Unintended shift in supply bases away from well-governed jurisdictions after critical mineral export restrictions
Year: 2026
Type: preprint
Abstract: Producing countries increasingly restrict exports of minerals the energy transition needs, and de-risking policies aim to move companies that rely on these minerals towards suppliers in secure, well-governed jurisdictions. How these companies’ supply bases respond has received little study. We combine 142,150 annual reports, used to infer which US-listed companies use which minerals, with their disclosed supplier relationships and six export restrictions by China and Indonesia between 2010 and 2024. Relative to companies whose reports never name these minerals, the average rule of law in the headquarters countries of exposed companies’ suppliers fell by 0.064 points on the World Bank index after a restriction (95% confidence interval 0.024 to 0.103), with no detectable difference in trends beforehand. The decline reflected a rising share of suppliers headquartered in China. It rested mainly on Indonesia’s nickel-ore bans, on repeatedly exposed companies, on companies with few disclosed suppliers and partly on newly recorded suppliers, was only borderline significant with the restrictions as the units of inference, and was not clearly distinct from a smaller drift among companies using only unrestricted base metals. On average, exposed companies’ supply bases moved away from, not towards, the well-governed sources that de-risking policies intended to favour.
Source: Research Square
Authors: Can Cui, Dequn Teng, Steve Evans
Institution: University of Cambridge
Language: English
Subfield: Management, Monitoring, Policy and Law
Field: Environmental Science
Domain: Physical Sciences
Open Access status: green
Funder: Cambridge Trust
OpenAlex ID: W7225344089