|Congo, Dem. Rep.|43|Chile|31|Mozambique|50|Argentina|22|South Africa|38|Indonesia|18|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Australia<br>|8|United States|10|Tanzania|12|United States|17|Australia|18|Australia|10|
|Indonesia<br>|7|Peru|8|Kazakhstan|11|Bolivia|16|Gabon|11|Canada|10|
|Canada<br>|6|Australia|6|Canada|7|Chile|11|United<br>States|8|Russian<br>Federation|9|
|Nauru<br>|5|Congo, Dem.<br>Rep.|4|Malawi|6|Australia|7|Kazakhstan|4|Philippines|8|
|Tonga<br>|5|Russian<br>Federation|4|United<br>States|3|Canada|7|Canada|4|New Caledonia|8|
|Cuba<br>|3|Canada|4|Australia|3|Germany|5|Ukraine|3|Brazil|5|
|Philippines<br>|3|Mexico|4|Madagascar|2|China|4|Georgia|3|Cuba|4|
|Zambia<br>|2|China|4|Sweden|2|Congo, Dem.<br>Rep.|3|Ghana|2|South Africa|3|
|New Caledonia<br>|2|Indonesia|3|Greenland|1|Mexico|1|India|2|Nauru|3|

_Source:_ Authors based on World Bank’s AFE Energy Transition Material (ETM) reserves data.

# **The IRA is expected to boost demand for critical minerals in the US, especially for green technologies,**

**benefiting eligible exporters** . In the short-term, established producers of raw and processed critical minerals for EV batteries with a US FTA, like Mexico, are expected to see increased exports. Other top exporters to the US, like Brazil and China, could lose market access without an FTA as EV credits are contingent on a large share of the minerals in the battery being sourced from a country with an FTA. In the medium-term, as new mining enters operation, countries with large reserves of critical minerals may enter the US market or increase their exports of critical minerals for EV batteries if they secure an FTA. For instance, African countries with zinc and manganese reserves that secure an FTA may benefit from US diversification efforts. Similar short and medium-term impacts are expected for countries that export raw and processed critical minerals for other technologies (besides EV batteries) but without FTA membership affecting demand as only minerals for batteries require FTA membership for eligibility to credits. In the short term, the developing countries with mining sectors most exposed to the increased US demand are South Africa, China, and Russia. However, the exposure of these countries’ mining sectors and economies is not high as their raw mineral exports to the US do not represent a large share of their total exports of raw and processed minerals to the world and of their GDP.

**China's green energy transition is also anticipated to drive demand for critical minerals from developing countries.** Rising EV production will increase the need for battery materials like lithium, nickel, and cobalt.<sup>24</sup> This demand surge benefits developing countries’ mining and refining. The implementation of China’s ETS might lead to increased demand for components necessary to upgrade coal and gas-fired plants in China. Although the current structure of China’s ETS does not promote a higher adoption of renewable energy, if this were to change in the future, the demand for minerals linked to renewable energy could rise.

**Recycling critical minerals can greatly influence trade in developing countries.** As noted by the IEA (2021), the green transition will boost demand for recycling. This change will reduce dependence on suppliers and affect raw mineral exports from developing countries. Conversely, it provides an opportunity for these nations to develop recycling industries and mitigate environmental harm caused by mining. Achieving this will necessitate considerable investment in recycling technology and infrastructure to remain competitive. Strategic planning and support are essential for these countries to benefit from recycling-based trade.

> 24 The demand for a specific mineral will depend on technological advances in batteries, which can result in the substitution of some minerals for others.

20