Traceability is essential for the critical minerals supply chain, report
A new OECD study of lithium and nickel in four countries finds fragmented tracking and calls for shared standards and data use.
A recent report by the Organization for Economic Co-operation and Development (OECD) highlights the importance of traceability in the critical minerals supply chain. As demand for these minerals surges, they play a pivotal role in national defense, technologies, and the energy transition. However, the global investment in their exploration faces obstacles due to operational and governance risks.
Traceability can mitigate these risks and enhance supply chain resilience. Currently, traceability tools for critical minerals are fragmented, with traders implementing them more than miners. Companies grapple with costs, confidentiality concerns, supplier leverage, and data quality issues. To improve traceability, the OECD recommends regulatory consistency, shared data infrastructure, and supply-chain mapping.
Nickel and lithium, essential for energy transition and defense, are examined in the report. Nickel's supply chain in Indonesia and the Philippines is complex and exposed to transnational ownership structures. Enhanced ownership transparency can support operations in lithium sourcing from Argentina and Chile, where significant lithium processing relies on China.
While end-to-end traceability is challenging, companies are boosting transparency through supply-chain mapping, audits, and mass-balance approaches. OECD advises a phased, risk-based approach for traceability, including short, medium, and long-term initiatives. The short-term involves leveraging existing systems for supplier mapping, audits, and bilateral mineral agreements.
The medium-term requires closing data gaps, collaborating with traders, exchanges, and smelters. Long-term measures necessitate international cooperation for data sharing and standardized standards for batteries and related products. OECD proposes leveraging frameworks like the G7 Critical Minerals Action Plan and bilateral critical-minerals agreements to implement these recommendations and create a more globalized, accessible traceability system.
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