Ecosystems Are the Missing Link in Critical Minerals Supply Chains

This article is part of a series examining the competitive outlook for key global process industries and how they can prosper in an uncertain future.

Urbanization. The energy transition. The data center boom. Advanced manufacturing. Defense and health care modernization. These and other global trends are driving insatiable demand for critical minerals— including cobalt, copper, graphite, nickel, lithium, and such niche metals as antimony, gallium, and rare earths.

But demand is far outpacing the investment needed to increase supply, which takes many years to accumulate. In addition, the geographic concentration of critical mineral processing is heightening supply chain and offtake uncertainty, sidelining projects before they can secure funding. Regulatory complexity only compounds the supply problem.

To cope with these challenges, companies and, increasingly, governments, are reconfiguring their own supply chains. But their individual, isolated efforts are not enough.

What buyers and sellers need is a coordinated approach. Drawing on lessons from other industries, we outline the key roles and elements of critical minerals ecosystems, which provide suppliers, buyers, and intermediaries across the value chain the conditions and structures necessary to create a well-functioning market. We also explain the concept of a “minimum viable ecosystem”—an approach to jumpstart the establishment of a resilient supply chain for critical minerals. This will help stakeholders chart a course to success in a fast-changing and high-demand industry. (See “The Future of Process Industries.”)

Multiple Factors Are Constricting the Supply Chain

New technologies and the massive transitions in a changing world have caused demand for a broad range of critical minerals to skyrocket. For example, the projected shortfall for critical minerals needed for the energy transition alone ranges from roughly 20% to 150% of existing supply, depending on the material needed. (See Exhibit 1.) Yet current exploration cannot meet growing demand. Since 2012, the exploration pipeline has decreased nearly 40%. At the same time, current investment is not sufficient to advance projects.

Moreover, today’s critical mineral supply is geographically concentrated in China—particularly midstream and downstream—due to the nation’s competitive cost positioning and extensive investment in mining, processing, and infrastructure. (See Exhibit 2.) And looking beyond the country’s advantages, China has tightened export controls for rare earths and lithium. Buyers across the value chain are now more exposed to trade restrictions and price volatility, as well as national security risks.

In addition, geopolitical stresses are reshaping global trade flows as countries move to shore up supply chain diversity and resilience. Regionalization, reshoring, and resource nationalism are gaining ground, as is the diversification of partnership agreements. These developments portend a multipolar future where supply chains are constrained, either because they are localized or aligned with political and economic allies—and thus unable to achieve the depth and scale necessary for a healthy, liquid market.

Key Impediments to Supply Chain Resilience

As market participants pursue solutions to tackle supply chain challenges, they encounter three systemic issues that cannot be solved through bilateral action.

Timing and price-signal mismatches.

End-user demand for critical minerals can shift within months, but new mines typically have a 15-year lead time from discovery to production. Upstream and downstream actors rarely interact beyond occasional bilateral deals, limiting shared supply-demand visibility and amplifying price volatility. Consider the 2018 spike in battery mineral prices triggered by soaring EV demand; or lithium’s surge in 2022 when supply and demand decoupled; or the recent swings in rare earths and cobalt sparked by changing tariffs and regulations.

Lack of scale coordination.

Miners and processors must have confirmed buyers before making the investments necessary to expand supply. In turn, processors and end users wait for visible supply before building capacity. Governments delay infrastructure funding until projects reach final investment decision (FID). These examples represent a chicken-and-egg dilemma. Unlike bulk materials production, individual critical mineral projects are often too small to trigger system-level development. Multilateral coordination is essential, but private-sector entities avoid it for fear of breaching antitrust laws. Governments often expect the market to resolve these issues.

Compliance and traceability uncertainty.

Fragmented and inconsistently applied legal and regulatory frameworks fuel compliance uncertainty. Rules governing trade, sustainability, labor, procurement, and other issues differ across countries, hindering cross-border participation. In addition, the lack of interoperability in templates and standards means that chain-of-custody data cannot be reliably tracked. Because materials need to be traceable across the value chain, bilateral contracts are inadequate.

These challenges make a fragmented approach to improving supply chain management unworkable. For example, traders may connect buyers and sellers but cannot overcome the systemic obstacles. Governments such as China and the US may leverage policy and partnerships to foster supply chain resilience, but countries lacking upstream resources and downstream demand can’t easily replicate state-based models. (See Exhibit 3.)

A Coordinated Approach Is the Answer

Only a coordinated approach can align supply, demand, capital, data, regulations, and risk among the stakeholders who comprise the supply chain for critical minerals. The most effective lawful solution is an ecosystem: an orchestrated group of companies, institutions, rules, and instruments, each playing a role in resolving the three systemic issues. (See Exhibit 4.) An ecosystem can be developed for a particular mineral or group of minerals or a region. Stakeholders span the value chain, from miners and processors to manufacturers and other end users. An ecosystem helps projects achieve bankability, sellers access sustained markets, and buyers secure compliant, traceable supply within reasonable price ranges.

The orchestrator serves as an ecosystem’s central administrator and governing entity. Orchestrators can be private, state, or multi-state entities, and how they operate can vary widely; generally, they are not stakeholders. Their tools range from standard market price reports and insurance-type products to more aggressive methods such as price or volume controls, which are legal only for state orchestrators. (The orchestrator role is described in further detail later in this article.)

Let’s look at how ecosystems can address each of the systemic challenges.

Aligning Timing and Price Signals

A well-functioning market requires that supply and demand are in sync, along with capital flows and guardrails that mitigate price volatility. An orchestrator convenes stakeholders and establishes a rulebook that creates these conditions. Resource-rich governments align permitting and infrastructure with project pipelines. Offtake-country governments support policy, joint financing, demand aggregation, and strategic stockpiling. Miners publish and commit to ramp-up schedules, while processors and end users commit to multi-year offtakes and, in some cases, provide capital. This aligned commitment and coordination enables production and procurement to move in tandem.

Coordination occurs through a variety of mechanisms:

• Price/volatility mitigation tools (like contracts-for-difference, premiums, and collars) manage risk without controlling prices. Ghana’s Cocoa Stabilization Fund and the UK’s Low Carbon Contracts Company demonstrate how such tools sustain investment across commodity cycles.
• Standardized long-term offtake agreements create predictable supply. Volkswagen’s lithium partnership with Patriot Battery Metals is an example.
• Buffer-stock rules mitigate market risk through reserve triggers. Examples include China’s strategic aluminium and copper purchases and Japan’s rare earth reserves.
• Permitting acceleration and scheduling coordination align project approvals with demand signals.

Together, these mechanisms make a volatile market more transparent, where risks are managed and investors participate with confidence.

Ecosystem examples
The European Hydrogen Bank uses competitive auctions and fixed premiums to de-risk early-stage projects. Similarly, H2Global bridges the gap between the lowest supply bids and highest purchase bids using public funds, thereby mitigating volatility without setting prices. At the other end of the spectrum, state-owned Chinese Mineral Resources Group (CMRG), standardizes procurement, aggregates demand, and synchronizes purchases with production to ease volatility.

Coordinating Scale

To overcome the circular interdependencies that stall progress, ecosystem actors must synchronize their commitments and scheduling. The orchestrator aligns project timelines and matches volume and timing requirements across the value chain. Resource-rich governments align permitting and infrastructure, while offtake-countries remove bottlenecks to allow processors and end users to efficiently and reliably access materials. Both provide patient capital or concessional finance. Meanwhile, miners pool supply and commit to shared schedules, processors align throughput with demand, and end users commit long-term to volumes. Traders support liquidity and inventory balancing. Investors deploy capital with phased capacity build-out, removing risk early on and accelerating scale-up.

Several mechanisms enable this coordination and sequencing:

• Pooled offtake windows aggregate purchase commitments within fixed timeframes through joint tenders and multi-buyer contracts, as demonstrated by the EU’s Raw Materials Platform.
• Pooled feed management allows processors to blend or toll material from multiple sources, improving utilization and product quality. One example is Mopani’s Mufulira smelter in Zambia, which processes copper from its own mines and third-party suppliers.
• Scheduled and committed capacity reservations allow advance booking for processing or transportation. Neometals’ and Element 25’s take-or-pay agreements are examples.
• Corridor-slotting rules match infrastructure needs with demand through open-season processes and long-term contracts. Australia’s Wiggins Island Coal Terminal is one such example.

Ecosystem examples
When projects, infrastructure, and financing are sequenced within a lawful structure, fragmented efforts become collective momentum. Each participant retains autonomy while following a common timetable that creates the scale and predictability required for a secure, competitive system. For instance, the European Battery Alliance broke the “no one moves first” deadlock through planning and regulatory alignment, ultimately scaling EU cell capacity from near-zero in 2020 to around 188 GWh in 2025.

Explore the Collection

The New Reality in Basic and Industrial Materials

Compliance and Traceability

Surmounting compliance and traceability obstacles requires three conditions: cross-border legal alignment, an interoperable data infrastructure, and a means of independent verification. The orchestrator plays a crucial role here, convening stakeholders to set standards, maintaining custody registries, and establishing a system of independent verification.

Governments facilitate legal alignment, enable audits, and enforce compliance. Resource-rich governments define export rules and licensing and permitting policies, while offtake-country governments set import criteria and validate lawful supply. Companies follow standards and transmit validated data. Traders preserve traceability through standardized contracts. Investors use verified data for due diligence and financing. Through other supporting mechanisms, ecosystems can reconcile conflicting laws, support traceability, and promote enforcement.

Ecosystem examples
The Battery Passport program, run by the Global Battery Alliance, includes standardized metrics and third-party audits that provide end-to-end traceability and compliance for battery materials. The blockchain traceability pilot managed by the United Nations Economic Commission for Europe (UNECE) provides cross-border verification and traceability for cotton and leather value chains through an interoperable digital system.

How Stakeholders Benefit from an Ecosystem

When each stakeholder fulfills their role, the resulting alignment unlocks ecosystem-wide value.

• Resource-rich country governments accelerate progress, from exploration to funding. They create jobs and diversify exports.
• Offtake-country governments secure resilient and diversified sources of supply, predictable input costs, and lawful market access.
• Miners, particularly juniors and developers, reach funding decisions faster, benefit from stable prices and volumes during ramp-up, and gain access to lower-cost capital.
• Processing companies secure steady, multi-source feedstock, increase utilization, and gain traceability across the value chain.
• End users secure a diversified, legal supply at more stable prices, thereby reducing production or discontinuation risk.
• Traders gain access to deeper, more liquid, markets and to volume flows not otherwise available to them. They also benefit from reduced basis risk.
• Investors enjoy lower risk premiums and standardized covenants. Above all, ecosystems unlock more deals across projects and regions and support more scalable deals.

The Principles of Ecosystem Design

Ecosystems—in particular, the orchestrator’s role—vary in design, depending on their context, but all share a few core characteristics. For example, an orchestrator must remain independent (it should not be a dominant stakeholder, unless it is a government body). Several common principles guide ecosystem development.

Choose between an enabling or controlling model.
Enabling ecosystem models do not interfere with market volumes or price. They limit downside risk by de-risking private actors through non-invasive means, like subsidies or forward contracts. Enabling approaches are narrower in scope, yet are more practical, featuring fewer regulatory hurdles. Control-based models, generally adopted by state or state-sponsored orchestrators, use mechanisms such as tariffs or quotas to influence prices or volumes directly. They have a broader toolkit but require cross-country coordination and legally intensive frameworks.

The enabling model is a more logical starting point for ecosystem development. It provides a more immediate, manageable execution path; however, it does not preclude later transitioning to a controlling model.

Ensure that scope is multi-country, two-way, and multi-issue.
The ecosystem model should benefit multiple countries, serve supply and demand actors, and address the multiple systemic issues characteristic of critical minerals supply chains.

Enable data sharing and set rules.
Ecosystem orchestrators facilitate structured data-sharing through a common platform to support traceability and coordination within antitrust boundaries. They should also ensure appropriate enforcement. For instance, H2Global uses binding rules to enable direct price support.

Establish rules to adhere to geopolitical goals.
Orchestrators should establish direct rules for such issues as procurement, capital, and cooperation in order to achieve independence and access and sustain supply chain resilience.

Expand market coverage in accordance with degree of control.
Enabling approaches can operate effectively with partial market coverage, for example, EHB and H2Global. Controlling approaches, such as CMRG, require near-full coverage.

Use double auctions to align incentives.
Double auctions allow producers to bid for support as they pool demand. This feature enables efficient, transparent pricing and risk-clearing on both sides.

Begin with a Minimum Viable Ecosystem

Ecosystem implementation should be guided by pragmatism. Create a basic functioning pilot before scaling the ecosystem across minerals and markets. A minimum viable ecosystem (MVE) represents the smallest multi-country model that can advance projects to bankability while fostering competition. The exact scope and size of an MVE will depend on its context. (See “Sizing an Ecosystem: Lithium.”)

The process begins with identifying the orchestrator and defining their role. The orchestrator manages the MVE, convenes actors, sets transparent rules, and aligns supply-demand timing through double auctions. The orchestrator mitigates price volatility and project risk by promoting structured pricing and blended finance. (See Exhibit 5.)

Implementing an MVE involves eight steps:

• Shortlisting top country contenders and pairing with compatible minerals, using a scorecard and scheduling framework.
• Leveraging existing networks to bring together participating governments, investors, and industry actors.
• Designating an orchestrator as a neutral operator within an existing authority and issuing a governance notice.
• Publishing the rulebook and eligibility criteria, including recognition pathways and data aggregation protocols.
• Defining capitalization needs and confirming funding sources across public and private partners.
• Establishing standardized templates for offtake, pricing, and investment terms under predefined conditions.
• Building the digital interface for auctions or contracts and implementing data, rules, and scheduling tools.
• Launching pilot rounds, monitoring results, and refining performance through continuous feedback.

Ongoing monitoring that tracks participation, capital flows, and compliance is vital as the early pilot transforms into a scalable ecosystem.

Even with a neutral, well-defined orchestrator, MVEs carry inherent risks. Early implementation might be slowed by limited institutional experience. In this case, a phased pilot can help. Political shifts by participating governments might disrupt continuity, but multi-year agreements can mitigate them. As the ecosystem scales, coordination fatigue or uneven engagement may arise. This can be managed through a shared roadmap, regular communication, and early visible wins that sustain momentum.

The race to secure resilience in the supply of critical minerals is accelerating. Only a coordinated ecosystem approach can overcome the many systemic limitations of today’s markets and achieve that resilience. Piloting a minimum viable ecosystem is the fastest, most legitimate, and most secure path to jumpstarting the process. With prompt action today, stakeholders can meet the burgeoning needs of the energy transition, urbanization, advanced manufacturing, and other rapidly moving global trends—and reap the benefits of industrial competitiveness in the coming decade.

The authors thank their BCG colleagues Lindo Shongwe, Puso Thahane, Nompumelelo Mpembe, Clement Kwok, Candice Zhang, and Fariza Makhayeva for their research and writing support.