Strategic Stockpiling Reduces the Geopolitical Risk to the Supply Chain of Copper and Lithium

Copper and lithium are essential to the global energy transition, each playing distinct roles in enabling low-carbon technologies. However, their supply chains are highly vulnerable to geopolitical risks, posing a threat to the stability and resilience of future clean energy systems. This study proposes strategic stockpiling as a cost-effective instrument to mitigate supply disruptions due to geopolitical risks in copper and lithium supply chains. First, we develop and apply novel, stage-specific, measures of geopolitical risk for copper and lithium for each of the four key phases of their supply chain: proven reserves, extraction, refining and end-use consumption. Second, we construct forward-looking stockpiling scenarios for both minerals, grounded in projected demand under the International Energy Agency’s Announced Pledges (APS) and Net Zero Scenario (NZS) pathways. Our estimates indicate substantial supply shortfalls by 2040 when strategic stockpiling is incorporated. Specifically, we project the shortfall in lithium supply to increase by a factor of 7.8 under APS and 9.8 under NZS, while copper shortages are projected to grow by 4.6 and 6.1 times, respectively. We consider Artificial Intelligence (AI)-driven productivity gains and recycling as alternative ways to alleviate shortages in both copper and lithium markets. We show that while enhanced recycling can significantly contribute to closing the supply gap for copper, its impact remains limited in the case of lithium due to technological, geological, and geographical constraints. We conclude that AI-driven productivity gains are essential to close the supply gap for both critical minerals.