Electric vehicles and wind power will play important roles in decarbonizing society. Rare metals are indispensable for the batteries in EVs and the motors of wind power generators. But the rare metals needed to make these batteries and motors are produced unevenly in a handful of countries, and their distribution is sometimes subject to the political whims of these nations.
Demand for rare metals is expected to grow as decarbonization progresses. Ensuring a stable supply will thus become an increasingly important component of economic security, and countries must prepare an array of measures to adequately procure these resources.
"Rare metals" is a general term that refers to about 30 different metals. About 70% of the cobalt used in car batteries is produced in the Democratic Republic of the Congo. Neodymium, a type of rare-earth element, is used in wind power generators, but about 60% of it is produced in China.
The Joe Biden administration in the U.S. has declared rare earths to be strategic commodities essential to maintaining and strengthening U.S. competitiveness, along with semiconductors, high-capacity batteries and pharmaceuticals. Washington has initiated reviews of supply chains for these goods.
Concerns about dependence on China for important minerals are driving such actions. In the private sector, U.S.-based Tesla is working to secure its own nickel and lithium deposits for use in its EVs.
Japan's industry ministry estimates that producing 1 million EVs would require an amount of lithium and cobalt equal to current domestic demand. Tokyo also needs to rethink its strategy to ensure a stable supply amid the changing environment.
The ministry will soon finalize its new Strategic Energy Plan, which will serve as a long-term guide for Japan's energy strategy. This is an appropriate mechanism for stronger measures to secure rare metals.
The first necessary step is diversifying procurement sources. In the case of very important minerals, policymakers should consider providing more support to exploration, development and refining companies through Japan Oil, Gas and Metals National Corp.
Japan's territorial waters and exclusive economic zone are thought to be rich in mineral resources such as cobalt and manganese. Establishing a system to develop and make use of these resources is necessary. Cooperating with the U.S., Australia, India and others to stabilize supply will also be important.
Last year, the Japanese government reviewed the management of the national stockpile of rare metals. Of key importance will be flexibility in changing the types and amounts of minerals covered depending on the international situation and market conditions.
Also essential is cooperation between the public and private sectors in developing alternative technologies like batteries that do not use cobalt, and promoting recycling to recover rare metals from used batteries and motors.