The Organisation for Economic Co-operation and Development (OECD) discourse and institutional norms on critical minerals focus on supply chain security, sustainable development and responsible business conduct (RBC), aiming to address the importance and potential risks of critical minerals in the global economy, green transition and national security. The following is a systematic analysis of the OECD's discourse, institutional framework and implementation, and provides suggestions from the neutral perspective of China's critical minerals practitioners.
1. OECD Critical Minerals
In its reports, forums and guidance documents, the OECD defines critical minerals as mineral resources that are critical to the economy and future development, but have a high supply risk, emphasizing their strategic role in green and digital transformation (OECD, 2023).
1.1 Definition and Importance of Critical Minerals
Critical minerals are non-renewable resources with high supply risk, low substitution and high economic impact, such as rare earths, lithium, cobalt, nickel, tungsten, etc. (OECD, 2015). Supply risks arise from geographical concentration (e.g., China accounts for 80% of global tungsten production), growing demand in emerging markets, technology dependence, and low recovery rates (USGS, 2023). Critical minerals are the building blocks of the new energy (electric vehicles, wind power), electronics (semiconductors), aerospace and defense industries. For example, lithium and cobalt are used in batteries, rare earths are used in permanent magnets, and tungsten is used in superalloys (OECD, 2023). Achieving dual green and digital transformation requires a steady supply of critical minerals, and the rapid development of renewable energy, electric vehicles, and consumer electronics will drive up demand, for example, lithium demand could increase to 2 million tonnes by 2030 (IEA, 2023).
1.2 Supply Chain Risk
Critical mineral reserves are unevenly distributed, for example, China controls 90% of rare earth processing and 70% of cobalt comes from the Democratic Republic of the Congo (USGS, 2023). This concentration makes supply chains vulnerable to geopolitics, trade restrictions, or conflicts. Industrialization and new technologies (e.g., 5G, AI) in emerging economies (e.g., China, India) increase demand, while low substitution and low recovery rates (e.g., rare earth recoveries below 10%) exacerbate supply vulnerabilities (OECD, 2015). Critical minerals mining often takes place in conflict or high-risk areas and can be linked to human rights violations, environmental damage, and corruption, such as cobalt mines in the Congo, which are linked to child labour and illegal mining (OECD, 2023).
1.3 Outlook for 2030
The OECD predicts that the criticality of critical minerals will change in the future as economic development and technological progress (OECD, 2015). Rare earths (heavy rare earths and light rare earths), germanium, and graphite have the greatest supply risk due to their low substitution and high production concentration. Tungsten, barite, vanadium, etc., due to their wide application in high-tech and national defense, have significant economic impact. By 2030, physical reserve availability is likely to be a limiting factor, and supply risks such as barite, borate, phosphate rock, etc. are likely to rise. Green and low-carbon pathways may change the pattern of mineral importance (OECD, 2015).
2. The OECD Advocates for the Following Measures to Address Critical Minerals Challenges
Enhance supply chain resilience and reduce reliance on a single source; promote sustainable mining and reduce environmental and social impacts; promote technological innovation to increase recycling rates and the use of alternative materials; Strengthen international cooperation for transparent and accountable supply chains (OECD, 2023).
3. OECD Critical Minerals Regime Specification
The OECD has developed an institutional framework for critical minerals supply chains through guidance documents, forums and multi-stakeholder initiatives, with a focus on responsible supply chain management and due diligence (OECD, 2023).
3.1 OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict and High-Risk Areas
First published in 2011 and last published in 2016, the guidance addresses supply chain management for tin, tantalum, tungsten and gold (3TG) and all minerals, with the aim of preventing conflict, human rights abuses or insecurity caused by the mining and trade of minerals (OECD, 2016). At its core is a five-step due diligence framework:
Establish a strong corporate management system and develop a supply chain policy.
Identify and assess risks in the supply chain (e.g. conflict, human rights, environmental risks).
Design and implement risk management programs to prevent or mitigate risks.
Conduct third-party audits to ensure transparency in due diligence.
Enhance transparency by publicly reporting due diligence results.
The guidance applies to all global mineral supply chains, with a particular focus on conflict and high-risk areas (e.g., Congo, Myanmar). Its goal is to help businesses respect human rights, avoid fuelling conflict, promote transparent supply chains, and support local economies (OECD, 2016).
Complementary guidance on tin, tantalum, tungsten and gold provides sector-specific advice, for example, where tungsten supply chains need to focus on illegal mining in high-risk areas such as Myanmar (OECD, 2024).
3.2 OECD Guidelines for Multinational Enterprises
Issued in 1976 and last revised in 2011, the guidelines are government-backed principles for responsible business conduct that apply to all industries, including the mineral supply chain (OECD, 2011). Companies need to avoid and respond to negative impacts (e.g., human rights violations, environmental damage) in their global operations, conduct due diligence to ensure supply chains meet standards, and work with stakeholders to promote sustainable development. In critical minerals procurement, companies need to identify risks (e.g., child labor, corruption) and take action to mitigate impacts (OECD, 2023).
3.3 OECD Environmental Due Diligence Manual for Mineral Supply Chains
Developed in 2021-2023 and published in autumn 2023, the handbook focuses on environmental risks (e.g. water pollution, carbon emissions, ecological damage) in the mineral supply chain (OECD, 2023). Based on a six-step due diligence framework, it provides best practices for environmental risk assessment and management, emphasizing the intersection of environmental and human rights risks. The handbook supports companies in complying with emerging regulations such as the EU Battery Regulation and the German Supply Chain Due Diligence Act, and aims to help companies prevent, mitigate and repair environmental impacts and promote sustainable mining throughout the supply chain, from extraction to consumer goods (OECD, 2023).
3.4 Forum for Responsible Mineral Supply Chains
Since 2007, the OECD has held an annual Forum on Responsible Mineral Supply Chains, bringing together representatives from government, business and civil society to discuss challenges and solutions in critical minerals supply chains (OECD, 2024). Topics include conflict finance risks, environmental and human rights risks, mineral demand in the green transition, and policy coordination. The 17th Forum 2024 was held on 22-23 May and highlighted conflict risks, development minerals (e.g. sand and gravel for construction), regional issues in the gold supply chain and the role of responsible business practices in intergovernmental agreements (OECD, 2024). The 18th Forum 2025 is scheduled to take place from 5-7 May and is expected to continue to focus on supply chain sustainability and emerging risks (OECD, 2025).
3.5 Other Initiatives
The OECD has partnered with the Responsible Minerals Initiative (RMI) to develop environmental, social and governance (ESG) standards, such as RMI's RMAP 2.0 ESG standard, which is expected to be publicly consulted in the third quarter of 2024, integrating OECD due diligence guidance and EU regulatory requirements (OECD, 2024). The OECD also supports the Global Battery Alliance (GBA) to drive sustainability in the battery supply chain (e.g. lithium, cobalt, nickel) in response to the due diligence requirements of the EU Battery Regulation (OECD, 2024).
4. Implementation and Impact of OECD Institutional Norms
4.1 Implementation Mechanism
OECD member countries have established National Contact Points (NCPs) to oversee the implementation of the Guidelines for Multinational Enterprises and to deal with complaints of supply chain irregularities, for example, the Norwegian NCP investigated a company's human rights concerns in a cobalt mine in the Congo (OECD, 2019). The OECD engages the voices of governments, businesses, NGOs and communities through forums and projects such as the Environmental Due Diligence Handbook to ensure the broad applicability of the Code (OECD, 2023). The guidance document is aligned with the EU Critical Raw Materials Act and the US Inflation Reduction Act to enhance global policy coordination (OECD, 2024).
4.2 Effectiveness
More than 5,000 companies around the world have adopted the OECD due diligence guidance, especially for the 3TG supply chain. For example, Apple implements the OECD framework in its cobalt and tungsten procurement (Apple, 2023). The OECD has promoted a traceability system for minerals from conflict zones, such as the cobalt supply chain certification in Congo (OECD, 2023). The Environmental Due Diligence Manual is expected to help companies reduce carbon emissions and ecological damage from mineral extraction, in line with global carbon neutrality goals (OECD, 2023).
4.3 Challenges
The OECD is voluntary and has not been fully implemented by some companies, especially SMEs (OECD, 2023). Political instability and opaque information in Myanmar, Congo and elsewhere make due diligence difficult to implement (OECD, 2024). New regulations such as the EU Battery Regulation are stringent, and the OECD needs to further integrate guidance to avoid overburdening companies with compliance (OECD, 2024).
5. Suggestions for Critical Minerals Practitioners in China
5.1 Impact
OECD-driven supply chain diversification (e.g., increased tungsten production in Australia and Canada) could weaken China's market dominance in tungsten (80% global supply) and rare earths (90% processed) (USGS, 2023). Chinese companies need to adapt to OECD guidance and EU regulations (e.g. green mining standards) or risk losing the European market, for example, the EU plans to impose tariffs on high carbon footprint minerals from 2027 (Global Times, 2023). The OECD's emphasis on recycling and alternative technologies provides a space for Chinese companies to innovate (China Tungsten Online, 2023).
5.2 Recommendations
Business Transformation
Invest in high value-added products, such as high-performance tungsten alloys, to meet the demand for 5 nm chips and new energy, and expect to increase market share by 10% in 2025 (China Tungsten Online, 2023).
Expand the EU and ASEAN markets and reduce dependence on the US (Global Times, 2023).
Construction of green processing facilities that comply with OECD and EU sustainability standards (OECD, 2023).
International Cooperation
Through the Belt and Road Initiative, we will cooperate with African and Southeast Asian countries to lock in lithium and cobalt resources, and at the same time participate in the OECD forum to contribute China's experience (The New Yorker, 2023).
6. Conclusion
The OECD's discourse on critical minerals highlights its strategic position in the economy, the green transition, and national security, emphasizing the twin challenges of supply chain risk and sustainable development (OECD, 2023). Its institutional norms provide a framework for responsible supply chain management for global enterprises, and are of guiding significance to enterprises and policymakers. China's industry should seize the opportunities of technological innovation and market diversification, adapt to the requirements of the OECD and global regulations, and ensure the stability and sustainable development of the critical minerals supply chain through cooperation and dialogue.
Appendix: What is 3TG?
References
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[7] China Daily (2023). “China balances domestic mineral needs with global trade.” / 中國日報 (2023). “中國平衡國內(nèi)礦物需求與全球貿(mào)易。 ” China Daily.
[8] Global Times (2023). “China’s mineral strategy strengthens high-tech industries.” / 環(huán)球時報 (2023). “中國礦物戰(zhàn)略增強高科技產(chǎn)業(yè)。 ” Global Times.
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[10] The New Yorker (2023). “China’s grip on critical minerals shapes global markets.” / 紐約客 (2023). “中國對關(guān)鍵礦物的控制塑造全球市場。 ” The New Yorker.
