Building on the findings of the preceding analysis, this chapter provides recommendations for strengthening traceability in lithium and nickel supply chains. Building on the experiences of Argentina, Chile, Indonesia and the Philippines, it identifies measures to identify where traceability is necessary and outlines risk-sensitive policy actions to improve traceability for critical mineral supply chains.
Enhancing Resilience Through Traceability
Insights from Lithium and Nickel Supply Chains in Latin America and Southeast Asia
Abstract
The findings of this report indicate significant differences in uptake of traceability, with many producing countries still in the early stages of adoption. This is apparent in lithium and nickel supply chains, where regulatory frameworks, data collection capacities and technological readiness vary. Furthermore, scaling traceability faces a range of obstacles but also a need for stronger political commitment and support by policymakers. Where traceability has been adopted and implemented, its success has generally emerged from a combination of regulatory and institutional foundations, market incentives and data collection and technological capacity. While policymakers increasingly view traceability as a cornerstone of more resilient and diverse mineral supply chains, it is a means to achieve specific policy objectives rather than an end in itself. Above all, end-to-end traceability is neither feasible nor desirable in many circumstances. Less intensive forms of supply chain transparency may be sufficient or more implementable.
The following recommendations set out approaches for policymakers for targeted, cost-effective traceability that contributes to achieving policy objectives while being compatible with market realities in mineral supply chains. Operationalising this approach may involve using different types of supply chain transparency at different supply chain segments. A hybrid approach can only work if different systems are interoperable. Where traceability is costly, operationally difficult to implement or politically charged, it makes sense to target traceability to a certain minimum share of materials with sensitive downstream uses rather than aiming for comprehensive implementation.
These recommendations are supplemented by a phased pilot approach applying them to lithium and nickel supply chains. These minerals provide a strong basis for assessing the utility and application of traceability due to their contrasting supply chain structures and levels of complexity and distinct operational and governance risks, among other qualities. The action plan, outlined in the executive summary, sequences these recommendations by feasibility, distinguishing near term measures from medium and longer-term actions that require new infrastructure or international co-ordination. The recommendations below provide the analytical basis and supporting evidence for each.
6.1.1. Diversification and geoeconomic goals
Economic security has become a central lens through which governments approach critical minerals. Recent initiatives such as FORGE, RESourceEU and the G7 Minerals Action Plan and Roadmap combine trade with trusted partners, public and blended finance, stockpiling, price floors, and exploration support, among other policy measures. Traceability underpins each of these instruments in distinct ways: it helps locate dependencies and vulnerabilities in the value chain; it verifies that finance, procurement and price support reach producers meeting agreed standards; and it facilitates procurement from trusted partner supply chains. Key data points include countries of origin or processing and entities in the supply chain that may raise national security concerns, with the depth of traceability calibrated to the sensitivity of the end-use.
To track the overall impact of resilience policies on supply chain diversification, trade data analysis may be largely sufficient. Several regulations in OECD members aiming to diversify critical mineral sourcing have supply chain transparency requirements but do not necessarily mandate full traceability. The EU Critical Raw Materials Act requires a supply chain risk assessment using supplier mapping for large companies in strategic sectors (European Union, 2024[1]). The US One Big Beautiful Bill Act (OBBBA) has provisions requiring companies to avoid sourcing or receiving material assistance from certain foreign entities, even many tiers away, to redeem tax credits for energy and advanced manufacturing (Internal Revenue Service, 2026[2]). OBBBA requires cascading certification or representations by supply chain actors to comply while United States defence procurement rules prohibit sourcing rare earth elements, tantalum or tungsten from China, Iran, the Democratic People’s Republic of Korea (DPRK) or Russia do not specify compliance modalities aside from requiring material tracking if contractors are otherwise unable to determine provenance (US GAO, 2024[3]).
The exact role of traceability in complying with these regulations may be in flux due to the latitude current rules provide. The number of supply chain tiers and the blending of minerals at different stages also call into question feasibility.
Policymakers aiming to strengthen supply chain transparency for diversification might consider the following measures to address geopolitical risks or upstream ownership that could affect security of supply (in order from lowest to highest effort commensurate with level of priority under each heading):
Understanding and addressing bilateral dependencies
Allow for mass balance and more flexible supply chain transparency approaches when they are sufficient for enabling more detailed information needed on dependencies than trade data alone, using resulting data to support probabilistic but credible findings on provenance;
Expand trade data analysis to go beyond binary mining and processing dependencies to account for multi-tiered mineral beneficiation and related intermediate products;
Strengthen disclosure of mineral country of origin by smelters and refiners in mineral supply chains through existing due diligence audit programmes, in addition to more detailed disclosure to regulators in cases in which dependencies are of highest concern or in which the comparison of trade analysis with due diligence disclosures reveals inconsistencies;
Use a recognised smelter approach, akin to the Smelter White List envisioned as part of the EU Conflict Minerals Regulation, to facilitate public procurement from smelters with more diversified sourcing; this approach could be accompanied by joint off-taking with private sector downstream companies to build leverage for more diversified sourcing.
Understanding and addressing the presence of specific entities of concern
Promote deeper supply chain mapping and risk assessments by companies in strategic sectors;
Work towards common expectations for ownership transparency and disclosure globally, with a focus on partner countries, to prevent complex ownership structures and shareholding arrangements obscuring the presence of entities of concern in critical mineral supply chains;
Establish full traceability, including identity preservation, for necessary volumes of the most national security-sensitive materials in supply chains resembling closed pipe sourcing models when other models fail to sufficiently address supply chain dependencies and vulnerabilities.
Other recommendations
Monitor how companies are complying with existing regulations aiming to enhance diversification, in addition to other regulations with higher expectations for traceability like the Uyghur Forced Labor Prevention Act and EU Batteries Regulation and apply successful use cases to policy measures aiming to enhance traceability in support of diversification;
Explore opportunities with commodity traders to establish secure, more resilient supply chains, leveraging their significantly higher use of identity preservation based on the survey;
Integrate traceability into price floor and stockpiling instruments among other trade-related measures. Price floor mechanisms, as well as national stockpiling programmes, should use traceability data to differentiate eligible material produced by trusted partners and responsible operations from material that would not advance the economic security objectives of the instrument. In most cases, mass balance supported by credible audit and origin disclosure will be sufficient; identity preservation should be applied to the most sensitive volumes. This ensures that price support flows to the supply chains it is designed to strengthen rather than generating windfalls for non-compliant production.
6.1.2. Responsible mineral supply chains
OECD standards on responsible business conduct call for risk-based due diligence. This means that the measures that an enterprise takes to conduct due diligence should be commensurate to the severity and likelihood of the adverse impact. When the likelihood and severity of an adverse impact is high, then due diligence should be more extensive. This includes measures to establish supply chain transparency. More detailed information on provenance, geographic path, and chain of custody puts companies in the supply chain in a better position to assess and respond to specific risks to which they may be linked.
The OECD Minerals Guidance translates this approach to the minerals sector through an expectation for downstream companies to map their supply chains to smelters and refiners, where the supply chain tapers, and for smelters and refiners to institute traceability or chain of custody systems if they have identified higher risks in their supply chains. RBC standards therefore provide a clear framework for targeting traceability.
Regulations on responsible business conduct in the minerals sector, like those for diversification, often require a level of supply chain transparency that involves traceability in some segments or circumstances, but do not involve end-to-end traceability. Only the EU Batteries Regulation (EUBR) and the US Uyghur Forced Labor Prevention Act (UFLPA) conceivably require companies to engage in near end-to-end traceability. While EUBR compliance modalities are in development, metals shipments detained under UFLPA have progressively fallen from a high of USD 18 million to negligible amounts. It is unclear how much this trend represents traceability implementation, sourcing that avoids exposure to forced labour risks altogether or changes in enforcement (US CBP, 2026[4]).
Site visits reinforced where leverage on RBC implementation is most effective. In Indonesia, stakeholders across government, industry and civil society consistently pointed to smelter joint ventures involving publicly listed partners as conducting stronger stakeholder engagement than purely private, closely-held operations, suggesting that exposure to market and investor scrutiny is an important transmission mechanism for RBC expectations. In Argentina and Chile, lithium operators noted that demand for traceability has come primarily from customers based in jurisdictions accounting for a relatively small share of global lithium demand, and that scaling uptake will depend either on broader regulatory alignment across importing markets or on clearer market signals.
In a context of inconsistent coverage, policymakers aiming to strengthen RBC in mineral supply chains, including to de-risk investment, may consider the following policy measures:
Support increased interoperability and harmonisation across RBC and traceability initiatives
Interoperability was cited most frequently as the greatest obstacle to traceability. Nearly 50% of survey respondents made regulatory coherence their first preference for support measures to scale traceability while another 50% made industry-wide data infrastructure their first or second preference;
While mandates that are incompatible with complex supply chains and mineral blending may be counterproductive, there is scope for a smart mix of policies and the use of common approaches on interoperability and recognition between audit schemes, provided that they meet credibility and fitness expectations (OECD, Forthcoming[5]);
Develop a roadmap with practitioners for data interoperability to consolidate emerging industry efforts at developing channels for secure communication of sensitive data (RBA, 2025[6])
When data interoperability efforts reach an impasse, consider prioritising the most sensitive materials and supply chains with like-minded countries, potentially through a trusted platform.
Deepen engagement with the midstream: traders, commodity exchanges, smelters, and refiners
Traders report the highest use of identity preservation, collecting the most RBC risk information through traceability, the most interest in using multi-stakeholder and industry initiatives with supply chain transparency elements to access markets (>90%) and finance (>50%) but, perhaps counter-intuitively, also report more obstacles to traceability due to cost and business confidentiality concerns. This suggests that traders have experience in scaling traceability under the right conditions. Governments can tap into traders’ expertise and influence by teaming on sourcing for defence or other public procurement needs;
Commodity exchanges help operationalise shared expectations for traceability and due diligence. This is limited though since only one major exchange sets out rules and the trading of nickel sulphate or lithium hydroxide mostly happens off-exchange via contracts. Governments can give priority to exchanges implementing rules on supply chain transparency to support initiatives on resilience like stockpiling and price floors, among other related measures, and can support research on extending transparency rules to futures contracts better suited to trading in intermediate forms of metals and minerals.
The survey highlighted smelters and refiners’ role as due diligence control points, with levels of traceability uptake somewhat lagging traders but still high. Governments can strengthen due diligence and traceability implementation by harmonising high expectations for disclosure by smelters and refiners and the multi-stakeholder and industry initiatives auditing them within the framework of existing regulations.
Leverage bilateral agreements on critical minerals for transparency and de-risking investment
While full traceability may not always be feasible or cost-effective, governments can integrate RBC standards into bilateral critical mineral agreements to drive supply chain transparency and where relevant traceability (i.e. where the risks warrant it), and help de-risk investment accordingly.
6.1.3. Circularity and resource efficiency
Enhanced traceability enables policymakers and companies to track material flows and their associated environmental impacts throughout the product lifecycle. It helps identify opportunities for reducing those impacts and optimise resource efficiency, and support verification of recycled content claims, thereby facilitating reuse and recycling. The importance of such capabilities is growing rapidly. In addition to regulatory requirements for ethical sourcing and transparency, consumers, and investors increasingly expect strong due diligence practices and detailed information on material origins as well as its associated environmental impacts. Traceability is a central element of these efforts.
The site visits highlighted that, although circularity and resource efficiency in mineral supply chains are on the policy agenda, implementation remains at an early stage. The limited uptake reflects broader structural challenges in waste management and recycling that extend well beyond mineral supply chains, as well as the lack of lithium-ion battery recycling infrastructure. As recycling markets in these countries mature and downstream mineral buyers face increasingly stringent circularity requirements, such as recycled content requirements or information obligations linked to digital product passports for products placed on the EU market, the inclusion of mineral producers in traceability frameworks will become progressively more important.
This report proposes three policy levers to strengthen mineral supply chain traceability for circularity and improved resource efficiency:
Deepen the inclusion of smelters, refiners and recyclers in multi-stakeholder and industry initiatives and transparency frameworks
Midstream actors in mineral supply chains, such as smelters, refineries, and metal chemical processing plants, occupy a critical position and are often identified as the chokepoint of mineral supply chains where traceability and due diligence efforts can be most effective. Compared with upstream mining, midstream operations are far more geographically concentrated and involve a smaller number of companies. Smelters and refiners often act as the junction between primary and secondary mineral supply chains as they aggregate materials sourced from multiple origins and transform these. These characteristics make midstream actors essential for strengthening traceability for circularity and reduced environmental footprint across mineral supply chains;
Recyclers can also be more effectively integrated into transparency frameworks as mineral suppliers, given the growing importance of secondary minerals markets for overall mineral supply. This is particularly important for critical minerals with emerging recycling markets, such as lithium and battery grade nickel, as large volumes of EVs’ lithium-ion batteries are expected to reach their end-of-life in the coming decade and battery recyclers become key suppliers of battery minerals. Future traceability efforts can build on existing collaboration across the supply chain between recyclers and more upstream actors that aims to optimise the collection and use of recycling feedstock.
Strengthen traceability of secondary mineral flows through recycled content requirements
As policies promoting the recycling of critical minerals continue to expand globally, it will be increasingly important to complement them with measures that strengthen demand for secondary minerals, ensuring that recycled minerals re-enter the economy. Broader adoption of recycled content requirements could not only incentivise traceability, but also help build confidence in secondary minerals and support their market uptake, further encouraging investment in recycling;
While recycled content requirements create new challenges for implementing traceability, especially regarding the verification of recycled content claims, companies are beginning to apply practical and simple methods. These include collecting, recording and sharing information with direct customers and suppliers, and analysing paper trail evidence to verify claims. Such methods could be further promoted where traceability is unfeasible and costs are prohibitive;
The EU is leading efforts to introduce recycled content requirements for certain critical minerals. Under the EU Battery Regulation, manufacturers will need to document the share of recycled content for key battery metals, namely lead, lithium, nickel, and cobalt (expected from August 2028). Similarly, the EU Critical Raw Materials Act requires disclosure of recycled content in permanent magnets, reinforcing downstream transparency obligations. Already one third of respondents to the survey, particularly those already tracing materials and those active in downstream stages, report tracing the recycled content of materials in their products and feedstock.
Support for a wider application of digital product passports where appropriate
For products with both high environmental impacts and high circularity potential, digital product passports (DPP) can play a key role in supporting more responsible, transparent and circular production chains, ensuring that relevant information is transmitted to the end of the value chain;
DPP are also warranted in cases where a given product is exposed to opaque supply chain conditions that contribute to operational and governance risks, requires inputs from multiple minerals that complicates traceability efforts, and high demand growth risks embedding unaddressed operational and governance risks into the supply chain;
Introduced so far in the EU, other governments may consider adopting DPP requirements, particularly for batteries, a key product which contains critical minerals and faces rapidly growing global demand. Expanding DPP schemes beyond the EU could help harmonise global data practices, reduce information gaps, and support more responsible and resilient battery supply chains;
In particular, the battery industry is encouraged to participate actively in government- and/ or industry-led battery passport initiatives, not only to stay ahead of regulatory requirements but also to demonstrate strong commitment to good operational, governance and traceability practices. This could be done through battery passport pilots or other existing initiatives. For example, emerging initiatives, such as the joint UNECE–ISO work on digital product passports, may also help address key challenges related to data standardisation and interoperability that are currently hindering effective traceability;
Where feasibility and resource constraints limit the adoption of DPP, governments and companies may adopt alternative supply chain transparency measures, strengthen product- and company-level data collection and report as well as promote eco-labelling and environmental certification schemes that all facilitate information sharing across the supply chain.
6.1.4. Local development in mining regions
Governments play a critical role in ensuring that mining activities generate lasting benefits for host regions and communities while minimising social and environmental impacts. Achieving this requires governance approaches that are sensitive to local contexts, inclusive of affected stakeholders, and supported by transparent and reliable information. To do this, governments can strengthen localised mining strategies and improve stakeholder participation in impact assessment processes as well as enhance the quality and accessibility of data on extractive activities.
Embedding traceability and transparency systems across the mining value chain can further support these efforts by ensuring that data on production, environmental impacts, and benefit-sharing is consistently tracked to specific projects and locations, and passed on to downstream actors in the supply chain. This can improve understanding of mining projects’ contribution to local economies to calibrate public services accordingly, align mining projects with broader regional development objectives, and increase community acceptance of mining projects.
Tailor mining standards to cultural and local contexts for improved local and host country benefits.
Subnational governments can tailor expectations on the economic, social, and environmental impacts and benefits from mining to suit their local contexts. This can assist mining companies, especially those new to specific regions in navigating social acceptance as well as mitigate negative externalities and ensure local benefits are captured where possible.
Integrating expectations from these locally tailored frameworks into traceability systems can help ensure that commitments made at the regional level such as local procurement, employment, or environmental safeguards are monitored and verifiable in practice. Some regions have implemented mining strategies to guide the operational and governance performance of projects and to improve interactions with communities and impacts on the environment.
For instance, the development of the Regional Mining Strategy of Antofagasta Chile was to better link mining with long-term development as many challenges from mining persist across the region. The region’s economy heavily relies on mining, contributing to 72% of its GDP in 2023 (Chapter 3). Mining strategies of subnational governments can also help co-ordinate community programmes led by mining companies (such as public infrastructure investments or health/education initiatives) to ensure alignment with local values and to avoid duplication of efforts among companies.
In la Puna, Argentina the provincial government mining development strategy helps to leverage mining companies ‘activities for local development focusing on supporting local skills and linking local suppliers to mining projects (Chapter 3). Traceability and transparency tools can support this co-ordination by tracking contributions, investments, and outcomes across actors, helping ensure that benefits are equitably distributed and aligned with local priorities. This can include multi-actor government structures to identify common needs and define action plans, such as the governance structure for the regional mining strategy of Antofagasta, Chile, public-private co-ordination platforms or municipal mining plans with a dedicated contact point (e.g. Sodankylä in Finland).
Increase stakeholder engagement in the impact assessment processes to include local communities and regional governments.
Effective impact assessments require broad and meaningful stakeholder participation, extending beyond immediate actors in the mining and processing sectors. In many countries, legal frameworks may formally mandate consultation, yet the depth and quality of engagement often remain limited. Affected communities, particularly those living in or near extraction areas, typically possess intimate knowledge of local environmental conditions, socioeconomic vulnerabilities, and cultural dimensions that external experts or operators may overlook. Without their voices meaningfully integrated and being provided adequate resources to participate, assessments risk failing to capture the true scale and distribution of project impacts.
In la Puna, Argentina, rapid growth in mining has increased pressures on regional government capacity to handle planning and monitoring, often without sufficient resources or training of public sector staff. Strengthening engagement requires investing in participatory mechanisms that both provide a platform for communities to voice their perspectives and exercise meaningful influence over the assessment process and resulting decisions. Traceability systems can reinforce these processes by providing communities with access to verifiable, site-specific information on environmental performance, resource flows, and compliance with agreed standards.
Governments and industry actors also stand to benefit from improved engagement. Early and continuous communication can reduce conflict, enhance trust, and surface concerns before they become sources of opposition or litigation. It can also lead to better‑designed mitigation strategies, more culturally appropriate compensation arrangements, and improved long‑term project acceptance. Achieving this in practice requires overcoming persistent obstacles including limited local capacity to engage with technical data, imbalances in negotiating power, lack of independent facilitation, and, in some contexts, weak enforcement of procedural requirements. Addressing these challenges calls for stronger institutional oversight, clearer minimum engagement standards, and support mechanisms, such as community advisory groups and capacity building to create a level playing field between communities, industry, and government.
Ultimately, improved stakeholder engagement helps align extractive projects with broader development and environmental‑protection objectives. It enables a more democratic and transparent process, where affected groups can meaningfully shape project outcomes rather than merely being consulted as a formality. This not only enhances procedural fairness but also contributes to more resilient and socially legitimate decisions.
Improve the comprehensiveness, disaggregation, accessibility, and reliability of the disclosed data on extractive activities
Robust transparency is a cornerstone of responsible resource governance, yet many countries struggle to provide sufficient data. Incomplete reporting, whether about licensing, production volumes, revenue flows, environmental impacts, or community benefits, limits the ability to assess whether resource extraction delivers public value. In la Puna, Argentina it is observed that local community engagement and related reporting from mining companies is not always visible or adequately integrated into local policy making, creating missed opportunities in improving monitoring the impact of mining (Chapter 3). Similarly, insufficiently disaggregated data (for example, aggregated by region instead of project, or by company instead of contract) makes it difficult to identify site-specific risks or distributional inequities. Improving reporting frameworks therefore means ensuring that information covers the full local value chain and is made available at the appropriate level of detail. Traceability systems can be a key enabler of such improvements, especially when they link data across different supply chain stages, ensuring consistency and comparability over time and across actors.
Accessibility is another critical dimension. Even where governments publish data, it may remain difficult to interpret due to technical formatting, or complex data structures. User‑friendly open‑data portals, standardised templates, and proactive dissemination practices can greatly enhance the usability of information. Reliability, consistency, regular updates, and independent verification are equally important.
Enhanced transparency supports not only public accountability but also better policy design. High‑quality data enables governments to identify revenue leakages, understand environmental impacts, compare contractual performance, and anticipate socio‑economic risks associated with extraction. Building comprehensive and credible disclosure systems strengthens institutional credibility, helps prevent corruption, improves local community perceptions surrounding projects and provides the informational foundation needed for evidence‑based decision‑making.
6.1.5. Robust fiscal policy
Across all stages of the mining value chain, countries can mobilise domestic revenues by incentivising the adoption of traceability systems by mining companies while simultaneously establishing governance infrastructure capable of accessing, verifying, and integrating operational data. International standards developed under the OECD/G20 BEPS Project provide an important legal foundation which, when applied alongside data generated through traceability systems, can help curb BEPS risks in the mining sector. In particular, BEPS Actions 4 (Limitation on Interest Deductions), 8-10 (Aligning Transfer Pricing Outcomes with Value Creation) and 13 (Transfer Pricing Documentation), together with ring-fencing provisions and evidence-based tax incentive frameworks, can reinforce this governance architecture. Traceability systems complement these legal tools by linking operational data, with the financial and tax information reported by MNEs, strengthening transparency and enabling tax administrations to translate this information into effective compliance and enforcement. Where reliable private systems are not available, governments may also consider developing interoperable state-led traceability platforms. Legal and institutional frameworks should aim to address key fiscal risks and enhance traceability systems across the mining value chain through the following measures:
Addressing undervaluation of production volumes through independent production verification mechanisms: Governments should establish independent production verification mechanisms, including mandatory third-party calibration and periodic audits of measurement systems. Joint verification protocols between mining regulators and tax authorities, supported by technology-enabled monitoring tools such as smart meters, satellite imagery, and drone-based surveys, reduce reliance on company self-reporting and enable systematic cross-checking across agencies. Where full traceability systems are not implemented, supply chain mapping can help identify key control points in the production and processing chain where independent verification of minerals can be prioritised, such as concentrators, smelters, and export terminals with relevant examples being Indonesia’s SIMBARA and Zambia’s MOSES.
Addressing undervaluation of mineral quality and grade through mandatory independent assay and sampling regimes: Independent assay and sampling rules should require accredited laboratories and split-sampling procedures involving company, state, and referee samples. Reference pricing frameworks should incorporate transparent quality adjustments and penalty matrices to ensure the mineral sold reflects market prices. In the absence of a full traceability system, chain of custody mechanisms can help record the sequence of actors handling the mineral and identify where sampling, blending, or processing occurred along the supply chain.
Addressing inflated freight, insurance, and intra-group service charges through strengthened transparency: Governments should introduce benchmarking and review mechanisms to ensure costs remain within appropriate ranges based on comparable routes, vessel type and services. Separate disclosure requirements for freight and insurance arrangements, together with benefit tests for feasibility, technical, and management services, help prevent duplicative or non-value-adding charges. In the absence of a full traceability system, chain of custody documentation and shipment records can still provide visibility over the actual routes, operators, and service providers involved in mineral transport, allowing authorities to benchmark freight and insurance costs against comparable market conditions.
Closing the mine to smelter traceability gap: Systems that track mineral flows for revenue assurance purposes, but do not reconcile mine-level production data with smelter sourcing, cannot detect the mixing of illegally mined material into formal supply chains, nor serve as credible due diligence instruments for downstream buyers or exporting plus importing-country regulators. Extending SIMBARA-type systems to mandate smelter intake records, linked to upstream mine production data, would represent a significant step toward closing this gap. Governments without full traceability systems should consider requiring standalone smelters to maintain and disclose sourcing registers.
Addressing excessive interest deductions and thin capitalisation through enhanced transparency over intra group financing: Governments should enhance transparency over corporate governance, ownership and financing structures. Oversight of intra-group financing arrangements, supported by profit-based interest limitation rules and disclosure obligations, reduces opportunities for base erosion through excessive interest deductions. Where a full traceability system does not exist, mapping the entities involved in the supply chain can help tax administrations identify related-party lenders, infrastructure entities, and service providers that may be used to shift profits through intra-group financing arrangements.
Review tax incentive regimes as a potential tool to promote traceability systems. Tax incentives should only be used when their expected benefits outweigh their costs, they are justified (e.g. when there is a market failure and no alternative policy approach) and are aligned with national priorities. Preference should be given to incentives tied to expenditures (e.g. investment, employment) with clear and careful targeting. Their implementation should support transparency, certainty and simplicity and their costs and benefits carefully evaluated. Traceability systems can support this process by providing reliable operational data that enables governments to assess whether tax incentives are generating the intended economic activity and value addition within their jurisdiction.
Ringfencing mining operations: traceability systems or the chain of custody, where the former are not available, can support the effective enforcement of ring-fencing regimes by enabling governments to monitor production volumes, mineral quality and sales from individual mining projects. By linking operational data to project-level financial reporting, authorities can ensure that revenues, costs and taxable profits are correctly attributed to each mine or project. Many resource rich countries have implemented ringfencing regimes such as Argentina, Papua New Guinea, South Africa and Zambia. Applying ring-fencing, including on a mine-by-mine basis, therefore creates a strong incentive for companies to maintain accurate and robust records.
Lithium and nickel can serve as test cases for a targeted approach to traceability. Supply chain structure and complexity, the significance of RBC risks in the supply chain, potential benefits for producing countries, and trade dependencies will help determine the need and usefulness for traceability or other transparency measures.
The recommendations below translate the general policy measures set out in section 6.1 into specific actions for lithium and nickel, drawing on the supply chain analysis in Chapters 3 and 4.
6.2.1. Lithium sourcing from Argentina and Chile
Trade dependencies and entities of concern: Existing trade data and supplier mapping highlight significant dependencies for processing in China. Continued monitoring can help assess the effects of diversification efforts, like public support for processing in other jurisdictions. Enhanced ownership transparency, through registries or other forms of disclosure, however, could help address the need for information of foreign entities of concern in the upstream supply chain. For defence sector-linked energy storage procurement, a mass balance approach could be piloted to ensure specific suppliers track overall diversification of their own sourcing. If ineffective in achieving sufficient diversification, identity preservation could be mandated for the most sensitive procurement needs to ensure sourcing bypasses entities of concern. Where countries introduce price floors or preferential procurement for lithium, traceability data (at minimum on country of origin, smelter/refiner identity and beneficial ownership) should determine eligibility, so that fiscal support flows to diversified and responsible supply.
RBC risks and host country benefits: Lithium mining in Argentina and Chile is highly formal, but is linked to risks spanning environment and stakeholder engagement. Most companies can use due diligence and supply chain mapping to identify and mitigate such risks, including through using leverage on suppliers and, as relevant, co-operate in the provision of remedy. Stronger transparency on the physical evolution of mineral products, potentially through a mix of disclosures and regulatory spot checks involving material testing, could help address BEPS risks, particularly under-valuing the mineral. Besides supporting tax authorities by addressing information asymmetry in enforcement, this would enable stronger due diligence by customers regarding due payment of taxes by suppliers. As policymakers expand related efforts beyond these focus regions, more exhaustive traceability including all four constituent data points, may be more relevant but also more challenging to roll out in informal settings like emerging artisanal and small-scale sources in Africa. This can, however, build on existing public chain of custody systems and due diligence reporting requirements in Central and Southern Africa. Site visits in Argentina and Chile indicated that operators view traceability demand as coming primarily from jurisdictions that represent a relatively small share of global lithium demand. Uptake is likely to remain limited unless accompanied by regulatory alignment across larger importing markets or clearer market signals, reinforcing the case for co-ordinated, multi-jurisdiction approaches rather than unilateral requirements.
6.2.2. Nickel sourcing from Indonesia and the Philippines
The nickel supply chain in Indonesia and the Philippines is somewhat more complex, including small-scale sources feeding into in-country smelting; this context warrants efforts to enhance supply chain transparency. The combination of existing market and regulatory requirements for due diligence, audit and certification initiatives, and an in-country traceability system (in Indonesia) that cover nickel, provide a strong basis to address outstanding gaps.
Policymakers could strengthen and complement existing systems with some of the following measures with relevance to meeting both resilience and RBC policy objectives. Site visits in Morowali, Indonesia, highlighted that complex ownership structures and limited minority-shareholder leverage within smelter joint ventures are practical constraints on due diligence that formal RBC standards alone cannot fully address. Beneficial ownership transparency should therefore be understood not only as a governance recommendation, but as a precondition for the effective implementation of the other nickel recommendations set out below.
Stronger beneficial ownership transparency: Like the lithium supply chain, this would help downstream companies that source nickel better understand potential entities of concern in the supply chain, but also help mitigate integrity risks linked to the involvement of politically exposed persons.
Leverage existing due diligence and traceability requirements: Existing requirements and audit programmes for nickel relevant to traceability and due diligence span regulations in net importers, the London Metal Exchange, site certification and supply chain audits, and a national traceability system. Prevailing enforcement challenges and a lack of interoperability between these systems compromise their usefulness and leave transparency gaps that affect important parts of the sector, including for battery-grade nickel. Harmonised expectations that leverage the complementarity of existing requirements given how they are situated at different parts of the supply chain can help address such gaps while avoiding duplication. As for lithium, increased transparency on physical evolution of materials, potentially as part of national traceability systems, could help address BEPS risks.
Focussing prospective more intensive traceability investments, including for identity preservation in cases of acute security of supply concerns, may be most relevant to nickel used in superalloys for the defence sector.
A targeted approach to traceability, starting with lithium and nickel, can help reach policy objectives on resilience, responsible business conduct and development in countries along the value chain while being in sync with expectations for regulatory simplification and burden reduction on companies. Co-operation among the G7, OECD, IEA and trade partners is poised to serve as a platform, including through multi-stakeholder engagement, to operationalise these recommendations.
This report was prepared based on qualitative research that included a literature review, desk-based research, remote semi-structured interviews, and primary data collected through a dedicated survey and site visits.
The survey was designed and run jointly by the OECD and the IEA in late 2025 through early 2026, with respective analyses reflecting the mandates of each organisation. Designed specifically to inform this report, the objective was to gather information from industry actors on the scope and design of traceability systems, as well as associated costs, barriers, drivers and perceived benefits. The target population comprised companies operating at different stages of mineral supply chains, including mining, smelting and refining, transport, trading, manufacturing, and recycling.
The survey was distributed to approximately 500 companies and industry networks across minerals value chains and a total of 90 valid responses were received. The questionnaire included 39 questions and was made available in four languages: English, Spanish, Bahasa Indonesian and Chinese. Most questions were single or multiple-choice questions, while selected questions included ranking exercises and open text fields. The OECD and IEA shared the questionnaire directly with companies and industry associations and encouraged recipients to forward it to relevant suppliers and business partners, including upstream actors. Participation was voluntary and respondents could choose to remain anonymous. Only completed survey submissions were included in the final sample, which was screened for internal consistency and to identify potential duplicate submissions.
Percentages are calculated based on the number of valid responses to each question. Some questions received fewer than 90 responses, as indicated in relevant figure notes. Survey results may differ slightly between the IEA and OECD publications, as the OECD report incorporates additional survey submissions received after January 2026. Given the voluntary nature of participation and reliance on self-reported data, results should not be interpreted as statistically representative of the global minerals sector and may be subject to reporting bias, reflecting companies that were willing and able to respond within the timeframe. Self-reported data are difficult to independently verify, particularly in areas such as compliance, environmental, operational or governance performance. Respondents span the full range of supply chain segments and mineral exposures and report geographically diversified operations, sourcing and sales activities. Miners, smelters/refiners and manufacturers account for the largest share of respondents (Annex Figure 6.A.1 Panel A). Around 36% of respondents operate across multiple supply chain segments. Companies also reported activity across multiple minerals, most frequently copper, nickel and lithium (Annex Figure 6.A.1 Panel B). Geographically, respondents reported operations, sourcing and sales across all major regions. Asia, Europe and North America were most frequently cited across these dimensions.
Miners, smelters/refiners, and manufacturers account for the largest share of respondents, with copper, nickel and lithium most frequently cited as most relevant to operations.
Note: This figure presents summary statistics based on survey Question 2 (“How would you describe your company?”) and Question 3 (“Which minerals are most relevant to your operations? (Select all that apply)”). Percentages indicate the share of respondents selecting each option. As categories are not mutually exclusive, shares may sum to more than 100%, and results should be interpreted as reflecting overlapping supply chain functions and multi-mineral operations within the sample. Overall, 36% of respondents report operating across multiple supply chain segments. Integration is particularly pronounced among recyclers (n = 9) and transporters (n = 4), all of which reported additional supply chain functions, as well as midstream actors such as traders (n = 12) and smelters/refiners (n = 36), where 75% operate across more than one segment. In addition, 64% of mineral respondents indicate activities across two or more minerals. Multi-mineral exposure is highest for aluminium, silver, graphite and rare earth elements (100% of respondents active in these minerals also report other minerals), and lowest for lithium (73%). Based on 90 valid responses, collected between late 2025 and early 2026. Please refer to the methodology section for further detail.
Source: OECD-IEA Survey on Traceability in Critical Mineral Supply Chains
In June 2025, the OECD conducted site visits to Indonesia to examine responsible business conduct practices linked to nickel production and smelting, and related impacts. The visits included semi-structured interviews and direct observation in Jakarta and the Regency of Morowali in Sulawesi. Stakeholders interviewed included representatives from business operators at mining, smelting and manufacturers, consultants, multi-stakeholder and industry initiatives on RBC, several ministries and government departments, international co-operation agencies, civil society organisations working on environment, human rights, and Indigenous Peoples, local community leaders, trade unions and former industrial park workers. In September 2025, a further OECD mission to Jakarta provided an opportunity for high-level engagement on critical minerals with senior Indonesian government officials, the private sector and other stakeholders. Discussions reinforced the importance of RBC standards, traceability, responsible investment and transparent fiscal frameworks to Indonesia’s critical minerals strategy. The mission highlighted the importance of alignment with international standards such as the OECD Due Diligence Guidance as a precondition for sustained market access and high-quality investment.
In October 2025, the OECD conducted site visits to Argentina and Chile to examine lithium supply chain governance and traceability practices in two of the world's most significant producing countries. In Argentina, the visit included the largest lithium production site in the country, as well as meetings with an OECD-based company in the early stages of initiating lithium production and processing operations in Argentina. Engagement with subnational and community stakeholders formed a central part of the programme, including meetings with the Salta Secretary of Mines and with representatives of Indigenous Peoples living in the Puna region. In Chile, the visit encompassed the largest lithium production facility in the country alongside a broad programme of stakeholder engagement. Meetings were held with local government officials, including the Governor of Antofagasta, the Mayors of Antofagasta and San Pedro de Atacama, and other local representatives, as well as with representatives of Indigenous Peoples' communities. At the national level, the visit included meetings with the Minister of Mines, senior representatives of the top lithium and copper producing companies operating in Chile, and representatives of a number of state-owned enterprises (SOEs).
References
[1] European Union (2024), Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/17, https://eur-lex.europa.eu/eli/reg/2024/1252/oj/eng.
[2] Internal Revenue Service (2026), Guidance to Apply Interim Safe Harbors for Purposes of Determining a Taxpayer’s, https://www.irs.gov/pub/irs-drop/n-26-15.pdf.
[5] OECD (Forthcoming), Fitness framework for sustainability initiatives supporting due diligence.
[6] RBA (2025), British Columbia, Catena-X, and the Responsible Business Alliance Join Hands for Interoperability Testing of the UN Transparency Protocol, https://www.responsiblebusiness.org/news/untp/.
[4] US CBP (2026), Uyghur Forced Labor Prevention Act Statistics, https://www.cbp.gov/newsroom/stats/trade/uyghur-forced-labor-prevention-act-statistics.
[3] US GAO (2024), Critical Materials: Action Needed to Implement Requirements that Reduce Supply Chain Risks, https://www.gao.gov/assets/gao-24-107176.pdf.