The Next OPEC? Exploring the Potential for an International Critical Minerals Coalition
Considering the immense changes emerging in the global energy market, we are at a historical moment where the energy transition is both shepherding technological innovation, and potentially redesigning the world’s geopolitical order.
As urgency rapidly grows to address environmental and climate concerns, demands for many “critical minerals” are expected to grow three-and-a-half times by 2030. It is ill-founded to assume that resources vital to the energy transition will not present political, social, and environmental challenges equally as tense as those currently caused by the extraction of fossil fuels. As source countries and producers, who refine these raw materials and make them usable, struggle to balance economic development and geopolitical influence with domestic environmental and social concerns, the astronomic growth in demand for lithium, cobalt, nickel, and rare earth elements could dramatically upend already strained supply chains and trade agreements around the world.
In the face of this, developing a friendly trade bloc or similar intergovernmental organization, like the Organization of the Petroleum Exporting Countries (OPEC), has been suggested for materials like lithium and cobalt. Labeled “Green Energy-Mineral Exporting Countries” (GEMEC) or “Organization of Mineral Exporting Countries” (OMEC), these proposals suggest that lessons learned from OPEC+ could be applied to the clean energy movement in a meaningful way.
Inherently, conflicts involving the interests of OPEC+ leaders can significantly impact resource availability around the world. Today, we see the potential for export restrictions and rapid price fluctuations connected to increased military activity and conflict in the Middle East. These conversations are deeply shaped, with varying implications, by member countries like Saudi Arabia or Iran. Here, and across the world, political strategy pushes leaders to weigh access to vital resources. Far too often, the resulting status quo includes detrimental humanitarian consequences.
Countries that possess large reserves of critical materials like lithium and cobalt could establish a framework to retain sovereignty over their natural resources, like OPEC. However, critical minerals are faced with unique challenges, including dependence on source countries often affected by conflict, and quickly growing demand that outpaces supply.
The balance between mined supply and processing capacity is heavily skewed to benefit producers further down the supply chain, with refining leaders like China leaving virtually no resources behind to benefit the local economy in mining powerhouses like the Democratic Republic of Congo. These challenges make the acquisition process particularly prone to haphazard construction, unsafe working conditions, and corruption, leaving destruction and political instability in its wake.
A trade bloc framework has the potential to help protect the supply chain from malpractice but could fall flat when pitted against a global desire for minerals that are quick and “easy” to acquire. As countries prioritize resources over human capital, the so-called “resource curse,” wherein abundant natural resources are associated with economic underperformance, becomes particularly pronounced. “Clean” energy supply chains across the globe are often detrimental to human lives and environmental conditions, and local communities often suffer the most pronounced consequences.
Establishing international supply chain regulations could help mitigate these risks and shift the benefit to material’s host countries, without limiting the green energy transition, but only if there is buy-in from source countries, producing countries, and consumers. As critical source countries like the DRC are already at a disadvantage in the global economy, it is now —before the inevitable demand for critical materials outpaces the development of global supply chain guidelines —that we must consider how an OMEC framework could be utilized, and if it could equalize the playing field without slowing the resource transition.
