## Café Economics — Mine the Gap

## Source details

**Canonical URL:** [Café Economics — Mine the Gap](https://www.imf.org/-/media/files/publications/fandd/article/2026/06/cafe-econ.pdf)

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### Interviewee background
- Gracelin Baskaran: minerals expert, founding director of the Critical Minerals Security Program at the Center for Strategic and International Studies, PhD from the University of Cambridge.
- Professional focus: mining economics and critical-minerals strategy; has worked on uranium, copper, cobalt, platinum, and rare earths.
- Early experience: lived in Rustenburg, South Africa, where the town produced 70 percent of the world’s platinum during her time there.

### Why critical minerals matter
- Minerals are "mission critical" to economic, national, and energy security: used in phones, computers, defense technologies, semiconductors, and cars.
- Supply-chain concentration creates broad economic risk—example: rare earth export restrictions caused Ford to stop manufacturing in Chicago, Japan to stop manufacturing the Suzuki, and disrupted vehicle manufacturing in Europe.
- Policy framing shift: mineral security framed as both a national security imperative and an economic security imperative.

### Rare earths: availability versus processing
- "Rare earths are not actually rare" — the challenge is processing and finding sufficiently concentrated deposits.
- Processing complexity: separation requires "more than 50 steps" to achieve necessary purity.
- Processing concentration: China was processing 99.5 percent of heavy rare earths when export restrictions went into effect.
- Industry time horizons: mining is not an overnight industry; in the US "it takes 29 years for a mine to start producing after a deposit is first identified."

### Industrial policy and Project Vault
- Historical context: industrial policy has been used by many countries to incubate industries (examples cited: Japan subsidized Honda; Finland subsidized Nokia).
- Project Vault: described as a US flagship initiative and an "economic security stockpile" intended to ensure access to critical minerals for civilian technologies (autos, semiconductors, energy) in the event of supply disruptions.
- Stockpiling precedent: "We have stockpiled for defense since 1939." Project Vault extends the logic to economic security.

### Global distribution and geopolitical implications
- Contrast with oil: critical minerals (60 on America’s list) are "everywhere," making cartels harder to form than in oil (OPEC model).
- Geopolitical engagement: race for minerals requires engagement with a broader set of countries, particularly in Africa and Latin America.
- Processing capacity outlook: because processing expertise is concentrated, "processing will remain concentrated in the hands of a single country for some time."

### Africa: opportunity and constraints
- New commercial diplomacy focus: the world is engaging Africa as a source of resources rather than only as an aid recipient, creating competitive interest.
- Policy moves in some African countries: Ghana, Namibia, and Zimbabwe have introduced restrictions on mineral exports to capture more in-country value addition ("If you’re not processing here, minerals aren’t leaving the country.").
- Preconditions for shared benefits: stable investment environments, consistent policies (particularly around taxation), and reinvestment of resource revenues in physical infrastructure, human capital, and sustainable resource management.
- Current challenge: reaching the necessary level of stability "remains a struggle."

### Minerals and the energy transition: scale of demand
- Clean-energy technologies are major drivers of mineral demand.
- Vehicle mineral intensity:
  - "The average internal combustion engine uses 32 kilograms of critical minerals."
  - "The average electric vehicle uses 210 kilograms" — "a sixfold increase."
- Implication: transitioning to clean energy requires substantial expansion of mining and processing capacity beyond current levels.

### Key findings and takeaways
- Mining timelines are long: example "29 years" from deposit identification to production in the US.
- Processing—not raw geology—is the chokepoint for rare earths: "more than 50 steps" and concentrated processing (99.5 percent for heavy rare earths).
- Mineral security is framed as economic as well as national security; Project Vault exemplifies this shift.
- The global mineral race opens opportunities for African countries but depends on governance, policy consistency, and reinvestment.
- Clean-energy adoption will markedly increase mineral demand (from 32 kilograms to 210 kilograms per vehicle).

*Interview edited for length and clarity.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2026/06/cafe-econ.pdf_