No energy transition without metallic minerals: Research project investigates trade in critical raw materials in times of political unrest

The war between Russia and Ukraine, for example, does not only affect the trade in gas and oil, but also the market for metallic minerals, which Europe urgently needs to boost the energy transition. A research project from the field of economics is investigating how trade in mineral commodities is linked to geopolitical risks.

Europe has committed to the energy transition in order to mitigate human-made climate change. Industry needs critical raw materials – that are currently in high demand – to be able to place greater emphasis on electromobility, wind turbines, photovoltaics and battery-based energy storage systems. Metals such as cobalt, copper, lithium and nickel, along with many others, have become indispensable for achieving the climate targets in the decades ahead. “We are seeing a race to import the necessary resources,” says Dmitri Blüschke (Department of Economics), who intends to get to the bottom of the current dynamics of trade in these raw materials in the FWF-funded project entitled “Europe’s mineral trade and global energy transition”.

“We need metallic minerals for the energy transition more than ever, but at the same time we are confronted with geopolitical tensions that have an impact on trade,” Dmitri Blüschke continues. In this context, European economies should be seen as both importers and exporters of these critical raw materials. However, a large proportion of metallic minerals comes from countries that are currently involved in geopolitical unrest: For example, almost 90 per cent of rare earths come from China and around 45 per cent of palladium, a metal that is essential for capacitors, circuit boards and hydrogen electrolysis, comes from Russia.

The study, which Dmitri Blüschke and his colleagues will be conducting over the next few years, is based on the international trade theory for metallic minerals used for the production of renewable energies. New econometric approaches are used to gain as much insight as possible into the interactions between trade and political unrest. Dmitri Blüschke explains: “It should also be possible to derive political implications from the scientific results. They should help to better categorise geopolitical risks in conjunction with the expansion of the mineral trade. Ultimately, the aim is to support the overarching goal of mitigating climate change.”