Trade Flows and Customs Codes for Critical Minerals

International trade data is one of the most valuable tools for understanding how critical minerals move across borders, which countries depend on which suppliers, and where supply chain vulnerabilities exist. Every shipment of lithium carbonate, cobalt hydroxide, rare earth oxide, or processed metal that crosses a national border is recorded in customs databases using standardized classification codes. Analyzing these trade records reveals the physical geography of critical mineral supply chains in a way that no other data source can match. For policymakers assessing import dependencies, investors evaluating supply chain risks, and analysts building supply-demand models, trade flow analysis is an indispensable skill.

The Harmonized System (HS) Code Framework

The Harmonized Commodity Description and Coding System, known as the HS code system, is the international standard for classifying traded goods. Maintained by the World Customs Organization (WCO) and used by over 200 countries, the HS system assigns a six-digit code to each product category. Countries then extend these codes to eight or ten digits for more granular domestic classification. For critical minerals, HS codes differentiate between ores and concentrates, intermediate products, refined metals, and chemical compounds. Lithium carbonate, for example, falls under HS code 2836.91, while lithium oxide and hydroxide are classified under 2825.20. Cobalt ores and concentrates are coded as 2605.00, while unwrought cobalt metal is 8105.20.

The specificity of HS codes varies across minerals. Base metals like nickel and tin have well-established, detailed classification hierarchies that distinguish between different product forms (ores, mattes, intermediates, unwrought metal, wrought products). Specialty and minor metals often have less granular coding, with multiple distinct materials sometimes sharing a single HS code. Rare earth elements present a particular challenge: while HS codes distinguish between certain rare earth compounds, they do not always differentiate between individual rare earth elements, making it difficult to track the trade of specific high-value elements like dysprosium or terbium separately from lower-value cerium or lanthanum.

Major Trade Data Sources

Several databases compile international trade data and make it accessible for analysis. The United Nations Comtrade database is the most comprehensive global repository, collecting customs data reported by national statistical agencies. The International Trade Centre (ITC) Trade Map provides user-friendly access to the same data with additional analytical tools. National statistical agencies, such as the U.S. Census Bureau, Eurostat, and China Customs, publish detailed trade statistics for their respective jurisdictions, often at greater granularity than the international databases.

For critical minerals specifically, specialized data providers offer enhanced trade flow analysis. S&P Global Market Intelligence, CRU Group, and Benchmark Mineral Intelligence compile shipment-level data and combine it with proprietary intelligence to map critical mineral supply chains from mine to end user. These services are particularly valuable for materials where standard HS code data lacks sufficient granularity or where re-export patterns obscure the true origin of traded materials.

Interpreting Trade Flow Patterns

Trade flow analysis for critical minerals reveals several important patterns. The most fundamental is the flow of raw materials from resource-rich nations to processing hubs, particularly China. Australia exports the majority of its lithium spodumene concentrate to China for conversion into lithium chemicals. The Democratic Republic of Congo ships cobalt hydroxide and concentrate primarily to China for refining into cobalt metal and sulfate. Myanmar and Myanmar-origin rare earth ores flow to Chinese separation and processing facilities. These flows illustrate the critical role of China's midstream processing capacity and the dependence of upstream producers on Chinese demand.

A second pattern involves the re-export of processed materials from China to downstream manufacturing centers. China imports raw materials, processes them into battery chemicals, magnets, and other intermediate products, and exports these to South Korea, Japan, Europe, and North America. Tracking these re-export flows is essential for understanding the true supply chain dependencies of manufacturing nations. A European automaker may source its battery cells from a Korean supplier, but the cathode materials in those cells likely originated from Chinese processors using African or Australian raw materials. Trade flow analysis makes these multi-step dependencies visible.

Challenges in Trade Data Analysis

Trade data analysis for critical minerals faces several challenges. Reporting discrepancies between exporting and importing countries are common, as customs classification practices, valuation methods, and reporting timelines vary. For some trade flows, the exporter-reported data may differ significantly from the importer-reported data for the same shipment, requiring analysts to reconcile or choose between mirror statistics. Transshipment and re-export through intermediate countries such as the Netherlands, Singapore, and the United Arab Emirates can obscure the true origin and destination of materials, particularly for materials traded by intermediaries and trading houses.

Classification ambiguity poses additional challenges. When HS codes do not distinguish between different grades or forms of a material, it is difficult to determine whether a shipment consists of battery-grade lithium hydroxide or technical-grade material, even though the two have very different values and end-use applications. Some countries classify mixed or intermediate products under catch-all HS codes, making it impossible to attribute the trade value to specific critical minerals. Furthermore, trade data is typically published with a lag of several months, limiting its usefulness for real-time market monitoring.

Trade Flow Analysis for Policy and Strategy

Governments increasingly use trade flow analysis to identify critical mineral supply chain vulnerabilities and inform policy responses. The European Commission's supply chain analysis under the Critical Raw Materials Act draws heavily on trade data to assess import dependencies and identify concentration risks. The U.S. Department of Commerce has used trade flow analysis to support Section 232 investigations and critical mineral supply chain assessments. Australia, Canada, and the United Kingdom have all published supply chain mapping exercises that rely on trade data to quantify dependencies on Chinese and other concentrated supply sources.

For commercial participants, trade flow analysis supports sourcing strategy, competitor intelligence, and market entry decisions. A battery manufacturer evaluating alternative cathode material suppliers can use trade data to identify which countries and companies are shipping relevant products and in what volumes. A mining company assessing market opportunities can analyze import trends in target markets to estimate demand for its products. Traders use real-time shipment data and customs intelligence services to track physical flows and identify arbitrage opportunities between regions.

The IRA and Trade Flow Compliance

The U.S. Inflation Reduction Act (IRA) has elevated the importance of trade flow tracking for the critical minerals sector. The IRA's clean vehicle tax credit includes requirements that a specified percentage of critical mineral value must be extracted or processed in the United States or a country with which it has a free trade agreement. Compliance requires automakers and battery manufacturers to trace the origin of battery minerals through the supply chain, a task that depends fundamentally on trade documentation and customs classification. This traceability requirement has created new demand for supply chain transparency tools, chain-of-custody certification systems, and enhanced trade data analysis capabilities.

The IRA's "foreign entity of concern" provisions further complicate trade flow analysis by requiring that battery components and critical minerals not be sourced from entities controlled by designated countries, primarily China, Russia, North Korea, and Iran. Determining whether a material has passed through a foreign entity of concern at any stage in the supply chain requires detailed knowledge of trade flows, corporate ownership structures, and processing pathways that goes well beyond standard HS code analysis. These requirements are driving investment in supply chain traceability technologies, including blockchain-based tracking systems and digital product passports. See Market Manipulation and Transparency for more on the broader transparency challenges in these markets.