Economic Importance: Why Mineral Disruptions Matter

Economic importance, the second foundational axis of criticality assessment alongside supply risk, measures the consequences that would follow if a mineral's supply were disrupted or curtailed. A mineral can have high supply risk but low economic importance if it is used in niche applications that contribute little to GDP. Conversely, a mineral with moderate supply risk can still be classified as critical if it underpins industries worth hundreds of billions of dollars. The intersection of high supply risk and high economic importance is where true criticality lies.

How Economic Importance Is Measured

Different frameworks use varying methodologies to quantify economic importance, but most incorporate several common elements:

• Value added by end-use sectors: The European Commission's methodology allocates each mineral's economic importance score based on the gross value added (GVA) of the industrial sectors that consume it, weighted by each sector's share of total consumption. A mineral consumed primarily by high-value sectors like aerospace, automotive, or electronics receives a higher score than one used mainly in construction or agriculture.
• Revenue at risk: Some frameworks estimate the total revenue of downstream industries that would be at risk if the mineral became unavailable. For lithium, this includes not only battery manufacturing but the entire electric vehicle value chain, energy storage deployment, and consumer electronics production, potentially trillions of dollars in economic activity.
• Employment impact: The number of jobs dependent on industries that consume a mineral provides another measure of economic importance. Disruptions to minerals used in major employment sectors carry outsized political significance.
• Strategic sector exposure: Minerals used in defense, energy, telecommunications, and healthcare typically receive elevated importance scores because disruptions in these sectors have consequences that extend beyond economic loss.

The Multiplier Effect

A defining characteristic of critical minerals is the extreme asymmetry between their value as raw materials and their importance to downstream products. Consider gallium: the global primary gallium market is worth only a few hundred million dollars annually. Yet gallium is indispensable for gallium arsenide (GaAs) and gallium nitride (GaN) semiconductors, which are used in 5G telecommunications infrastructure, military radar systems, LED lighting, and power electronics. The downstream industries dependent on these semiconductors are worth hundreds of billions of dollars.

This multiplier effect means that a relatively small supply disruption, measured in tons or millions of dollars, can trigger economic damage orders of magnitude larger. Criticality frameworks attempt to capture this leverage by looking beyond the direct market value of a mineral to the value of the entire industrial ecosystem it supports.

Sector-Specific Analysis

Economic importance varies dramatically depending on which sectors consume a mineral:

• Clean energy and transportation: Lithium, cobalt, nickel, manganese, graphite, and rare earth elements are critical inputs to batteries, electric motors, and renewable energy generation. With global investment in clean energy exceeding $1.7 trillion annually, the economic importance of these minerals has surged.
• Defense and aerospace: Rhenium, tungsten, beryllium, titanium, and rare earths are essential for jet engines, missile guidance systems, armor plating, night vision equipment, and satellite components. Defense-related economic importance carries weight beyond simple GDP calculations due to national security implications.
• Electronics and semiconductors: Gallium, germanium, indium, silicon metal, and tantalum underpin the global semiconductor industry. With the CHIPS Act in the United States, the EU Chips Act, and similar legislation in Japan and South Korea committing over $200 billion in combined investment, the economic importance of semiconductor minerals is at an all-time high.
• Healthcare: Platinum group metals are used in cancer treatment drugs (cisplatin, carboplatin), medical implants, and diagnostic equipment. Helium is essential for MRI machines. Molybdenum isotopes are used in nuclear medicine. Disruptions to these minerals have direct human health consequences.

Evolving Economic Importance

A mineral's economic importance is not static. It evolves as technologies change, new applications emerge, and industries grow or contract. Two decades ago, lithium's primary applications were in ceramics, glass, and lubricants. Its economic importance score would have been moderate at best. The explosion of lithium-ion battery demand has transformed lithium into one of the most economically important minerals on Earth, with its downstream value chain projected to exceed $400 billion by 2030.

Similarly, the economic importance of rare earth elements has risen sharply as permanent magnet motors have become the technology of choice for electric vehicles and wind turbines. The shift from internal combustion engines to electric powertrains has elevated neodymium, praseodymium, and dysprosium from specialized industrial inputs to minerals with systemic economic significance.

Implications for Policy and Investment

High economic importance scores drive policy action. Governments prioritize minerals with the highest economic importance for stockpiling programs, trade agreements, and domestic production incentives. Investors use economic importance analysis to identify minerals where price premiums are likely to persist, because downstream industries will pay almost any price to secure supply rather than shut down production lines. Companies use these assessments to evaluate supply chain risk and make strategic sourcing decisions.

Understanding economic importance in the context of criticality frameworks is essential for anyone seeking to navigate the complex landscape of mineral supply, demand, and geopolitics that defines the 21st-century resource economy.