The Elements of Power

David Abraham worked as a rare metals trader and as a policy official, and this book explains the supply chains for the minor metals that modern technology depends on: rare earth elements, indium, gallium, tantalum, cobalt, lithium and others.

His argument is that these markets work differently from major commodity markets in ways that matter. Volumes are tiny, so there are no futures markets, no transparent pricing and no reliable data. Most are produced as byproducts of other mining, so supply does not respond to their own price. Production and processing are geographically concentrated, frequently in China, and the processing capability is a larger constraint than the ore. Substitution is difficult because these materials are chosen for specific physical properties. And demand can change abruptly when a new technology adopts a material, which a byproduct supply chain cannot accommodate.

Abraham traces specific supply chains from mine through processing to component manufacture, and covers the 2010 episode when China restricted rare earth exports and prices rose by multiples before collapsing. He also covers the environmental costs of processing, the recycling difficulties, and the policy responses attempted in the United States, Japan and Europe. The book was published in 2015, before the electric vehicle and battery expansion that transformed lithium, cobalt and nickel demand, but its structural analysis of why these markets behave badly has been confirmed by events since.