IDEAS home Printed from https://ideas.repec.org/p/rif/briefs/88.html
   My bibliography  Save this paper

Critical Metals – Competitiveness and Security of Supply

Author

Listed:
  • Hernesniemi, Hannu

Abstract

The USA, the EU and Finland have woken up to the fact that certain metals are critical in crises. Their production is concentrated in a few countries outside the USA and the EU. China controls 90–95 per cent of the production of rare-earth elements that are important to military technology and electronics. In Finland, the Critical Materials and Security of Supply monitoring group has listed the critical metals important to Finland. However, Finland is in an exceptional position among the European countries due to the fact the we have a competitive advantage in the mining of many critical metals and the processing of metals. Finland’s own mines and opened ore deposits yield battery materials (nickel, cobalt, lithium and graphite) and platinum group metals (with the most important ones being gold, palladium and platinum). Rare-earth elements can be used to make permanent magnets, which are needed in the jet engines of fighter aircraft, among other things. Fruitful development is being carried out in the recovery of critical metals (e.g. rare-earth elements) from scrap and municipal waste, and it will most likely lead to industrial-scale production within the next few years. However, Finnish industry uses a very wide range of critical metals and, particularly, ready-made components that contain them. How can the security of the supply of these materials be secured in a crisis? Businesses know their own needs the best. Their inventories of critical metals or components containing them could be increased by allowing premature recognition of a part of the purchase costs of inventories as expenses. Businesses could then immediately claim a tax deduction for the metals or components they purchase for their inventories. This would create an incentive to maintain excessive inventories, which would provide security in crises. For its part, the National Emergency Supply Agency could store some critical metals that would be shortest in supply worldwide in a global crisis. These inventories could then be exchanged for the metals and components containing critical metals that are required by Finnish industry.

Suggested Citation

  • Hernesniemi, Hannu, 2020. "Critical Metals – Competitiveness and Security of Supply," ETLA Brief 88, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:briefs:88
    as

    Download full text from publisher

    File URL: https://www.etla.fi/wp-content/uploads/ETLA-Muistio-Brief-88.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Critical metals; International Conflicts; Competitiveness; Security of supply;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rif:briefs:88. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kaija Hyvönen-Rajecki (email available below). General contact details of provider: https://edirc.repec.org/data/etlaafi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.