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China leads rise in export restrictions on critical minerals, OECD says​

Beijing is at the forefront of expanding export restrictions on critical minerals that are restricting the availability and raising the price of raw materials needed for a green energy transition, according to an OECD report.

More than 13,000 restrictions had been implemented by the end of 2020, a fivefold increase in more than a decade that means a 10th of the global value of critical raw material exports face at least one such measure.

The OECD said that since 2020, the latest detailed analysis available, even more restrictions had been introduced. The findings underline that fragmentation in the global economy threatens to drive up the cost of the clean-energy transition and indicates the potential shift in power away from the industrialised west towards mineral-rich nations.

“The research so far suggests that export restrictions may be playing a non-trivial role in international markets for critical raw materials, affecting availability and prices of these materials,” the OECD wrote in the report on Tuesday. “This situation warrants further scrutiny.” Beijing increased the number of restrictions on critical raw materials needed for electric cars and renewable energy such as lithium, cobalt and manganese by a factor of nine in the 11 years to 2020.

India, Argentina, Russia, Vietnam and Kazakhstan were the top five countries after China in introducing export restrictions on critical minerals during the 2009-20 timeframe. The report added that western, industrialised nations had a higher import dependency on non-OECD countries such as China, Russia and South Africa than for general products. It also said that the concentration of production in those nations had increased in the period. The findings were released as western nations, which are import dependent for most critical metals, race to secure the supplies needed to compete in clean energy technologies from batteries to wind farms and fuel cells. The report also coincides with rising tensions between western allies and China and Russia. The EU released the Critical Raw Materials Act last month aimed at boosting the resilience of its supply chains by mining and processing more materials domestically and even financing projects of strategic importance outside of the bloc.

The OECD findings reflect the increasing demands that mining companies face from resource-rich governments from Indonesia to Chile and Panama, which have been renegotiating taxes, introducing export bans on ore and asking for greater processing and manufacturing to be done domestically. Emerging market governments are under pressure to plug budgetary holes following the pandemic and as dollar-denominated debt has become more costly to service.

Demand for critical minerals such as lithium, nickel and copper has rocketed this decade because they are vital to a shift away from fossil fuels. Electric cars, for example, use three times as much copper as combustion engine equivalents. Lithium demand is expected to rise nearly fivefold by the end of the decade. Surging demand and constraints in introducing new supply are already putting pressure on the price and availability of commodities such as copper and lithium. The OECD warned that export restrictions — more than a third of which take the form of export taxes, largely because they are permitted under World Trade Organization rules — could exacerbate the situation. “The overall global economic impact of these measures can thus be sizeable,” it said.



Russian Aluminum Now Dominates Stockpiles in LME Warehouses​

  • Metal from Russia makes up 52% of LME’s on-warrant aluminum
  • Russian units are traded at a discount in the wider market

Russia is now the biggest source of aluminum available in London Metal Exchange warehouses, according to the bourse’s latest origin report.

At 220,575 tons, Russian primary aluminum made up 52% of LME on-warrant metal at the end of March, up from 46% in February, data released Tuesday show. India, another key exporter, is the other major source of LME aluminum stocks.

Since February, the LME has been publishing the country of origin for the metal that backs its futures contracts amid debate over whether it should be allowing Russian stocks to trade on the exchange. Last year, it decided against a ban.

Still, the data could add to concerns that the LME’s prices will end up reflecting a benchmark price of Russian material, which trades at a discount in the spot market due to widespread self-sanctioning.

Russian Aluminum Inventories Jump With LME Warehouse Inflows

The LME’s on-warrant copper stocks were 49% Russian origin at the end of March, down from 82% in February, with the data indicating outflows of 8,250 tons.

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