IEA and OECD report shows progress, but ongoing barriers such as high costs and lack of international standards. Structural challenges particularly slow adoption in rare earth supply chains.
New export restrictions from China and rising geopolitical tensions have once again highlighted supply risks in critical raw materials over the past year. While supply chains—especially in processing and refining—remain highly concentrated and demand for lithium, rare earths, and other materials continues to grow, the development of alternative sourcing options is struggling to keep pace. This is according to a new report by the International Energy Agency (IEA) and the OECD.
In recent years, a wide range of policy measures has been introduced to reduce these risks. In strategies focused on diversifying supply chains as well as promoting sustainable and responsible sourcing, traceability systems play a central role. A joint survey by the IEA and OECD of more than 80 companies shows that around two-thirds already use such systems. Upstream actors are significantly more advanced than those in midstream and downstream segments. Traceability systems are most widespread in cobalt supply chains. In rare earths, there is strong interest, but implementation is hindered by structural challenges. These include the very small quantities of these materials used in components, generic or inconsistent labeling, and concerns over protecting trade secrets.
Expanding Traceability Could Reduce Investment Risks
The survey also shows that many systems remain incomplete. While nearly all companies collect country-of-origin data, more detailed information—such as environmental impact or corporate responsibility data—is far less commonly gathered. Yet such data could help attract investment and reduce risk, particularly in early-stage and less standardized supply chains such as graphite, rare earths, and lithium.
The authors identify high costs, lack of interoperability between systems, and weak incentives for data sharing as key barriers to further expansion. They recommend targeted financial support for upstream and smaller actors in particular. In addition, international standards should be better aligned to make data more comparable and easier to use.
