Avenues to Maximizing Value Added from Critical Minerals

Carlo Pietrobelli and Jorge Valverde Carbonell
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Carlo Pietrobelli: RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn
Jorge Valverde Carbonell: RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn

No 2025-019, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: The energy transition success depends largely on the availability of critical minerals, and this may produce a window of opportunity for producing countries. In this regard, this paper examines the different avenues to maximizing value added from critical minerals production. In particular, we assess whether the classic structural change recipe could be a good road map for countries rich in critical minerals. For this purpose, we use copper and lithium as case-studies. For each mineral, we discuss and assess the cost competitiveness and the potential benefits for countries to diversify downward, including potential spillovers proxied by products’ complexity. Our research shows that maximizing value-added in the long term is a tailored mineral-country-specific challenge that can be pursued through three main channels: deepening, moving downward and/or moving upward along the mining value chain. These depend on the comparative advantages of the country and the particular features of the mineral market. In the case of copper, deepening and moving upward seems to be preferable given the bounded value-added of nearer downward chain stages, such as smelting and refining. However, under a low-carbon paradigm downward stages could become competitive. In the case of lithium, moving downward appears a preferable strategy due to the significantly larger value-added and spillovers derived from producing grade battery lithium (carbonate or hydroxide) rather than producing lithium intermediate compound, such as sulfate or chloride, or lithium ore (spodumene).

JEL-codes: O13 O14 Q32 (search for similar items in EconPapers)
Date: 2025-09-04
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2025019

DOI: 10.53330/HQBR9588

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