The Commodity Pulse Friday Edition - Weekly Q&A + Top 31-day movers

Welcome to this week’s Friday Pulse, where I answer two questions brought to me by readers and industry professionals. Before we dive in, don’t forget to check out The Commodity Bro Podcast every Monday at 12 PM EST.

Everyone talks about securing supply chains, but what happens to mining communities when demand shifts to new minerals?

It is a nuanced topic as demand is affected by multiple variables outside of the direct supply chain. Many of the complications around securing reliable access and the development of infrastructure critical to securing the supply chain for critical minerals are subject to policy.

Policy plays a key role in both controlling and regulating the industry, but can also lead to bottlenecks and prolonged undersupply in the event that the time it takes to navigate policy drags on.

In Canada, a particular hot-button issue is the ongoing challenge between Indigenous communities and mining companies. Indigenous communities sitting on lithium, cobalt, and rare earth deposits are experiencing newfound economic opportunity. However, many of these communities lack the infrastructure to capitalize on this newfound opportunity. Coal mining towns are also facing a challenge, with some pivoting to extract critical minerals from coal waste.

Critical mineral markets have become more concentrated, with the top three producers controlling an approximate 75% of the market in 2024, according to the IEA 2024 Critical Mineral Outlook. This means that having the raw critical minerals in your possession is not enough. You need processing facilities to capitalize. The social cost is significant: workers in declining sectors often lack transferable skills for high-tech mineral processing, creating pockets of economic displacement even as global demand for critical minerals soars.

Which matters more for energy security: having domestic oil reserves or controlling rare earth processing?

While oil can be stockpiled and sourced from multiple suppliers, rare earth processing requires sophisticated infrastructure that takes years to build and even longer to master.

The vulnerability is stark: China dominates supply growth for almost all critical minerals except nickel (where Indonesia leads), creating chokepoints that make the 1973 oil crisis look simple by comparison.

They both also face a unique set of external challenges. For example, critical mineral deposits tend to be located in geopolitical hotbeds; therefore, there is always the risk that supply chains are affected by regional conflicts or policy changes. These problems are rampant, and illegal mining operations and seizures can cause short-term disruptions.

Oil and gas reserves require the right conditions, and refined products have varying lifespans (though they can be slightly extended with fuel stabilizers), but there needs to be continual replenishing of reserves as they are used up.

Critical minerals, though they might be easier to store than energy products, have low reserves that can have longer-term implications for adjacent industries, such as those relying on battery metals.

This is a more nuanced discussion and ultimately a matter of both being important. As oil and gas are not disappearing anytime soon, and demand for battery metals grows, critical minerals may become increasingly more essential.