Where Geopolitical Risk Binds: Stockpiling and AI as Complementary Strategies for Mitigating Supply Chain Risk in Critical Minerals

Joaquin Vespignani, Russell Smyth, Jamel Saadaoui and Yitian Wang

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We develop novel, stage-specific, geopolitical risk indicators to examine how geopolitical risk is distributed across the supply-chain for lithium and copper, two minerals which are vital for low-carbon technologies. We find that refining is the geopolitical bottleneck for both minerals, reflecting that refining capacity is highly concentrated in China. We examine refining diversification, strategic stockpiling, and AI-driven productivity gains as complementary policy instruments for mitigating exposure to geopolitical risk at the refining stage. We show that reducing China's refining share substantially lowers refining-stage geopolitical risk, with larger gains for lithium than for copper. We find that stockpiling plays a critical role in buffering near-term geopolitical shocks, but significantly increases the projected shortfall in copper and lithium which is needed to realize the clean energy transition under alternative Net Zero pathways. We demonstrate that AI-driven productivity gains will be needed to narrow the projected supply gaps for both minerals. Our results suggest that ensuring effective security of critical minerals requires a coordinated policy mix, combining refining diversification, strategic stockpiling, and productivity-enhancing technological change.

Keywords: critical minerals; copper; lithium; geopolitical risk; refining bottlenecks (search for similar items in EconPapers)
JEL-codes: C14 Q20 Q41 Q43 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2026-02
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Related works:
Working Paper: Where Geopolitical Risk Binds: Stockpiling and AI as Complementary Strategies for Mitigating Supply Chain Risk in Critical Minerals (2026)
Working Paper: Where geopolitical risk binds: Stockpiling and AI as complementary strategies for mitigating supply chain risk in critical minerals (2026)
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