Green energy depends on critical minerals. Who controls the supply chains?

Luc Leruth, Adnan Mazarei, Pierre Régibeau and Luc Renneboog
Additional contact information
Luc Leruth: Tbilisi University
Pierre Régibeau: European Commission

No WP22-12, Working Paper Series from Peterson Institute for International Economics

Abstract: In light of the transition away from fossil fuel-based energy, this paper highlights the importance of understanding who controls vital parts of the global supply chains of critical minerals and rare earth elements (REEs). Analysis of direct ownership does not reveal the real sources of control over the decisions of the company. To identify those sources, we use an index that measures the degree to which important shareholders can affect voting decisions. This analysis is not straightforward, because companies along the supply chain are not necessarily incorporated in the countries in which mining and production activities take place, and shareholders can exert influence through multiple layers of subsidiaries. Our analysis reveals that China's control over the global value chains involving critical minerals and REEs extends beyond what is commonly assumed. It also sheds light on environmental, social, and governance issues in the countries in which mining and/or production take place. The paper advocates increasing transparency regarding the sources of control to better assess and manage economic and geopolitical risks; enhancing recycling, to reduce dependency on foreign supply; avoiding protectionist and trade-reducing reactions; and encouraging research and development in order to speed up the adoption of technologies of substitution.

Keywords: Ownership; voting power; corporate social responsibility; ESG; supply chain; recycling; rare earth elements; critical minerals; geopolitics (search for similar items in EconPapers)
JEL-codes: G3 L1 L7 Q3 Q5 (search for similar items in EconPapers)
Date: 2022-08
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env and nep-int
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Green Energy Depends on Critical Minerals. Who Controls the Supply Chains? (2022)
Working Paper: Green Energy Depends on Critical Minerals. Who Controls the Supply Chains? (2022)
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