local sources. 

Meanwhile, in 2022, the European Commission unveiled a legislative proposition, the Critical Raw Material Act, to address the growing reliance on China for raw materials and reinforce more robust supply chains. As the world pivots towards green and digital solutions, the need for critical raw materials is predicted to surge significantly. The Commission anticipates a fivefold rise in demand by 2030. Likewise, the World Bank's projections echo this trend, forecasting a fivefold global demand increase by 2050.

Innovative solutions, such as coastal sea mining and industrial waste recycling, are being explored, with firms like Anactisis leading the charge in transforming waste into vital elements like scandium. President Joe Biden's Executive Order 14107 reflects this shift towards resource security, mandating an examination of US dependency on adversarial nations for critical minerals. As the global supply chain reshuffles, countries like Mexico are emerging as promising partners, able to supply a substantial number of the required essential materials.

Disruptive impact

Consumers might experience changes in the cost and availability of electronics, electric vehicles (EV), and green energy solutions. These products, integral to the digital-green convergence, heavily rely on critical raw materials like lithium, cobalt, and rare earth elements. Any volatility in their supply could result in price increases or supply shortages. Automakers like Tesla, which heavily rely on these materials for EV production, might need to rethink their supply chain strategies, innovating new ways to source these materials or developing alternatives.

Companies could face disruptions in their supply chains and increased operational costs. However, this could also spur innovation. For example, Texas-based Noveon Magnetics recycles rare earth magnets from discarded electronics, offering an environmentally friendly and potentially more stable alternative to mining new materials. Similarly, this supply shift could fuel growth in industries like materials science, leading to a surge in research and development into synthetic alternatives.

For governments, the escalating demand for critical raw materials underscores the importance of resource security, requiring robust strategies for maintaining stable, ethical, and environmentally sustainable supply chains. Governments might need to invest more in domestic mining industries or forge new international partnerships to secure access to these resources. An example is the Australian government's deal with the US in 2019 to jointly mine and develop rare earth elements. Moreover, the rising demand could incentivize policies promoting recycling and the circular economy, reducing dependency on foreign sources.

Implications of avoiding weaponized dependency

Wider implications of avoiding weaponized dependency may include: 

• Heightened social awareness and activism around responsible sourcing and ethical supply chains, influencing consumer purchasing behavior and preferences.


• Economic growth and investment in countries with abundant reserves of critical raw materials, leading to the emergence of new economic powerhouses and shifting global dynamics.


• Governments facing intensified competition and geopolitical tensions over access to and control of critical raw materials, leading to strategic alliances, conflicts, or negotiations that shape global politics and international relations.


• The need for skilled labor in mining, recycling, and materials science industries driving demographic shifts, as workers migrate to regions with job opportunities in these sectors.


• Job opportunities in mining, recycling, and advanced materials manufacturing, while workers in industries heavily dependent on non-renewable resources may be displaced.


• Increased focus on environmentally friendly mining practices, resource recycling, and circular economy models, promoting ecological conservation and reducing the environmental impact of extraction and production processes.


• The unequal distribution of critical raw material reserves worldwide worsening economic disparities between countries with access to abundant resources and those heavily dependent on imports.


• The need for secure and diverse supply chains for critical raw materials fostering increased collaboration and partnerships between governments, businesses, and research institutions, promoting knowledge sharing, technological advancements, and collective efforts.

Questions to consider

• What policies have your government enacted to reduce reliance on other countries for raw materials?


• What might be other ways to boost local production of critical materials?