Abstract
In the era of globalization, industries of critical metals are organized through the global supply chain. However, the global supply chains have been disrupted since 2020 by the outbreak of COVID-19 and a series of geopolitical crises. To better address the supply chain challenges of critical metals, a review is needed about the sources, propagation, and responses of the supply chain risks. Firstly, this review provides an overview about the research progress in identifying the risk sources and assessing the risks and then proposes a new supply chain framework, categorizing relevant risk factors into upstream risks, middle-stream risks, downstream risks, and general risks, for risk analysis of critical metals. Secondly, this review offers a comprehensive understanding about how the risks propagate horizontally and vertically. Finally, responses such as supply diversification, stockpiling, material substitution, recycling and circular economy strategy, price volatility hedging, and supply chain traceability are reviewed. This survey features the supply chain perspective, overviews on network-based studies, and affirms the urgency and need for further studies on supply chain risks and resilience, which may contribute to a smooth clean energy transition.
Introduction
Critical metals usually refer to rare metals, rare disperse elements, and rare earth elements that play irreplaceable and significant roles in new energy industries—from solar photovoltaic and wind turbines to electric vehicles and battery storage (Zhai et al., 2019; ). Gallium, tungsten, rare earths, bismuth, antimony, magnesium, germanium, vanadium, molybdenum, indium, tin, silver, lithium, niobium, beryllium, nickel, cobalt, chromium, platinum, and copper are recognized as the critical metals for low-carbon technologies (Wang et al., 2021a; Zuo et al., 2021). With the massive and increasing deployment of low-carbon technologies for a net zero emission society, demands for these metals have been increasing significantly and the world is moving from fuel-intensive systems to more material-intensive systems (). Against this background, it is important to review the research progress related to these metals.
Nowadays mining, refining, manufacturing, use, and waste management of critical metals are sliced and located across the world, forming various global supply chains of critical metals, as shown in Figure 1. In the supply chain environment, productions are interconnected, and the effective operation of one production stage depends increasingly on the normal operation of the other stages which may be located differently (Ponomarov and Holcomb, 2009). Under this circumstance, disruptions of any stage can be propagated either upstream or downstream. A resilient supply chain of critical metals is therefore of high importance to the global energy transition, which, however, experiences more and more unexpected disruptions.
FIGURE 1
Since 2020, the global pandemic has pushed governments to adopt various lockdown policies, which seriously affect the operations of global supply chains (
Many reviews have been carried out on critical metals.
The remainder of this review is organized as follows: Section 2 introduces risks identification and assessment; Section 3 presents the propagation of risks in the global supply chain networks of critical metals; Section 4 discusses responses to the supply chain risks, followed by the last section of conclusion.
2 Identifying risk sources and assessing risks
2.1 Supply risks in criticality assessment
In the field of criticality assessments of metals, supply risk is a key component, as shown in Eq. 1 (
In an overview of the raw material supply risks,
Due to the various economic structures and resource endowments, different economies have adopted differentiated methods to assess supply risks. For example, in the European Commission (EC)’s supply risk assessment, the supply risk is measured as a product of supply concentration, import reliance, governance performance, trade adjusted parameter, and substitution index (
In the supply risk evaluation framework of the United States, the National Research Council identified five supply risk sources, namely, demand growth, thin markets, production concentration, by-product production, and recycling. Based on this research, the United States Department of Energy (DOE) developed a weighted index for evaluating supply risk, in which 40% is given to basic availability of metals, 20% to political, social, and regulatory factors, 20% to producer diversity, 10% to competing technology demand, and 10% to codependence to other markets. The United States framework was later developed by
Low-carbon technologies have been massively deployed in China, and some of them have the largest market size in the world (e.g., electric vehicles). To develop a criticality assessment for the Chinese context, Yan et al. (2021) analyzed three types of supply risks, i.e., sustainability risk, reliance risk, and tolerance risk, in identifying the critical metals for China, as given in Eq. 3:
The illustrated cases show that not all these indicators are utilized in each assessment of the supply risks. The selection of indicators depends on the goal and scope of the relevant research; accordingly, there is no unified assessment of supply risks and the lists on critical metals are varying (
2.2 From supply risks of single stage to supply chain risks
From the perspective of a supply chain, the supply risks can be categorized into four groups, namely, upstream risks, middle-stream risks, downstream risks, and general risks, as shown in Figure 2. The general risks are the disruptions that could occur at any stage of the supply chain. This perspective could provide a more holistic view about the supply chain risks of critical metals and a better understanding of the existing supply risk studies. Most existing studies on the supply risks of critical metals focus on the upstream risks, and only a few analyze the potential bottlenecks in middle-stream, downstream (Schrijvers et al., 2020), and the whole supply chain.
FIGURE 2

Framework for the supply chain risk assessment.
Shocks in the middle-stream and downstream, however, should be fully acknowledged. For the shocks to the middle-stream, the supply chain of metals is seriously affected due to China’s processing role in the global production network (
There are four theoretical tools to analyze the supply chain risks. The first is the material flow analysis (MFA), which is widely used in analyzing the material cycles of metals in the anthroposphere (
3 Propagation of risks in global supply chain networks of critical metals
There are several terminologies for the propagation of risks in the academic literature, which include risk diffusion (
The global supply chains of critical metals are complex systems that contain various economic and financial connections. These connections provide various channels for shock/disruption of one node to propagate to its directly connected nodes, which then propagate their crises to the other connected nodes. This process continues until the disruption effects are absorbed totally by the chain or all the nodes in the supply chain are jeopardized. The propagation process in the global supply chain of critical metals is essentially the same as the virus-spreading phenomenon, which has been widely analyzed by network-based models (
3.1 Propagation of shocks in single-layer trade network
Systemic trade-related risks have been widely acknowledged (
Besides the disruptions that happened in the upstream, Wu et al. (2021) designed a non-dominated sorting genetic (NSGA-II) algorithm to identify the key countries and trade relations in the stability of the lithium carbonate trade network, which enriches the understanding of potential supply risk propagation paths in the trade network of middle-stream products. As for the risk propagations in the downstream of the supply chain, disruptions spreading caused by node failure and link interruption in the lithium-ion battery trade network (
3.2 Propagation of disruptions in multiplex trade network
From the perspective of a multiplex network, mining, refining, manufacturing, consumption of end-use products, and waste management of the supply chain are different layers (Shi et al., 2022), as illustrated in Figure 3. In each layer, countries exchange goods through international trade, forming a single-layer network. Single-layer networks connect via global input–output linkages, forming an interdependent multiplex network. In this interdependent multiplex network, the failure of nodes in the mining stage leads to failure of the dependent nodes in middle-stream or downstream layers, which in turn may cause further damage to the first network, leading to cascading failures and possibly catastrophic consequences (
FIGURE 3

Illustrated multiplex trade network of metals.
Through investigating the interdependencies between the copper raw materials–trading network and its waste-trading network,
3.3 Price volatility spillover/transmission
Price volatility is also recognized as an important risk, which significantly affects the supply–demand balance, trade dependence structure (Zhao et al., 2022), investment decisions, and other sectors of the economic system (Sun et al., 2018; Sun et al., 2019). Understanding the price volatility spillovers is helpful in hedging the price risks. From the perspective of a single-layer network, price volatility spillovers are transmitted horizontally and occur at different levels, from firms, commodities, markets, sectors, countries, to time, which have been studied intensively.
From the perspective of the supply chain, price volatility is transmitted vertically. The vertical transmission can be further categorized into forward vertical transmission, backward vertical transmission, and bidirectional transmission. In a study on the dynamic relationship between primary and scrap prices, Xiarchos and Fletcher (2009) found that scrap prices do not improve the long-run interpretation of primary prices of copper, lead, and zinc, which, however, exist in the short run. In recent years, network-based transmission models are developed to reveal the sources, receptors, hubs, media, paths, and motifs of price spillovers. Related studies have been examined in the steel supply chain (
4 Responses to supply chain risks
The responses to the supply chain risks are essential to improve supply chain resilience, which is defined as “the capacity to supply enough of a given material to satisfy the demands of society, and to provide suitable alternatives if insufficient supply is available” (Sprecher et al., 2015). On the supply side, the diversity of supply and increasing stockpiling are proposed to improve supply chain resilience of critical metals; on the demand side, improving material efficiency and developing material substitution are advocated (Sprecher et al., 2015; Sprecher et al., 2017;
4.1 Responses on supply side
Supply diversification. More sources of raw materials are helpful in reducing damages caused by disruptions. Using rare earths as an illustrated case, with increasing alternative supplies from Australia and the United States, the HHI of rare earths has decreased from 0.68 in 2017 to 0.43 in 2019, which could potentially decrease to 0.34 (
Increasing stockpiling. Stockpiling is a short term and effective tool to hedge supply disruption and price hikes (Sun et al., 2022) and can be applied to any stage of the supply chain. A critical issue of stockpiling is the feedback loop through the price mechanism (Sprecher et al., 2015). When a supply disruption occurs, emergency stockpiling by actual needs and speculation activities will drive up the demand and price, which in turn lead to pessimistic expectations about supply and more stockpiling. On the contrary, releasing inventories will increase the supply and ease the market, which in turn negatively influences the price. How does this price mechanism interact with the stockpiling behavior in the field of critical metals? There are few studies in this regard to date.
Recycling and circular economy strategy. Supply diversification and stockpiling cannot sufficiently mitigate the supply chain's risks. The supply chain is a closed loop, and in the reverse supply chain/circular value chain, old scrap/waste can be redesigned, reused, remanufactured, and recycled/urban-mined, therefore, recycling and circular economy strategy are treated as a sustainable solution to reduce the supply chain risks (Zeng and Li, 2015;
Supply chain traceability. Social and environmental risks draw more and more attention, for example, the artisanal mining in the Democratic Republic of the Congo (Nkulu et al., 2018). To reduce related risks, it is suggested to establish a supply chain traceability system (Shi, 2022). Due to the advantages of decentralized control, security, traceability, and auditable time-stamped transactions (Shi and Sun, 2020; Omar et al., 2022), blockchain is proposed as a tool for supply chain traceability in the mineral industry and critical success factor for this type of tracing system are discussed (
4.2 Responses on demand side
Material substitution. Price hikes of critical metals have determining influence on material substitution (
Hedging price volatility. Buyers and sellers can use long-term contracts to negotiate a stable price for a specific period and stabilize profits/costs (
5 Conclusion
To better address the supply chain challenges of critical metals in the era of frequent disturbance, this article reviews the studies on the sources, propagation, and responses of supply chain risks of critical metals. Based on the literature review on these three aspects, the following issues are proposed to be further studied in the future.
Firstly, to better identify and assess the risks in the criticality assessment of metals, there are more studies to be conducted in a new holistic framework of supply chain risks. This new framework should not only focus on the specific risks in the upstream, middle-stream, and downstream but also on general risks along the whole supply chain. Besides this conceptual framework, building a comprehensive database is required for this type of risk assessment. As for the potential direction of empirical studies, scholars could perform a holistic risk assessment for a particular metal, cobalt, for example, or they could carry out a holistic assessment for joint-metals, cobalt–lithium–nickel, for instance, or do comparison studies of risk assessments and thus better understand the criticality of the corresponding metals. The material flow analysis, multiregional input–output model, systemic dynamics, and complex network theory are potential tools to address these issues.
Secondly, the propagation of trade-related risks and price volatility are intensively examined, and we have a comprehensive understanding of how the risks propagate in a single-layer network. Nonetheless, there is still a lack of enough understanding about the supply chain vulnerability caused by the interdependences between different stages of the supply chain. In addition, the vertical transmissions of price risk, which include forward vertical transmission, backward transmission, and bidirectional transmission, should be further explored. Multiplex network could be a useful tool for these explorations. Interdisciplinary studies that combine the multiplex network, econometric modeling, multiregional analysis, etc., also deserve a try since they may provide flexible and comprehensive solutions to these issues in the future.
Thirdly, to respond effectively to the supply chain challenges, there are short-term measures like stockpiling and price hedging and long-term approaches like recycling and circular strategy. In the future, more studies should be done to investigate supply chain diversification rather than diversification of one stage. In addition, more quantitative models those include the price factor, recycling, and technological breakthrough are worthy of attention due to rapid clean energy transition and the nature of metal scarcity. As for the recycling of critical metals, studies on the cost of recycling and its influencing factors are few but deserve academic investigations. Supply chain traceability supported by blockchain has also become an emerging frontier topic. It should be noted that there are trade-offs in every response approach, which deserves more studies in the future.
Statements
Author contributions
XS: conceptualization, methodology, formal analysis, writing—original draft and revision.
Funding
I’m thankful for the financial support from the National Natural Science Foundation of China (Grants No. 41901246).
Acknowledgments
The author is thankful to Prof. Xiangyun Gao at China University of Geosciences (Beijing) for his opinions and suggestions on the topics reviewed, to FZ for his handling of the article, and to the reviewers for their constructive comments that improved this article substantially.
Conflict of interest
The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Publisher’s note
All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.
Supplementary material
The Supplementary Material for this article can be found online at: https://www.frontiersin.org/articles/10.3389/fenrg.2022.957884/full#supplementary-material
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Summary
Keywords
supply chain, risk, clean energy, network, propagation, critical metals
Citation
Sun X (2022) Supply chain risks of critical metals: Sources, propagation, and responses. Front. Energy Res. 10:957884. doi: 10.3389/fenrg.2022.957884
Received
31 May 2022
Accepted
12 July 2022
Published
11 August 2022
Volume
10 - 2022
Edited by
Fu Zhao, Purdue University, United States
Reviewed by
Yanfang Zhang, Nanjing University of Aeronautics and Astronautics, China
Jinghan Di, Renmin University of China, China
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*Correspondence: Xiaoqi Sun, sunxiaoqi@szu.edu.cn
This article was submitted to Sustainable Energy Systems and Policies, a section of the journal Frontiers in Energy Research
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