Can metals lead to a war?

For nearly a century, nations have been in battle nearly 180 times over territories that contained or supposedly contained oil or mineral resources. These skirmishes and battles ranged from a brief violation of territory to World Wars. Some of these battles such as the Second World War, the Invasion of Kuwait in 1990, the American invasion of Iraq, the Iran-Iraq conflict, and a few others have been termed as classic oil wars.

Henry Kissinger, the former Secretary of State during the Nixon administration had quoted “Control oil and you control nations.” The Yom Kippur War in 1973 led to OPEC announcing an oil embargo on Israeli supporters and the energy world would never be the same again. In the United States, this led to the evolution of the Department of Energy and funding to what would primarily lead to the development of modern renewable energy solutions.

The Russia-Ukraine conflict has triggered a shocking jolt to the global energy scene since the 1973 crisis. A couple of observations are obvious. One is that Russian gas is being substituted with LNG provided primarily by the USA, Australia, and Qatar. The other outcome is an acceleration of the transition to clean energy solutions of wind and solar.

Solar and wind demand for manifold increases in the quantum of mineral inputs as compared to a natural gas plant that offers the same amount of energy. EVs need nearly six times the quantity of mineral inputs as a traditional car.

Electrification needs hardware and hardware requires mines which in turn is dependent on minerals like copper, lithium, nickel, rare earths, and cobalt. Copper plays a significant role in the quest for electrification through clean energy and electric vehicles.?Lithium has acquired the status of white gold for the role it plays in grid-stabilizing energy storage and powering EVs and smartphones. The unfettering of the shackles of fossil fuel dependence has also led to a new dependence on rare earths that have now been pivotal to an innovative ecological and digital society. To a large extent that industry and governments embrace electrification, minerals and rare earths have become the new oil.

The emergence of rare earths

Rare earth elements have special characteristics that make them vital cogs in the advancement of new technologies. The physical and chemical properties they possess make them arguably the superstars of the periodic table. Lanthanum helps convert crude oil into fuels. Neodymium is used in the manufacture of extremely powerful magnets that powered the miniaturization of electronic gadgets. Modern technology is highly dependent on rare earths and this ranges from TVs, EVs, catalysts, and even guided missiles.

The US government and industry are highly dependent on critical minerals to manufacture weapon systems, EVs, satellites, and wind turbines. The making of an F-35A fighter aircraft consumes nearly 920 pounds of rare earth elements that come primarily from China.

Natural disasters, civil unrest, trade disputes, and company failures can all disrupt a mineral supply chain and the many products that depend on it making many critical minerals a national security priority.

Concerns about the supply chains

The demand for lithium, cobalt, rare earths other critical minerals needed for low-carbon technologies alone is expected to skyrocket upwards from 100% to 1,000% by 2050.

ion batteries and China has rapidly invested in this region.

The Russia-Ukraine war has impacted commodity markets through the physical impact of blockades and the obliteration of production capabilities as well as trade sanctions. These sanctions are having major global ramifications Russia and Ukraine export many commodities. Russia is the leading exporter of wheat, pig iron, natural gas, and nickel and this has global ramifications. It also holds a large share of the oil, coal, and aluminum market.?

The reserves of rare earths according to Statista estimates, amount to nearly 120 million metric tons. Most of these reserves are located within China, estimated at some 44 million metric tons.

These figures are concerning on their own, but when combined with global demand and a desire for reduced mining, they can paint a grisly picture of the world economy.

Moreover, a large number of critical metals are geographically restricted in supply. The DR of Congo mines nearly 70% of cobalt that is used in rechargeable lithium cells.

The cost of war is catastrophic.?As per the Institute for Economics & Peace, an amount north of USD 14 trillion in 2019 was the price of war. This causes a hefty cost to the global economy including billions of dollars in production losses. Armed conflict also gives birth to operational risks that change inventory policies.

Expanding recycling and reuse of critical minerals can increase sustainability and make minerals more available for all. Another way is to encourage the formation of recycling ecosystems that have a collective responsibility from e-waste firms, large manufacturers, and the government.

Besides urban mining, countries can also expand their exploration of critical minerals. Lithium mining in the California desert and rare earth projects in Nevada and Colorado are some examples. Both these efforts at a global level can play a decent role in avoiding war.

The economy needs to grow and technology needs to keep advancing. However, the stakes of a mineral conflict can keep mounting. This gives rise to a power competition between a select few nations that has ramifications across the globe. A philosophy of energy sovereignty can maybe prevent further escalations.

Greenscape is a leading player in the urban mining sector and one of the pioneers in the recycling of e-waste.