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Supply chain risk management for critical commodities: A system dynamics model for the case of the rare earth elements

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  • Keilhacker, Michael L.
  • Minner, Stefan

Abstract

We investigate mitigation strategies that potentially reduce the supply chain risk caused by exogenous interventions for critical commodities. We apply a system dynamics approach to examine the individual company’s reaction in the rare earth elements (REEs) supply chain to China’s introduction of export restrictions over a three-stage supply chain for 11 REEs, 10 semi-finished goods (SFG), and 21 finished goods (FG) between 2004 and 2015. We analyze how FG and SFG substitution, secondary recycling, supply extension and research and development (R&D) affect dynamic variables such as the price level, supply and demand on each stage to determine the effectiveness of each strategy for mining companies, SFG and FG producers.

Suggested Citation

  • Keilhacker, Michael L. & Minner, Stefan, 2017. "Supply chain risk management for critical commodities: A system dynamics model for the case of the rare earth elements," Resources, Conservation & Recycling, Elsevier, vol. 125(C), pages 349-362.
    • Handle: RePEc:eee:recore:v:125:y:2017:i:c:p:349-362
    DOI: 10.1016/j.resconrec.2017.05.004
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    2. Chinenye Chinwego & Rosanna Garcia & Daniel McArthur Sehar & Evan MacGregor & Steven Tate & Kenneth Savage & Thaddaeus Zuber & Benjamin Sseruwagi & Daniel Dietrich & Emmanuel Opoku & David Smith & Ada, 2025. "Sufficiency-driven business models for rare earth recycling: integrating stakeholder collaboration and customer discovery for sustainable innovation," Journal of Innovation and Entrepreneurship, Springer, vol. 14(1), pages 1-20, December.
    3. Thibeault, Al & Ryder, Michael & Tomomewo, Olusegun & Mann, Michael, 2023. "A review of competitive advantage theory applied to the global rare earth industry transition," Resources Policy, Elsevier, vol. 85(PA).
    4. Seiler, Volker, 2021. "China-to-FOB price transmission in the rare earth elements market and the end of Chinese export restrictions," Energy Economics, Elsevier, vol. 102(C).
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    7. Hamed, Mosaab M. & Turan, Hasan Hüseyin & Elsawah, Sondoss, 2024. "Balancing supply diversification and environmental impacts: A system dynamics approach to de-risk rare earths supply chain," Resources Policy, Elsevier, vol. 92(C).
    8. Leng, Zhihui & Sun, Han & Cheng, Jinhua & Wang, Hai & Yao, Zhen, 2021. "China's rare earth industry technological innovation structure and driving factors: A social network analysis based on patents," Resources Policy, Elsevier, vol. 73(C).

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