Highlights
- Researchers enhance global economic modeling by integrating rare earths, nickel, zinc, and platinum group metals into the GTAP Database with unprecedented granularity.
- Model exposes how countries like China dominate downstream processing and value creation in critical mineral supply chains, revealing strategic economic vulnerabilities.
- Provides policymakers and investors a powerful tool to simulate trade policies, supply risks, and potential disruptions in clean energy mineral ecosystems.
A newly presented paper at the 28th Annual Conference on Global Economic Analysis—“Advancing the representation of critical minerals supply chains in the global economic models”—offers a major leap in how governments, investors, and energy planners can model the real-world complexity of the energy transition’s raw material backbone. Developed by Maksym Chepeliev (opens in a new tab) and collaborators, this research integrates rare earths, nickel, zinc, and platinum group metals into the GTAP (Global Trade Analysis Project) Database (opens in a new tab) with unprecedented granularity, allowing for modeling of both upstream extraction and downstream value-added stages across global supply chains.
This GTAP Multi-Region Input-Output (MRIO) enhancement allows users to trace where critical minerals are mined, refined, traded, and embedded into finished products, like EVs, wind turbines, and solar panels.
REEx Summary
Global demand for rare earths and other critical minerals increases as climate pledges increase. But until now, most global economic models couldn’t map where these minerals came from, how they were refined, and who captured most of the value. This paper fills that gap, giving policymakers and investors a powerful tool to evaluate future supply risks, trade dependencies, and choke points in the critical mineral supply chain. For the first time, it shows how countries like China dominate mining and downstream processing, where most of the profit is made.
Key Findings
The updated GTAP model paints a clearer picture of how the real value in critical mineral supply chains isn’t in mining, but in what happens next—refining, processing, and manufacturing. It highlights how countries like China, South Africa, and Chile control entire segments of these chains, putting others at risk of supply shocks or export restrictions. With this new level of detail, policymakers can now simulate how trade policies, carbon taxes, or geopolitical flare-ups could disrupt mineral flows and derail clean energy ambitions. Crucially, the model corrects a significant flaw in previous economic simulations that treated critical minerals like basic commodities, ignoring the chokepoints and dependencies that actually define their strategic importance.
Investor and Strategic Implications
This new GTAP-based modeling tool delivers long-overdue clarity for institutional investors, miners, and policymakers by exposing where the real bottlenecks—and profits—lie in the critical mineral supply chain. It enables scenario planning rooted in hard data, showing how rare earth processing constraints or trade restrictions could choke off market access, inflate costs, or derail clean energy timelines. It’s a strategic wake-up call for defense planners: mineral shortages or export dependencies aren’t just economic—they’re national security vulnerabilities. And for investors, it forces a reevaluation of value creation, redirecting focus from speculative mining plays to the midstream processing and magnet production stages that actually drive margins and market power.
Risks and Limitations
Despite its power, the GTAP model remains an academic tool—it’s not a substitute for boots-on-the-ground data, operational realities, or geological assessments needed for serious investment decisions. Like all computable general equilibrium models, it runs on baseline assumptions that can miss the mark when real-world disruptions, technological leaps, or geopolitical shocks hit. And while it offers valuable macroeconomic insights, it lacks real-time pricing, market sentiment, or intelligence on fast-moving geopolitical developments that actually drive volatility in critical mineral markets. Investors should treat it as a strategic map, not a tactical playbook.
Conclusion
This GTAP supply chain modeling breakthrough is a long-overdue upgrade to global economic forecasting tools. It finally recognizes critical minerals as strategic—not just bulk—commodities.
While not a market mover on its own, it offers a new analytical lens for serious investors, miners, and policymakers to model real dependencies, simulate policy impacts, and identify where long-term value and risk truly reside. It is not a discovery, but it may change how discoveries are evaluated.
Leave a Reply