This chapter presents an overview of the growing global demand for critical minerals, the resulting pressures on highly concentrated supply chains and recent policy efforts to secure access to these minerals. It highlights the importance of responsible business conduct standards and traceability systems in managing operational and governance risks and their potential to contribute to economic security. The section also summarises the key findings and policy recommendations of the report.
Enhancing Resilience Through Traceability
Insights from Lithium and Nickel Supply Chains in Latin America and Southeast Asia
Abstract
This report was developed as part of the OECD Critical Minerals Initiative to provide a more systematic evaluation of approaches to traceability and how it can contribute to the management of operational and governance risks in critical mineral supply chains. In this work, traceability is defined as the collection of reliable data on origin, geographic path, the sequence of entities that held ownership or control over the product and its physical evolution (IEA-OECD, 2025[1]). The report takes a global perspective with case studies on lithium in Latin America and nickel in Southeast Asia, namely in Argentina, Chile, Indonesia and the Philippines. Drawing on survey data collected as part of this study, stakeholder interviews and site visits (see Annex 1.A. for methodology), this report analyses how responsible business conduct (RBC) and traceability initiatives are being implemented in practice across the entire mineral supply chain, including production, processing, manufacturing and recycling. Ultimately, this report aims to better understand the incentives, constraints, and operational realities shaping responsible production methods and traceability adoption across different segments of the supply chain.
Chapters 2 through 4 provide the evidence base, Chapter 5 analyses enablers and obstacles across the full survey sample, and Chapter 6 sets out phased policy recommendations with mineral-specific application for lithium and nickel.
Sharp increases in global demand for critical minerals are being driven by expanding industries such as advanced manufacturing, including of electric vehicles (EVs), digital technologies and clean energy. It will be necessary to increase production of critical minerals such as cobalt, copper, graphite, lithium, manganese, nickel and rare earths, which are essential inputs for electronics, batteries, power systems, defence and other vital products. The scale is considerable: the current mine project pipeline is expected to fall short by more than 30% of the required supply to meet net-zero pathways by 2040 (IEA, 2025[2]). Increasingly, reliable access to critical minerals is pivotal to maintaining overall economic security and competitiveness, as well as energy security.
Production and processing of many critical minerals remain geographically concentrated, including in jurisdictions with challenging operational environments and perceived governance risks, which in turn poses risks for energy and economic security (IRENA, 2023[3]). The average market share of the top three mining countries for key energy minerals rose from 73% in 2020 to 77% in 2024 (IEA, 2025[2]). Concentration is even more pronounced in processing, with the People’s Republic of China (hereafter “China”) expected to supply more than 60% of refined lithium and cobalt and around 80% of battery-grade graphite and rare earth elements by 2035 (IEA, 2025[2]). Supply chains are also increasingly affected by trade restrictions, as export control measures on industrial raw materials1 have increased more than five-fold over the past decade, with around 14% of global exports now affected, potentially undermining global supply resilience (OECD, 2025[4]). These structural features make critical mineral supply chains vulnerable to supply disruptions, underscoring the importance of securing reliable and responsibly sourced minerals.
Despite soaring demand projections, investment into critical mineral mining and processing is lagging behind what is needed to meet expected consumption. Meeting the copper, nickel, lithium, and cobalt demand alone is estimated to require USD 500 billion in additional capital investment for mining between 2025 and 2040 (IEA, 2025[2]; Scheyder, 2024[5]). This underinvestment reflects long project lead times, volatile commodity prices and reputational risk that characterise many mining and processing operations. Investment into exploration activity plateaued in 2024, before dropping 43% year-over-year in 2025 due to oversupply, weakening prices and tighter financing conditions (S&P Global, 2026[6]). Compounded by declining ore grades, this underinvestment risks contributing to production shortfalls in the future.
As such, increasing and diversifying investment is imperative, but requires comprehensive measures to de-risk investment. This will entail taking steps to address the operational and governance risks facing projects along critical mineral supply chains, such as aligning activity with OECD guidance on due diligence and responsible business conduct, as well as enhancing circularity and secondary material production.
Governments have taken increasingly assertive action to develop more resilient mineral supply chains. At the national level, countries have sought to increase domestic production through streamlined permitting and regulatory processes, expanding public financing and supporting domestic processing and recycling capacity. Many have also introduced due diligence, disclosure and supply chain traceability requirements to identify and minimise exposure to operational and governance risks that can translate into investment delays, supply disruptions and reputational costs for downstream buyers, and align mineral sourcing with broader industrial and economic security objectives.
These economic security measures have also taken the form of collective approaches such as the European Union’s Critical Raw Materials Act, the Forum on Resource Geostrategic Engagement (FORGE), as well as the 2025 G7 Critical Minerals Action Plan and Roadmap to Promote Standards-based Markets for Critical Minerals. The G7 has centred its response to these challenges around a set of high-level frameworks designed to improve security of supply, diversify value chains, and promote high operational and governance performance. These efforts emerged from the initial G7 Five-Point Plan for Critical Minerals Security that was developed during the Japanese G7 presidency. This was reaffirmed and operationalised by subsequent Italian, Canadian and French G7 presidencies. On the whole, G7 efforts have aimed to operationalise commitments to promote diversified and resilient supply chains, support recycling and circularity, and encourage greater innovation and mineral substitution. They identify implementation of the OECD Due Diligence Guidance for Responsible Mineral Supply Chains (OECD Minerals Guidance) as one of the criteria to support the development of credible, standards-based markets for critical minerals (G7, 2025[7]; G7, 2025[8]).
Most of these economic security measures share a reliance on data as a common operational requirement. Trade-related measures such as price floors require verified information on origin and production conditions to ensure that price support reaches responsible producers in partner countries rather than generating windfalls for non-compliant material. Stockpiling programmes need to know the provenance, grade and ownership history of acquired material. Preferential procurement under bilateral mineral agreements or defence sourcing rules requires verified chain of custody to exclude entities of concern. Without sufficient traceability, these instruments risk being either unenforceable or indiscriminate.
Lithium and nickel sit at the centre of this report's analysis. Both are essential inputs for EV batteries and, in the case of nickel, for stainless steel and defence applications. Both have been identified by OECD Members and across G7 frameworks as priorities for investment, diversification and governance improvement. Several OECD member countries have pursued bilateral agreements and strategic partnerships with key producing countries in Latin America and Southeast Asia, covering trade, investment and sustainable mining provisions, and have designated strategic projects targeting both minerals with growing emphasis on diversifying processing capacity.
Furthermore, lithium and nickel provide complementary illustrations of the structural challenges and risk profiles that make traceability simultaneously valuable and difficult. In both supply chains, a handful of jurisdictions and actors exert considerable influence over global supply. This concentration means that operational and governance outcomes in Argentina, Chile, Indonesia and the Philippines reverberate across battery supply chains worldwide. Yet their supply chain structures, governance frameworks and risk profiles differ considerably, making them complementary case studies for this report. For both minerals, unresolved operational and governance risks can translate into investment delays, supply disruptions and reputational costs for downstream buyers. Addressing these risks at source to enable stable mining and processing sectors along reliable and transparent supply is consequently a shared interest for producing and importing countries.
Standards-based markets are key to these objectives as they help to create a level playing field across jurisdictions and among companies. Without common expectations and verification mechanisms for responsible performance and governance, companies that invest into stronger community engagement, environmental safeguards and traceability systems may face higher operating costs than competitors operating with weaker standards or diminished oversight. This can distort competition and discourage responsible investment as production shifts to lower-standard environments. Aligning market access, public finance and procurement with common benchmarks for operational and governance performance, standards-based approaches reduce the risk of distorted competition and reward responsible actors, all while providing greater certainty to investors and buyers.
RBC standards, supply chain transparency and, where relevant, traceability can help differentiate responsibly produced minerals, support investment and financing, and ultimately strengthen supply chain resilience. They enable access to markets and, in some circumstances, better financing terms, especially as public and blended finance play greater roles in driving investment into critical mineral supply chains. These benefits extend beyond the private sector and stronger operational and governance standards along critical mineral supply chains can meaningfully improve outcomes for host communities and countries.
OECD standards on RBC set out a process for risk-based due diligence for enterprises to identify, prevent and mitigate actual and potential adverse impacts that they may be causing, contributing to, or directly linked to through their operations or business relationships, including in the minerals sector. Multi-stakeholder and industry initiatives on RBC have, in turn, emerged to facilitate or verify (e.g. through auditing) implementation of due diligence or other activities to improve operational and governance performance typically in scope of OECD standards on RBC.
Traceability, by collecting reliable data on material origin, geographic path, chain of custody and physical evolution, can support due diligence processes but also distinguish and, in some cases, reward responsible business conduct. Traceability may overlap, but does not equate to, transparency, as transparency can mean both supply chain visibility and disclosure. It is part of a broader set of transparency measures available to companies and governments that increase supply chain visibility, but collected data through traceability may not lead to enhanced disclosure. Strengthening traceability and addressing these risks across the supply chain is therefore not only a matter of responsible sourcing, but also increasingly central to supply chain resilience and development for mineral-importing and mineral-producing countries alike.
Policies targeting end-of-life of critical minerals are also gaining traction as waste collection and recycling of minerals-rich end-of-life products is becoming increasingly important. E-waste is one of the fastest growing waste streams and EV batteries are expected to reach end-of-life at large scale in the 2030s. Recycling provides a valuable secondary source of raw materials that lessens dependence on primary mineral supply and strengthens supply security, especially for mineral-importing countries. In the future, recyclers may become key suppliers of critical minerals, operating alongside other upstream players. Strengthening their integration into standards-based mineral markets will hence become essential.
Upholding verifiable responsible mineral production and processing can channel demand and capital towards responsible actors, both suppliers and downstream buyers. This serves to reinforce G7 aims to secure critical minerals without compromising RBC or bringing about a regulatory race to the bottom. In the process, responsible business conduct can also help manage risks that sometimes lead to disruption and higher costs stemming from conflict, corruption, political risk and community opposition. Some traceability platforms can also help collect data on operational and governance risks, actions taken to address them, and support certification or assurance based on operational and governance performance or responsible sourcing criteria. Though achieving stronger corporate governance and mitigating operational risks may impose additional upfront costs on companies, industry analyses indicate that companies failing to meet regulatory requirements and investor expectations face constrained market access and higher costs of capital (PwC, 2021[9]; BCG, 2023[10]). A level playing field for RBC and related environmental, labour and governance expectations is nonetheless necessary to avoid putting companies that meet such expectations at a disadvantage.
Traceability systems can create aligned incentives across stakeholders in mineral supply chains: they support producing countries in strengthening revenue mobilisation and governance, enable importing countries to secure more resilient and transparent supply chains, and allow companies to demonstrate responsible practices and maintain access to international markets. By improving transparency over production, pricing and other related-party transactions, traceability systems help curb BEPS practices and protect public revenues in producing countries. This, in turn, supports the social contract surrounding mineral extraction, reducing the likelihood of community opposition, fiscal instability or abrupt regulatory changes. By addressing these Base Erosion and Profit Shifting (BEPS) practices, companies are better positioned to maintain stable operations, thereby contributing to more reliable and resilient supply chains.
Responsible investment and resilient supply chains: Investors increasingly consider operational and governance risks in supply chains, particularly in high-risk sectors such as mining.
Tax policy and financial integrity: Reliable, auditable data on mineral origin, production volumes, grade, transport routes, ownership, and trade flows strengthens governments’ ability to enforce tax rules effectively. Integrated traceability systems enable cross-checks between operational and financial data, supporting risk assessment, improving transfer pricing oversight, and reducing reliance on company self-reporting. Such visibility enables tax authorities to verify quantities, pricing adjustments, and related-party arrangements against objective market benchmark prices, to ensure that the producing countries achieve an appropriate price for the mineral.
Environmental policy and circular economy: Traceability enables tracking of material composition, easing recyclability and mineral recovery and supporting other circularity strategies such as repurposing and remanufacturing. It also helps policymakers implement and enforce environmental regulations, reducing waste and the ecological footprint of mineral supply chains.
Economic security and competitiveness: Integrating strong due diligence into critical mineral production and processing offers an opportunity to gain enhanced visibility of supply chain bottlenecks and opportunities for diversification, and anticipate and manage shocks caused by operational and governance risks.
Community development and social acceptance for projects: Responsible projects can become drivers of local development and support governments in addressing local development needs, enhance community and Indigenous Peoples participation in mining decision-making processes, and improve the transparency of information shared locally.
This section summarises the report’s principal findings on the uptake, drivers and limitations of traceability in critical mineral supply chains, drawing on the evidence base presented in Chapters 2 through 5.
Traceability uptake across critical mineral supply chains is growing but remains uneven and fragmented. Drawing on an OECD-IEA survey of 90 companies, stakeholder interviews and site visits in Argentina, Chile, Indonesia and the Philippines, this report finds that a combination of supply chain mapping, mass balance and due diligence auditing already supports partial visibility without end-to-end traceability. Uptake is strongest among traders, who report the highest implementation rates of any segment of the supply chain, though much of the information collected is not publicly disclosed, and weakest among miners. Most systems rely on mass balance and supplier mapping rather than identity preservation, which fewer than 30% of smelters use.
Most traceability systems are being developed within individual companies using proprietary tools with limited public disclosure. These traceability measures could be further adapted to risk, as nearly half of respondents report that their systems collect the same information regardless of risk level. Companies participating in multi-stakeholder and industry initiatives on responsible business conduct more frequently report having traceability systems, suggesting that existing initiatives provide a practical entry point for scaling uptake.
There is a mismatch between what traceability systems currently track and what economic security and governance objectives require. Most systems are driven by customer demand and brand reputation rather than by proactive risk management. This is reflected in their design: origin data is widely collected, but information on ownership structures, supplier affiliations, payments to governments and the physical characteristics of minerals remains inconsistent. Closing these gaps for high-risk and sensitive minerals is essential if traceability is to support emerging policy instruments and trade related measures such as price floors, stockpiling and preferential procurement. At the same time, one third of respondents already trace recycled content, suggesting an emerging foundation for circularity-related traceability ahead of mandatory requirements.
Nearly three quarters of surveyed companies plan to increase investment in traceability even though most report it is too early to identify tangible benefits. Cost, interoperability and fragmented regulation are the principal barriers. This represents a window for policy action, in which targeted intervention can shape how traceability systems develop before they consolidate around incompatible standards.
Traceability can support policy objectives such as supply chain diversification, responsible business conduct and circularity, among others, all of which are key to improving economic security. The following recommendations are organised by the policy objective that traceability systems can support. While addressed to policymakers, companies have a crucial role to play and may consider this approach to prioritise where to invest in more extensive traceability. Figure 1.2. sequences these recommendations by implementation phase, from near-term measures that leverage existing tools through to longer-term actions requiring international cooperation, and tags each by the policy objective it serves.
1.6.1. Supply chain diversification
Expanding trade data analysis to cover multi-tiered mineral processing, strengthening supplier mapping and improving country-of-origin disclosure for smelters and refiners would better track dependencies without requiring full traceability. For example, the EU Critical Raw Materials Act now requires large companies in strategic sectors to conduct supply chain risk assessments using supplier mapping.
For the most sensitive materials, joint public-private off-taking from certified smelters can incentivise diversification, with identity preservation reserved for cases where other approaches inadequately address security of supply risks. Governments developing trade related measures, such as price floors and stockpiling programmes could specify minimum traceability requirements at the design stage to ensure that support flows to the supply chains these instruments are designed to strengthen.
1.6.2. Responsible business conduct and due diligence
Policymakers can encourage use of common protocols for data sharing and trusted platforms that transmit secure data for select materials. Midstream actors, particularly traders, warrant deeper engagement given their leverage and market access motivations. Indeed, traders – who report the highest traceability uptake of any supply chain segment to date – cite cost and confidentiality as persistent constraints that targeted policy engagement might help overcome. Smelters and refiners serve as due diligence control points where harmonised disclosure expectations can have the greatest impact. For example, the London Metal Exchange's responsible sourcing requirements, aligned with the OECD Minerals Guidance, provides a blueprint to operationalise shared expectations. Finally, bilateral critical mineral agreements offer a way to embed RBC standards and strong supply chain transparency where risks are greatest, while anchoring a common approach to due diligence expectations.
1.6.3. Circularity and resource efficiency
Traceability efforts focused on midstream operations, recycling and product design may be most impactful. Strengthening traceability at smelters and refiners, the critical junction between primary and secondary supply chains, can provide essential data on recycled material production and its role in supply chain resilience. Recyclers are mineral suppliers and should be considered as such in traceability frameworks. One third of survey respondents already trace recycled content, suggesting an emerging foundation on which policy measures can build. Recycled content requirements, such as those introduced under the EU Battery Regulation for lithium, nickel, cobalt and lead from 2028, and digital product passports can further incentivise traceability adoption and secondary mineral market development.
1.6.4. Sustainable development in mining regions
Subnational governments should develop region-specific frameworks for environmental management, community engagement and local development. Site visits in Salta, Argentina demonstrated what this can look like in practice, with social working groups linking community priorities to mining projects, the University of Salta providing independent environmental monitoring, and an Indigenous Chamber of Commerce supporting local suppliers. Traceability can track performance against locally agreed standards, helping governments understand mining's contribution to local economies. Governments should ensure meaningful community participation throughout impact assessments and strengthen disclosure frameworks to provide disaggregated, accessible information.
1.6.5. Revenue mobilisation
Traceability systems can reduce information asymmetries between companies and tax administrations that BEPS practices exploit, supporting greater revenue capture. Physical evolution of mineral products is the least tracked traceability category in the survey, yet it is central to accurate valuation. Millions of tonnes of nickel exports from Indonesia, which the SIMBARA platform was developed in part to address, illustrate how gaps in reconciling production and processing data directly impact revenue mobilisation. Enhanced transparency on the physical evolution of mineral products, through disclosures and regulatory spot checks including mineral testing, is particularly relevant to address under-valuation risks in lithium and nickel supply chains and other practices that could lead to revenue losses, such as smuggling.
References
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← 1. The OECD Inventory on Export Restrictions on Industrial Raw Materials covers 65 industrial commodities, including 58 minerals and metals, six wood products, and all metallic waste and scrap from minerals and metals covered in the Inventory