OECD, IEA say traceability is imperative for secure critical mineral supply chains

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A joint report by the Organisation for Economic Cooperation and Development (OECD) and International Energy Agency (IEA) says high levels of supply chain concentration and rising trade restrictions are limiting investment and creating real vulnerabilities in critical mineral supplies.

While efforts to diversify sources are gathering pace, investment still falls short of what is needed to keep up with demand, the organisations state.

In parallel, the operational and governance risks that come with mining and processing activities need to be managed more effectively, lest they delay projects, erode trust and cause future disruptions.

OECD and IEA say reliable access to critical minerals has become central to economic security and competitiveness, but market concentration of processing, smelting and refining is acute.

They explain that national and multilateral initiatives to enhance economic security by developing more resilient and diversified critical mineral supply chains will require supply chain transparency to be fully implementable.

Having surveyed 90 companies covering all major critical minerals to compile the 'Enhancing resilience through traceability' report, OECD and IEA determined that responsible business conduct standards, transparency and traceability are important tools to address some of the world's current challenges.

"When applied in a targeted and pragmatic way, traceability can strengthen resilience, derisk investment and support responsible sourcing. By improving visibility across supply chains, traceability helps identify dependencies, verify responsible practices and target interventions where risks persist," the organisations state.

By looking at the lithium and nickel supply chains in Latin America and Southeast Asia, in particular, the report highlights the importance of a tailored approach to traceability. In Latin America's lithium sector, high refining concentration creates opportunities for targeted interventions while Southeast Asia's nickel sector, with its complex ownership structures, is more challenging.

OECD and IEA say reliable supply chain data is at the core of traceability systems and that price floors and similar trade-related measures need verified information on origin and production conditions to direct support toward trusted and responsible producers.

The organisations find, however, that current traceability systems worldwide are fragmented. In practice, a combination of supply chain mapping, mass balance and auditing are often part of wider due diligence efforts, which does support partial visibility but not end-to-end traceability.

OECD and IEA cite the example of Indonesia's Simbara system that can provide a foundation that targeted policy measures could strengthen.