Comment: Onshoring secures mineral supply chains as global economy electrifies

The clean energy transition cannot happen without critical minerals. Further, the International Energy Agency predicts that future demand for the critical minerals required to manufacture batteries will far outstrip supply. This would slow the deployment of electric vehicles (EVs) and energy storage and thus, renewable energy – harming key industries, as well as economic growth and energy security.

Enabling the electrification of transport and decarbonisation of energy systems through onshoring critical mineral supply chains will play a pivotal role in helping achieve future economic and environmental goals in tandem.

Failure to strengthen supply chains risks slowing the pace of electrification and net zero efforts. It also threatens to drive big players in the Western automotive industry out of business, due to the unfair advantages enjoyed by their competitors.

Diversifying global supply chains

Policymakers and leading organisations are increasingly viewing critical minerals as a security risk, and there is growing consensus around how to address this challenge. Per the Munich Security Conference and the IEA’s landmark critical minerals summit, diversification is crucial.

One way to achieve this is through the creation of an international collective framework, which would streamline nations’ collective efforts to sustainably source critical minerals.

Although a promising option in theory, it’s been difficult to realise in practice. Talks between the EU and the US in Munich were unfruitful, and they have gone on to miss targets in subsequent discussions. This framework could be incredibly impactful, but progress to date has been too slow to offer meaningful reassurance to the market.

Another potential solution to this challenge is ‘friendshoring’ – rerouting supply chains to countries regarded as political and economic allies.

Enabling nations to diversify and thus, strengthen their supply chains through diplomacy alone, sounds ideal. But the reality is far more complicated.

This solution relies on nations knowing who their true ‘friends’ are in an increasingly fraught and complex geopolitical landscape. As times change, so do geopolitical loyalties – at all levels. The ever-shifting nature of diplomatic relations makes friendshoring ill-suited to addressing long-term challenges and strengthening critical mineral supply chains.

Onshoring production represents the best way forward. It mitigates geopolitical risk and provides security of supply for Western automotive and clean technology industries.

In addition, it provides a range of wider benefits, from catalysing economic growth and creating local jobs to enabling local control of the electrification economy and visibility over the working conditions of those involved in the supply chain.

With 93 per cent of battery-grade graphite produced in China, this critical mineral’s supply chain is particularly vulnerable to disruption. The ramifications of this monopoly dominance over graphite have become painfully clear to the West in recent months with restrictions causing a 77 per cent slump in exports compared to the same period last year.

Biomaterials as a solution

Another solution to this urgent problem is to invest in, and otherwise support, onshoring production of biomaterial alternatives such as biographite, a drop-in replacement for synthetic graphite that can be created from sustainable forestry industry by-products like wood chips. Biomaterials represent a key area of opportunity for nations. Produced from widely available, renewable feedstocks, they can provide a perpetual supply of climate positive alternatives to much-needed critical minerals like graphite.

Using less than five per cent of this industry’s residues generated annually in Europe and North America, enough biographite could be produced to meet half the total global projected graphite demand for EVs by 2030.

As such, it offers a novel opportunity for policymakers and industry to diversify the supply chain of a truly critical mineral and thus, mitigate geopolitical risk, as well as to catalyse economic growth and create local jobs.

With the right support, biographite can help nations achieve their net zero goals and enable the Western automotive industry to thrive as the world transitions to clean transport.

Ivan Williams, CEO at CarbonScape