The global scramble to secure and stockpile critical minerals could end up triggering the very supply disruptions they're meant to prevent.

According to a report from the London School of Economics' Center for Economic Transition Expertise, governments acting independently to build strategic reserves of critical minerals risk driving up prices, worsening shortages and increasing geopolitical tensions. This comes as countries around the world have rushed to build up supplies of lithium, cobalt, nickel, graphite and other rare earth elements that are essential for a range of advanced technologies, from semiconductors and AI data servers to consumer electronics and military hardware. 

The issue with that approach is that as nations like the U.S., EU members, Japan and South Korea have simultaneously and independently sought to buy up critical minerals, each country is competing for the same supply. When that happens, prices rise because demand is spiking all at once, and the risk of shortages and disruptions increases.

"Stockpiling itself is not the risk; the current scramble to secure supplies is," said Hugh Miller, critical minerals lead at the Centre for Economic Transition Expertise at the London School of Economics and Political Science.

The LSE estimates that the combined demand from building strategic stockpiles in Australia, China, the EU, India, Japan, South Korea and the U.S. could eat up as much as 34% of the current annual global supply of cobalt, and more than 10% of lithium, graphite and copper. In that case, each country is undermining the other's efforts, all while restricting access for economies that have far fewer resources to compete. 

As an alternative, the report calls on countries to cooperate on stockpiling strategies in a few key ways. First, it urges nations to avoid buying up critical minerals all at once, and instead operate on agreed-upon schedules so that no one is entering the market at the same time. Second, it recommends that countries agree ahead of time on when and how they'll each release their stockpiles, to create a more predictable market long term. And finally, it suggests that governments use the time bought by stockpiles to develop new mines and suppliers, rather than treating stockpiles as a permanent fix for fragile mineral supply chains.

What will perhaps be most important, though, is ensuring that any cooperative strategy is designed to serve everyone's interests equally. 

"Coordination is not a refinement of national stockpiling strategies – it is the condition under which they do not undermine each other," the report concludes.