The critical minerals value-addition myth: Why mineral-rich countries may struggle to realize added value

Critical minerals (CMs) global value chains (GVCs) are central to the energy transition. Beyond their crucial role in reducing fossil fuel dependence, governments across the world and international organisations see them as an opportunity for mineral-rich countries to develop and join downstream sectors of the mineral GVC. While natural resources, under certain conditions, may drive value chain upgrading, turning the rising global demand for CMs into sustainable economic development is more complex than portrayed in the policy discourse. By integrating the Marxian political economy concepts of conditions of production and conditions of exchange with the Global Value Chains (GVC) framework from development economics, we examine the patterns and constraints shaping value chain upgrading for countries with nickel and copper reserves in the context of the energy transition. Using Hausmann et al. (2023)'s Product Complexity Index (PCI) as a proxy for the conditions of production required to enter each stage of the minerals' GVCs, and the Economic Complexity Index (ECI) as a proxy for countries' existing productive capabilities, we compare the two to illustrate the gap between required and existing productive capabilities among countries with significant mineral reserves. We then analyse corporate control over mine output to illustrate how control over conditions of exchange, particularly lead-firm control, influences opportunities for value chain participation and value capture across countries with reserves above 8000 kt for copper and above 2100 kt for nickel according to the U.S. Geological Survey (2025). The findings suggest that many low- and middle-income countries with mineral resources have insufficient conditions of production and exchange to succeed in value-upgrading efforts within the energy transition timeline. While some countries with higher complexity appear better positioned to participate in higher-value segments of the GVCs, value capture remains challenging under the current GVC governance structures.