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Rare mineral shortage could upset global markets


Financial Market. Image sourceinvestmentdiv

Financial Market. Image sourceinvestmentdiv

Rare minerals are crucial to the manufacture of mobile phones, electronics, and medical equipment, and a shortage could upset the global marketplace and spark wide-ranging financial instability, a study warned Friday.

The analysis of international commodity trade networks and how they could be roiled by shortages of minerals was published in the journal Science Advances.

“Regional shortages of minerals necessary for the manufacture of modern technologies could ripple throughout the trade system, leading to a sharp increase in the price volatility of such minerals in the global markets,” said lead author Peter Klimek, a researcher at the Medical University of Vienna, Austria.

Klimek led the study — which examined the flows of 71 mineral commodities between 107 countries — in collaboration with International Institute for Applied Systems Analysis (IIASA) researchers.

The European Union faces the highest risk of instability, particularly when it comes to beryllium, used in manufacturing connectors and switches for lightweight precision instruments in the aerospace and defense industries, the study said.

“Eighty-five percent of the world supply of beryllium is mined in the United States; much of the remainder comes from China,” it said.

The next highest-risk mineral for the European Union is indium, which is essential for manufacturing liquid crystal displays.

Indium is produced as a byproduct of zinc mining. So even if demand for indium rises, “its availability will not necessarily increase because this availability is largely determined by zinc economics,” said the study.

For the United States, the highest trade-risk mineral is thallium, a crucial component in medical imaging.

“Global supply of thallium is relatively constrained for the United States, especially because China eliminated several tax benefits on the export of thallium in 2006,” said the study.

Overall, minerals that are produced as a byproducts of other processes, such as mining, are “the most susceptible to price volatility leading to systemic instabilities,” said the study.

Some of these high risk byproducts include gallium and vanadium, produced by aluminum and uranium mining respectively.

Another high risk mineral is tellurium, mined as a byproduct of copper and critical for manufacturing solar panels, the study said.

“Commodity markets, like financial markets, are highly international and interconnected,” said IIASA Advanced Systems Analysis researcher Stefan Thurner.

“Understanding these networks gives us a handle to explain and possibly predict a large portion of the instabilities in terms of price volatility in the markets.”

The study authors said certain policy measures, such as a tax based on commodity risk, could help create more stable markets.

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