Critical stocks, critical stakes: the effectiveness of critical mineral stockpiles in mitigating supply risks to energy, security and information

The digital and energy transitions, together with renewed rearmament, are driving up demand for critical minerals such as lithium, cobalt, copper and rare earth elements. These materials are vital for low-carbon energy, digital infrastructure and defence systems. Supplies are highly geographically concentrated and exposed to geopolitical tensions; their scale-up has been slow. Governments are therefore seeking greater security of supply, including through stockpiling schemes as a buffer against disruption.

This report assesses the effectiveness of strategic stockpiling in addressing five risks linked to critical minerals: market volatility, inflation, industrial competitiveness, energy security and national security. The focus is on the energy transition, with implications also considered for the digital and defence sectors. 

The analysis finds that stockpiling can be an effective measure to mitigate acute risks related to critical minerals but needs to be part of a broader strategy to mitigate supply risks. In the right circumstances, stockpiling can help stabilise commodity markets and offer insurance against geopolitical disruptions. However, stockpiling has limited effectiveness to address more long-term structural risks, such as chronic undersupply or market tightness.

Recommendations

The authors make five policy recommendations, developed under the assumption of an internationally coordinated stockpiling initiative, to support economic objectives concerning the energy transition:

• Embed the policy within a broader industrial and trade policy strategy. Integrate stockpiling within a comprehensive strategy to address longer-term solutions, such as supply chain diversification, circular economy measures and support for R&D for increased mineral efficiency. Partial reshoring of mineral extraction and refining may play a complementary role: these additional policies would support the objectives of stockpiling efforts and mitigate longer-term risks that stockpiling alone is unable to adequately address.
• Agree international coordination on mineral scope within strategic stockpiling initiatives. Develop common lists of minerals to be included or at least a shared methodology to assess criticality, which would enable greater flexibility but still ensure a common objective of stockpiling. This would avoid the unintended consequences of unilateral actions that may exacerbate supply risks.
• Establish international coordination on stock calibration. Agree the appropriate size and timing of buffer stocks, with participation from both export- and import-dependent countries. International stock calibration will ensure there are no ‘free riders’ within the agreement and countries equally share the burden of accumulating buffer stocks.
• Develop international pre-agreement on clear release conditions. Define transparent criteria for releasing buffer stocks, alongside transparent reporting of stocks and monitoring of commodity prices. Pre-agreed conditions would enable the quick and efficient release of stocks in response to market disruptions.
• Adopt hybrid policy design for the type of stockpiling programmes. Tailor stockpiling designs – public, private or market-based – to reflect the national risk profiles, sectoral exposure and structure of different mineral markets. Hybrid policy design would offer flexibility to countries to tailor their own stockpiles to best suit their risk profile.