June 2025 – Critical Minerals Development in the Global South

Cleantech supply chains remain highly-concentrated in China and are more fragile than commonly understood. President Trump’s aggressive and unpredictable trade policies threaten to compound deep-seated structural challenges facing China’s economy, including overreliance on exports, weak consumption, ideological dogma, financial opacity, and a property crisis. Consequent supply chain disruptions could lead to a climate technology shortage that ultimately delays global decarbonization efforts.

As the global demand for clean energy technologies rises, nickel — and other critical transition minerals — has become central to Indonesia’s economic strategy. The country is leveraging its significant nickel reserves, key for electric vehicle (EV) batteries and stainless-steel production, to secure a growing share of the global market. At a macroeconomic level, there is a rich debate on the role of mining and mineral value addition in a broader national strategy for economic diversification and broad-based economic development. Indonesia’s experience — both successes and challenges — can serve as a valuable model for other low- and middle-income mineral-producing countries as they develop and implement their own strategies to manage their transition minerals sustainably and equitably.

It is expected that a significant increase in the supply of dozens of so-called “critical minerals” will be needed in the coming decades, for uses ranging from defense to no- and low-carbon energy. Mineral endowment and production capacity have therefore become crucial assets for developing economies. Achieving this supply growth will depend on multiple stakeholders across governments and the private sector. Yet one set of the stakeholders — artisanal and small-scale mining (collectively referred to here as ASM) — tends to be overlooked and may prove to be crucial. The Payne institute is initiating a research study to consider how ASM can be leveraged most effectively to support the complementary ambitions of growing critical minerals supply and promoting social and economic development. The research will address the role ASM-supplied minerals have in current value chains. It will also explore the value of governmental oversight/regulation for practitioners, ASM’s relationships with large-scale mining (LSM) and the community, and industry economics.

To support policymaking on mineral value addition in mineral-producing countries, including providing a better understanding of the competitive landscape, the authors have surveyed the policies that governments have adopted in recent years. This article has focused on the copper, lithium and nickel value chains and identified 123 policies adopted by different countries up to April 2025 that target these value chains. Under current conditions, most low- and middle-income countries will struggle to meaningfully reduce the inequities in copper, lithium and nickel value chains. Despite the recent turn inwards of some high-income countries and China, they should provide support to low- and middle-income country efforts to develop mid- and downstream mineral-based industries, where this aligns with mineral producer countries’ priorities and economic circumstances.

Producer countries seeking to turn transition-critical mineral booms into lasting development outcomes must navigate market volatility, complexity, and uncertainty. The recent rise and crash of lithium prices underscore how quickly market realities can outpace expectations; in Brazil and Ghana, overoptimistic projections and plans have translated into deflated public revenues and challenged downstream ambitions. Given these challenges, the Jain Family Institute (JFI) is developing a suite of tools to reduce information asymmetries and support policymakers in assessing and managing market risks. JFI has begun with the Mineral Market Dashboard, which benchmarks varying projections for transition-critical mineral market growth and maps the distribution of historical production and current estimated resources and reserves to enable more grounded discussions on the scale and distribution of opportunity.

Indonesia now dominates the global supply of nickel, an essential raw material for lithium-ion batteries and stainless steel. Nickel production in the country has more than doubled in the last 4 years, fueled by the government’s “value chain” strategy that drove domestic development of smelting/refining capacity. The supply chain of raw nickel ore is characterized by a blend of large- and small-scale mining. The contribution of artisanal and small-scale mining (ASM) to Indonesian nickel production is unclear, although we believe it might be as much as 25% of recent production. This sizeable impact raises the imperative for Indonesia to understand ASM’s contribution to and the nature of domestic nickel production. This can set the basis for optimizing the economic benefit for local communities and the country as a whole.