Export restrictions on strategic raw materials and their impact on trade and global supply

Frank van Tongeren: Head of division, OECD Trade and Agriculture Directorate
Jane Korinek: Policy analyst, OECD Trade and Agriculture Directorate
Jeonghoi Kim: Policy analyst, OECD Trade and Agriculture Directorate


The attached paper examines the presence and impact on trade and global supply of export restrictions applied to selected metals and minerals. The strategic metals and minerals selected for this study have a number of shared characteristics which in turn determine their impact. Their exploitable mineral reserves are generally found in one or a few geographical regions of the world implying that their potential mining and export are concentrated in a few countries. For most of these strategic raw materials, the top three producing countries account for over half of world production. In some cases, production is so concentrated that over half of world production occurs in a single country. This in turn leads to a dependence on such imports by countries that consume these materials or the finished goods produced from them. It also suggests that countries producing these raw materials may influence their prices and quantities made available on world markets.

The metals and minerals in this study are generally used as inputs into high-technology or strategic sectors. Although often needed only in small quantities, these metals are increasingly essential to the development of technologically sophisticated products. They play a critical role in the development of innovative “environmental technologies” to boost energy efficiency and reduce greenhouse gas emissions. Hydrogen-fuel based cars, for example, require platinum-based catalysts; electric-hybrid cars need lithium batteries; and rhenium super alloys are an indispensible input for modern aircraft production. In addition, there are few substitutes available in the short-term for these raw materials.
Export restrictions are applied to many of the metals and minerals under examination. Three case studies illustrate their impacts on exports and on global supply. A number of insights regarding the impact of export restrictions can be gleaned from these case studies:

  • Many export restrictions are put into place for environmental reasons or to preserve natural resources. In order for them to satisfy this objective, however, they must result in lower production levels. In one case study, molybdenum, it can be seen that this was not the outcome of the imposition of export restrictions.

  • As many of these raw materials are produced in a limited number of countries, export restrictions that are imposed in one country may motivate other countries to follow if importers massively move to buy their raw materials. The restrictions imposed by the first country then lose their effectiveness in limiting exports. This can in principle lead to a situation of competitive policy practices – and of higher and higher export taxes. This risk was apparent in one of the cases under examination, namely exports of chromite.

  • Export restrictions can impact potential investments in mining facilities worldwide. In the case of rare earths, the possibility of export restrictions being imposed makes industry participants assess the risk in the industry differently. Investments in the mining industry, which are necessarily long-term and require large amounts of capital and know-how, may be affected by the possibility of sharp changes in world prices either due to the imposition of export restrictions or to their sudden removal.

  • Several objectives motivate implementing export restrictions on strategic raw materials. In some cases, these can be understood as a response to market imperfections. The question remains, however, whether export restrictions are the most effective tool to achieve the desired outcomes.