Critical Minerals, Complex Choices: WDI Report Unpacks the Dilemmas, Pathways for Countries with Vast Reserves

Editor’s note: The global shift to clean energy has transformed lithium, nickel, and similar minerals into critical resources for electric vehicles and renewable technologies. This transition offers resource-rich nations an unprecedented opportunity to move beyond traditional extractive models for building their economies. Rather than simply exporting raw materials, countries like Chile, Ghana, Indonesia, and the Philippines are exploring ways to capture more value through domestic processing, refining, and manufacturing. Many governments now explicitly link their mineral wealth to ambitions in EV supply chains, while importing nations simultaneously seek to secure supplies and capture key value chain segments, creating both partnership opportunities and intensified competition.

However, converting mineral deposits into meaningful local economic development remains challenging. A new report from WDI, “From Ore to Opportunity: Value Addition Dilemmas and Pathways for Resource Rich Countries,” contends that “value addition” has become more aspirational rhetoric than practical reality in policy circles. Current research emphasizes enabling conditions like infrastructure, stable policies, and favorable investment climates, but rarely addresses the fundamental dilemmas and trade-offs embedded in different approaches. By examining lithium and nickel development strategies across four nations with distinct geological endowments, governance structures, and economic contexts, this report reveals the dilemmas that contrasting pathways for value-addition strategies in the context of the EV transition present, moving beyond simplistic assumptions to understand the complex choices these countries actually face.

In the following Q&A, report authors Diana E. Páez, WDI Senior Director, Energy & Mobility; Dana Gorodetsky, WDI Program Manager, Energy & Mobility; and Gerald E. Arhin, Research Fellow in the Political Economy of Climate Compatible Development, University College London; discuss the core dilemmas countries face, share lessons from their comparative analysis, and offer guidance for policymakers navigating these complex choices.

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In approaching the research, what did you hope to find that you were not seeing in other studies on critical minerals?  

With the increased attention on critical minerals, we wanted to look beyond the dominant narrative around this topic, which centers on the perspective of countries seeking to secure the supply of critical minerals for their industries. Instead we spotlight the stakes for countries that have these resources, many of which are low- and middle-income, and seek to create value from them – by moving beyond exporting raw minerals. Similarly, we move beyond abstract discussions and hype around value addition to instead surface and dissect the core dilemmas that these countries face in their quest to move into segments of the EV value chain and open up additional opportunities for economic growth.

You identify five key dilemmas that cut across all four countries. What are they and which dilemmas do you see as the most challenging for policymakers to navigate?

We identify interrelated dilemmas across five domains: viable scale and position to pursue in the EV value chain; control, governance, and investment attractiveness; speed, standards, and social license; market dependence and diversification; and innovation and technology risks. Perhaps the most challenging is the dilemma related to the first domain that we list: determining how far down the value chain, and at what scale, it is realistic and viable for countries to compete. The other dilemmas quickly follow, based on decisions made at this point. A factor that makes it difficult to be realistic when confronted with the first dilemma is that market and political pressures reward quick wins and bold moves, which are usually at odds with more incremental gains that require longer term investments and ecosystem-wide strategies.

There’s enormous pressure on resource-rich countries to move quickly to capture market share in EV supply chains. How can countries balance this urgency with the need for robust environmental protections and community engagement? Are there examples where this balance has been struck effectively?

The experiences of the four countries we examined show that social and environmental protections are not optional, nice-to-have. They must be integral dimensions for any value-addition strategy to be sustainable in the longer term. This is a difficult balance to achieve, and there is no perfect example of achieving it just yet. But, by highlighting the trade-offs, we seek to encourage decisionmakers to examine the mechanisms, frameworks and approaches that, when combined in a way that works in their unique contexts, can help them strike a better balance.

Your research suggests regional strategies might offer better outcomes than countries “going it alone,” particularly for countries with smaller deposits like Ghana. What are the biggest barriers to regional cooperation on critical minerals, and what would it take to overcome them?

Resource-rich countries seeking to attract investments are often competing for the same investors, and these investors seek the best conditions to develop the resources they see as critical. Because there are multiple countries with such resources, bilateral deal-making promises to be a bigger political win with more immediate local benefits. While regulatory frameworks and national priorities vary widely, we are seeing increased momentum around regional strategies for value addition, particularly in Africa, where key stakeholders underscore the potential for regional value chains and harmonized rules, as well as the opportunities for countries to work together to gain additional bargaining power.

Chile is betting heavily on direct lithium extraction, while battery chemistry is rapidly evolving away from nickel-based batteries. How should countries think about technology risk when making long-term infrastructure investments? What hedging strategies make sense?

This is a real risk and one that evolves very quickly. In addition to keeping a pulse on market trends, the key question to ask is: Will the chosen strategies advance economic diversification, foster technological development and local capabilities? Without these elements it is very difficult to hedge in any way, increasing exposure for these countries and their investments. 

China plays a dominant role in your case studies — as investor, buyer, and technology provider. How does this concentration of market power affect the value addition strategies available to resource-rich countries? What diversification strategies are realistic?

The China factor is a crucial one that no country can afford to ignore, given that China concentrates processing and refining capabilities for nearly all critical minerals, with the exception of nickel, which Indonesia now dominates. Already we see some resource-rich countries working toward diversification by developing new partnerships, considering new technologies and expanding their concept of value addition to be more multidimensional, versus focusing exclusively on the capabilities that China dominates. This is also why investing in technological innovation and initiatives that engage and create opportunities across the broader ecosystem is so important — it can create the conditions for innovative developments that open up new pathways for value addition.

Indonesia is often cited as a success story for its aggressive nickel export bans and downstream development. Your report presents a more nuanced picture. What are the key lessons — both positive and cautionary — that other countries should take from Indonesia’s experience?

The case of Indonesia offers very valuable insights, but we have to remember that it is more of an outlier than a blueprint. Many aspects of its value addition strategy, including its raw nickel export ban, are enabled by the massive share of global nickel reserves that the country possesses. This allows it to exert serious influence on the market and has led to significant industry development and local economic gains in a short period of time. The country has also attracted substantial investments from China, but this relationship also presents risks. Indonesia continues to face many of the dilemmas already discussed, for example in its dealing with the serious environmental and social consequences of its fast downstreaming moves, and the risk of stranded assets and lost gains if the EV battery industry continues shifting away from nickel-containing chemistries. Though Indonesia has been working to achieve local value addition for longer than many other resource-rich countries, the story is still evolving.

Ghana’s Ewoyaa lithium project, the country’s first following the discovery of commercially viable lithium deposits in 2018, has faced repeated delays and was recently withdrawn from parliament. What does this case reveal about the governance challenges facing first-time lithium producers, and what could Ghana have done differently?

Ghana’s case reveals how power and politics continue to shape the governance of these critical minerals. The case presents two key insights which are both related to speed, but contradictory. The delay points to the need for countries not to rush into production of their newly-found resource before the required institutions for governance are put in place. On the other hand, the local communities are suffering from this deadlock as they are banned from accessing their farm lands until a resolution is achieved. For newly resource-rich countries, it is important for governments to be patient in negotiating terms and agreements with companies. At the same time, they must not delay in identifying any negative externalities for the vulnerable in their communities so these can be considered and addressed from the outset. 

If you were advising a resource-rich country that’s just beginning to develop its critical minerals strategy, what are the three most important questions they should ask themselves before pursuing downstream value addition?

First, reflect on the motivations to pursue value addition strategies, and what value means to them. Then, rather than pursuing any or all downstreaming, ask: Does the value addition strategy identify the most viable segment or niche in the value chain where mineral resources, current capabilities, market access and dynamics align? Second: Do the strategies include governance, environmental protection and social license as strategic and integral to long term downstreaming success and project sustainability? And third: Do these strategies deepen dependence on a small set of players, technologies, or products? Or do they retain the possibility of pursuing multiple pathways that can lead to a broader set of opportunities? 

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