Critical materials and manufacturing: Comparing China, the European Union, Japan, and the United States

Abstract

Manufacturers worldwide depend on supply chains for raw material inputs and intermediate products, with varying importance and risk levels across countries and supply chain stages. Understanding these variations is essential for developing strategies to mitigate supply chain vulnerabilities. This study adds a geographic dimension to the existing criticality assessment framework by simultaneously comparing material criticality in China, the European Union (EU), Japan, and the United States (US). It assesses supply chain risk (two stages: mining, processing) and economic importance for twelve materials representing infrastructure, battery, specialty, and other materials. Our analysis reveals distinct regional differences: China faces greater supply risk at the mining stage, primarily due to its reliance on imported raw materials for certain minerals, while the United States experiences higher supply risk at the processing stage, stemming from limited domestic processing capabilities. The EU and Japan exhibit higher supply risks overall than both the US and China, largely because of limited domestic production capacities. Japan has the highest number of materials—eight out of twelve—with both high supply risk and economic importance. Materials with the greatest difference in criticality among regions are rare-earths and aluminum at the processing stage, where processing bottlenecks and concentration of processing facilities heighten supply risks, and lithium, nickel, and cobalt at the mining stage, due to geographic concentration of mining activities and rising demand driven by battery production. These findings highlight the necessity for region-specific strategies to address supply chain risks, such as diversifying import sources, investing in mining/processing infrastructure, and stockpiling.