International trade has long been the backbone of the raw materials industry. The economic viability of this industry requires extraction and processing to take place where materials are the most naturally abundant, or where the geological and climatic conditions and available technology and resources make their extraction and processing economically viable. Mining and processing operations also require significant long-term investment and typically face extended approval periods. Additionally, the raw materials industry has long been characterised by pervasive state intervention, including in the form of special regulations (e.g. natural monopolies, licenses), state ownership, investment restrictions, subsidies, and export restrictions.
This combination of natural endowments, economic viability, economies of scale and policies explains why the extraction and processing of certain raw materials is highly concentrated, both geographically and in terms of ownership and control.
The figures tell the story: for example, the three top producing countries in 2023 accounted for 60% or more of the global production of primary forms of cobalt (78%), lithium (92%), nickel (65%), and rare earth elements (90%). Processing of raw materials is also typically performed in a handful of countries. Concentration in the processing stage can be influenced by the concentration of reserves, given the vertical integration of mining and processing activities and efforts to minimise transport costs, and also policies aimed at leveraging ownership of reserves to attract investment in processing and enhance local value addition.
Concentration means that markets for raw materials are highly sensitive to trade restrictions. With the digital and green transitions significantly increasing demand for several of these highly geographically concentrated resources (IEA (2024[1]), there can be growing incentives for market participants and policy makers to exploit market power dynamics to pursue economic and non-economic objectives. The situation is further complicated by the fact that the expansion of demand for industrial raw materials is taking place against a backdrop of growing geopolitical tensions and strategic rivalries.
Export restrictions, defined as measures known or suspected to restrain export activity, take many forms and can be aimed at achieving diverse policy objectives. For example, some countries may use export licensing measures to help monitor and limit negative environmental and social effects of extraction and processing of raw materials, or as a means of tracking exports. Export taxes can be aimed at raising government revenue, including to address environmental and social costs of mining activities. Export quotas or outright export bans can also be aimed at limiting extraction or processing activities by reducing incentives for such activities in the domestic market, but they can also be used to lower the domestic prices, or reduce global supply, of raw materials in order to promote domestic processing and attract foreign investment in processing facilities. That said, there can be debate about whether such measures are the best policy instruments to sustainably achieve the intended objectives, notably where the policies of a single important producing country can have significant international spillover effects. For example, exploitation taxes can be an alternative to generate government revenue from critical raw materials for source countries, but without the same impacts on global markets as export taxes.
Restrictions on exports of raw materials aimed at favouring downstream domestic users to the detriment of foreign users are some of the most contentious forms of state intervention. Where the exporter holds a large share of the global market, export restrictions contribute to raising world market prices, creating incentives for other exporters to impose similar restrictions, resulting in spiralling negative effects on international markets. By undermining the economic viability and thereby decreasing the output of domestic extractive industries, or simply by limiting the supply available to other countries, export restrictions can also potentially hamper the global supply of the concerned materials.
The OECD has been monitoring the use of export restrictions on critical raw materials since 2009 and updates its Inventory on Export Restrictions on Industrial Raw Materials annually (for more information, see About the OECD Inventory below). This note sets out the key findings from the latest update of the Inventory, covering the period 2009-22. The next release, expected in 2025, will cover data through to 2023.
