Better traceability of critical minerals like lithium and nickel can boost the credibility and integrity of the supply chain, a new report by the Organization for Economic Co-operation and Development (OECD) shows.
Demand for critical minerals is at record-high levels, as they are essential to develop national defence, technologies and for the energy transition.
Still, global investment in the exploration of these minerals is facing obstacles due to operational and governance risks associated with their production and processing.
Tracking where minerals originate, who owns key assets and how materials move through the chain of custody could help manage those risks and make supply chains more resilient, the OECD says.
Traceability today
Current critical minerals traceability tools remain fragmented, with many systems developed within individual companies rather than through comprehensive frameworks available across the industry. That fragmentation can obscure who ultimately controls key mineral assets.
Traders have the highest rates of traceability-system implementation, while miners have the lowest, according to the report. Companies also face costs and operational concerns involving confidentiality, supplier leverage and data quality. The OECD survey respondents said the top priority should be more regulatory consistency and a shared data infrastructure between countries, companies and the public.
While end-to-end traceability is not yet completely achievable, companies are trying to increase transparency by relying on supply-chain mapping, audits and mass-balance approaches.
Traceability can also support brand reputation and customer trust, although the report found its concrete commercial benefits remain difficult to quantify.
Nickel and Lithium
The OECD report primarily focused on the traceability of nickel in Indonesia and the Philippines. It also examined lithium supply chains in Argentina and Chile to analyze how traceability works across different commodities and jurisdictions.
Lithium and nickel serve as strategic and essential elements for energy transition, defence and different industrial applications.
The report found that the nickel supply chain in Indonesia and the Philippines is more complex, as it is exposed to elaborate transnational ownership structures. Existing systems such as Indonesia’s SIMBARA, London Metal Exchange responsible-sourcing requirements, sustainability initiatives and local audits could provide building blocks for greater transparency, the report said.
For lithium sourcing from Argentina and Chile, enhanced ownership transparency can help operations be more transparent when it comes to the presence of foreign entities in the upstream supply chain. For example, significant lithium processing from these countries is dependent on China, and it is shown by existing trade data and supplier mapping. Limited data is still the biggest obstacle for traceability in these countries.
Future traceability
The OECD recommends implementing a phased, risk-based approach to increase traceability using short, medium, and long-term initiatives.
In the short-term, OECD is asking governments to use systems that are already in place more. That includes supplier mapping, audit programmes and bilateral mineral agreements that already exist to increase transparency.
In the medium-term, governments need to close data gaps, engaging more with traders, exchanges and smelters. That should advance ownership transparency and pave the way for independent mineral testing and tracking of recycled content to be introduced.
Longer-term measures would require international co-operation to share traceability data across borders and align standards for batteries and related products.
The OECD said co-operation among organizations including the G7 and International Energy Agency, along with trade partners, could help turn those recommendations into practice. Existing initiatives including the G7 Critical Minerals Action Plan, the Roadmap to Promote Standards-based Markets, FORGE, RESourceEU and bilateral critical-minerals agreements could provide frameworks for that work.
With all these recommendations, OECD is aiming to create a more globalized and accessible traceability system that helps to develop the critical minerals supply chain.
Source: https://www.mining.com/traceability-is-essential-for-the-critical-minerals-supply-chain-report/
