Supply chain transparency and traceability in critical mineral extraction are essential for ensuring responsible sourcing, verifying ethical practices, and maintaining accountability across the entire value chain. Traceability allows stakeholders to track the origin, processing, and distribution of minerals, while transparency ensures that all supply chain actors adhere to ethical, environmental, and human rights standards.

Traceability Systems and Technologies

Advances in traceability systems and technologies have transformed the critical minerals sector, providing tools to verify the origin, sustainability, and ethical practices of mineral supply chains. These systems enhance transparency but face limitations in data integrity, scalability, and adoption, particularly in regions with weak regulatory oversight.

Blockchain integration:

Blockchain technology offers secure, tamper-proof tracking of minerals from extraction to end use, creating a digital ledger that records each transaction or transformation within the supply chain. It is especially valuable for high-risk minerals, such as cobalt and rare earth elements, where traceability is critical to prevent unethical sourcing. Blockchain systems can integrate with Internet of Things (IoT) devices, automating data capture and reducing manual record-keeping. However, blockchain is only as reliable as the data entered, making it vulnerable to inaccurate or falsified inputs.

• Circulor and Volvo: Volvo has partnered with Circulor to track cobalt used in electric vehicle batteries. This system traces cobalt from artisanal mines in the Democratic Republic of the Congo (DRC) through refining and processing to final assembly in electric vehicles. By using blockchain, Volvo can monitor each transaction in real time, ensuring compliance with ethical sourcing standards. The project is part of a broader initiative by Volvo to ensure that all critical minerals in its vehicles are sourced responsibly. However, independent audits have shown that blockchain solutions can be bypassed through unregistered intermediaries and unverified suppliers in the DRC.
• IBM and Everledger: IBM’s blockchain solutions, including partnerships with Everledger, provide traceability for diamond mining, ensuring ethical sourcing and transparency in the jewelry industry. Everledger’s platform uses blockchain to document the origin, ownership history, and certification of diamonds from mining sites to retail stores. This approach has been extended to other high-value minerals, including colored gemstones and rare earth elements. Despite its success, Everledger has faced challenges in maintaining data accuracy due to reliance on manual input at the mining stage. Smuggling and counterfeit certifications remain significant risks in high-value mineral supply chains.
• Ford and Huayou Cobalt: Ford uses blockchain with Huayou Cobalt and LG Chem to ensure that cobalt in its electric vehicle batteries is sourced ethically, with all supply chain actors verified and audited. This system tracks cobalt from mining operations in the DRC, through processing and refining, to battery production and vehicle assembly. Ford’s approach includes on-site audits and third-party verification of suppliers. However, reports from human rights organizations have shown that even blockchain-verified supply chains can fail to eliminate child labor and unsafe working conditions at the mining level. The complexity of the DRC’s supply chain, with its mix of artisanal and industrial sources, remains a significant challenge.
• Rio Tinto’s Blockchain for Aluminium: Rio Tinto has launched a blockchain-based traceability system for its aluminum production, known as START, which provides customers with detailed sustainability data, including carbon emissions, water usage, and social impact metrics for each batch of aluminum produced. This initiative aims to provide transparency and build customer trust, but critics argue that the system’s reliance on self-reported data from suppliers limits its effectiveness.

Geospatial monitoring and remote sensing:

Geospatial monitoring and remote sensing use satellite imagery and aerial surveillance to detect illegal mining activities, deforestation, and environmental degradation at mining sites. These technologies offer a near-real-time view of mining operations, helping to identify unlicensed mines, monitor ecosystem impacts, and track compliance with environmental regulations. Despite their effectiveness, remote sensing solutions can be costly to deploy at scale and may face legal restrictions in certain regions.

• Planet Labs and the Amazon Rainforest: Planet Labs uses satellite imagery to monitor illegal gold mining in the Amazon basin, providing government agencies and environmental groups with real-time data on unauthorized operations. This system has identified extensive deforestation in protected areas, including Indigenous territories. Despite the availability of this data, enforcement has been inconsistent, with illegal miners often relocating to evade detection.
• Global Forest Watch (GFW): GFW, a platform developed by the World Resources Institute, provides real-time deforestation alerts using satellite data from NASA, ESA, and commercial providers. Companies like Apple use GFW to monitor the environmental impact of raw material sourcing, including forest degradation linked to bauxite mining in Southeast Asia. However, GFW’s reliance on public satellite data limits its resolution, making it less effective for detecting small-scale illegal mining operations.
• Earth-i and cobalt mining in the DRC: Earth-i, a geospatial intelligence company, has developed a satellite monitoring system to track artisanal cobalt mining in the DRC. This system provides transparency into areas of high-risk labor practices, identifying new mining sites, monitoring environmental impacts, and detecting illegal dumping of mining waste. Earth-i’s data has been used by human rights organizations to document labor abuses and environmental violations. Enforcement remains a challenge, as local authorities often lack the resources or political will to act.
• Global fishing watch and illegal sand mining: Although primarily focused on illegal fishing, Global Fishing Watch has adapted its satellite monitoring system to detect illegal sand mining in Southeast Asia. Sand mining, a critical but unregulated industry, has led to coastal erosion, habitat destruction, and conflicts with local communities. Satellite data helps identify unauthorized dredging activities and provides evidence for regulatory action.

Digital tracing solutions:

Digital tracing solutions, including QR codes, RFID tags, and digital passports, provide real-time tracking of minerals from extraction to the final product. These solutions can be integrated into packaging, shipping containers, and end-user products, offering consumers and businesses a clear view of product origins. However, digital tracing is only effective if adopted throughout the supply chain, and it can be compromised by fraudulent labeling or tampering.

• Tracr by De Beers: De Beers uses the Tracr blockchain platform to provide traceability for diamonds, ensuring that each stone is conflict-free. The system tracks diamonds from mining and cutting to retail, providing a digital certificate of origin and quality for each stone. Tracr has been expanded to include colored gemstones, reflecting growing consumer demand for transparent sourcing. However, critics have noted that traceability is only as reliable as the initial data entered, and conflict diamonds can still enter the supply chain through unregulated markets.
• Tesla’s lithium supply chain: Tesla has implemented digital tracking for lithium sourced from South American brine operations, providing transparency for battery manufacturing. Each batch of lithium is tagged with a digital identifier, which tracks its journey from extraction to battery production. This approach allows Tesla to monitor the environmental and social impact of its lithium suppliers, but independent audits have revealed discrepancies between reported data and actual environmental practices, including excessive water use in the Salar de Atacama.
• Microsoft’s rare earth supply chain: Microsoft has partnered with British blockchain firm Circulor to track rare earth elements used in its products, including the Surface line of computers. The system integrates QR codes and blockchain records to verify the origin and sustainability of rare earth supplies from China, Malaysia, and the United States. Despite this initiative, Microsoft has faced criticism for failing to disclose the full list of suppliers or the criteria used to define “sustainable” sourcing.
• GemFair by De Beers: A subsidiary of De Beers, GemFair uses digital tracking, including handheld devices with QR code readers, to ensure ethical sourcing of diamonds from small-scale mines in Sierra Leone. Participating miners receive digital certification for their stones, which are tracked through the supply chain to international markets. However, the program has been criticized for excluding miners who cannot meet certification standards, potentially pushing them into black market sales.

Responsible Sourcing Initiatives

International standards and certification programs:

Companies adopt recognized standards to ensure responsible sourcing of critical minerals.

• OECD Due Diligence Guidance for Responsible Mineral Supply Chains: A global standard requiring companies to conduct due diligence on supply chain risks, particularly for minerals from conflict-affected regions.
• Responsible Cobalt Initiative (RCI): A multi-stakeholder initiative launched by the Chinese Chamber of Commerce of Metals, Minerals, and Chemicals to improve cobalt sourcing in the DRC.
• Aluminum Stewardship Initiative (ASI): A global standard promoting responsible production, sourcing, and stewardship of aluminum, adopted by companies like Rio Tinto and Hydro.
• London Metal Exchange (LME) Responsible Sourcing Requirements: The LME mandates that all listed companies must meet minimum standards for responsible sourcing, including third-party audits.

Company-specific policies and agreements:

Companies establish internal policies and supplier agreements to enforce responsible sourcing.

• Apple’s Supplier Code of Conduct: Apple requires all suppliers to adhere to strict environmental, labor, and ethical standards, with annual audits and public reporting of violations.
• Tesla’s Conflict Minerals Report: Tesla’s annual Conflict Minerals Report discloses its due diligence practices for sourcing cobalt, tin, tungsten, and gold.
• Samsung SDI and Responsible Cobalt Sourcing: Samsung SDI has established direct agreements with artisanal mining cooperatives in the DRC, ensuring that only verified, ethically sourced cobalt is used in battery production.

Multi-stakeholder initiatives and collaboration:

Industry groups and multi-stakeholder initiatives promote best practices and align supply chain actors on transparency.

• Global Battery Alliance (GBA): A public-private partnership including companies like Glencore, Tesla, and Volkswagen, focused on responsible battery material sourcing.
• European Partnership for Responsible Minerals (EPRM): An initiative supporting small and medium-sized enterprises in adopting responsible sourcing practices for conflict minerals.
• Extractive Industries Transparency Initiative (EITI): A global standard for transparency in extractive industries, requiring public disclosure of payments, licensing terms, and environmental impacts.

Audits, Verification, and Accountability

Third-party audits and verification:

Companies are increasingly subject to independent audits to verify compliance with responsible sourcing standards.

• RMI (Responsible Minerals Initiative) Audits: Used by companies like Intel and Apple to verify responsible sourcing of conflict minerals.
• RCS Global Group Audits: Provides supply chain audits for cobalt, tin, tungsten, and tantalum, with clients including BMW, Samsung, and Ford.
• Deloitte and ISO 14001 Certification: Mining companies like Rio Tinto and Anglo American use third-party auditors to maintain environmental management system certifications.

Transparent reporting and public disclosures:

Companies are expected to publicly report supply chain practices, compliance rates, and audit outcomes.

• Microsoft’s Responsible Sourcing Report: Discloses the company’s due diligence processes for sourcing raw materials used in electronic devices.
• BMW’s Sustainable Supply Chain Report: Provides detailed disclosure on the origin of materials, including lithium, cobalt, and nickel used in electric vehicles.
• Rio Tinto’s Sustainability Report: Discloses third-party audit outcomes, water usage, tailings management, and biodiversity protection for each operational site.

Enforcement and remediation:

Companies are held accountable for violations of supply chain standards, facing fines, litigation, and reputational damage.

• Glencore’s Legal Settlements: Glencore has paid over $1.5 billion in settlements related to corruption and environmental violations across its global operations.
• Vale’s Penalties for Environmental Disasters: Following the Brumadinho dam collapse, Vale has faced lawsuits totaling over $7 billion in damages and has been ordered to implement stricter environmental management.
• Tesla and Supplier Violations: Tesla has terminated supplier contracts over non-compliance with labor and environmental standards.

Challenges and Emerging Issues

Supply chain complexity and traceability gaps:

Multi-tiered supply chains complicate transparency, particularly for minerals like cobalt, where artisanal and industrial sources are mixed. Critical minerals often pass through numerous intermediaries before reaching end-users, creating opportunities for misrepresentation and fraud. The integration of artisanal and small-scale mining (ASM) with large-scale industrial mining further obscures the true origin of materials.

• Congo cobalt supply chain: Despite blockchain initiatives and supplier audits, child labor, hazardous working conditions, and exploitative labor practices remain widespread in artisanal cobalt mining in the Democratic Republic of the Congo (DRC). The country supplies nearly 70% of the world’s cobalt, but a significant portion originates from unregulated ASM sites. These sites are often controlled by informal networks, including intermediaries and small traders, who sell cobalt ore to larger industrial processors. Although companies like Glencore and Umicore have implemented blockchain traceability systems, they struggle to ensure full transparency due to extensive use of third-party aggregators. The existence of unlicensed traders and the widespread practice of commingling artisanal and industrial ores further compromise traceability efforts.
• Gold supply chain in Latin America: Gold sourced from artisanal mines in Peru and Colombia is frequently mixed with gold from industrial operations, creating a similar traceability challenge. Despite certification schemes such as the London Bullion Market Association (LBMA) Responsible Gold Guidance, smuggling networks and false documentation allow illegal gold to enter legitimate supply chains. Swiss refineries, which process a significant share of the world’s gold, have been criticized for insufficient due diligence on supply origins.
• Lithium supply chain in Argentina: Argentina is part of the “Lithium Triangle” alongside Chile and Bolivia, but the supply chain is marked by complex ownership structures, including joint ventures between multinational companies and local firms. Brine extraction operations often involve multiple subcontractors, each with different environmental and labor practices. Inadequate monitoring and regulatory oversight allow harmful practices, such as excessive groundwater use, to persist despite sustainability certifications.

Geopolitical tensions and resource nationalism:

Governments increasingly impose export restrictions, taxes, or local beneficiation requirements on critical minerals, using resource nationalism as a strategy to maximize domestic economic benefits. These measures create supply chain volatility, impact global pricing, and drive companies to relocate processing and refining operations.

• Indonesian nickel export ban: Indonesia, the world’s largest nickel producer, has imposed a ban on the export of raw nickel ore since 2020, requiring local refining and processing to capture greater economic value. In response, companies like Tsingshan Holding Group, China’s leading stainless steel producer, have invested billions of dollars in large-scale nickel processing facilities in Indonesia, including the Weda Bay Industrial Park. This shift has transformed Indonesia into a global hub for nickel refining, but has also raised environmental and human rights concerns, including deforestation, pollution, and labor exploitation. The government’s recent decision to include copper and bauxite in the export ban is expected to trigger further investment in domestic processing.

Greenwashing and misleading claims:

Companies may exaggerate sustainability achievements or hide poor practices behind certifications. This issue is particularly pronounced in the critical minerals sector, where sustainability certifications can be inconsistent and easily manipulated.

• Lithium extraction in Chile’s Salar de Atacama: Despite certifications of sustainable water use, reports from independent audits have shown that water extraction rates in Chile’s Salar de Atacama exceed natural replenishment, causing severe environmental damage. SQM and Albemarle, the two largest lithium producers in the region, have been accused of underreporting water consumption and failing to mitigate ecosystem impacts. Indigenous communities in the Atacama region have reported declining water tables, desertification, and loss of traditional grazing lands, directly contradicting sustainability claims made by the companies. Despite the implementation of water monitoring agreements with the Chilean government, enforcement has been inconsistent.
• Carbon-neutral nickel from Indonesia: Several nickel producers in Indonesia, including those operating in the Morowali Industrial Park, have marketed their products as “carbon-neutral” due to the use of hydropower. However, investigations have revealed that most nickel refining in the region relies heavily on coal-fired power plants, which generate significant emissions. Carbon offsets purchased by these companies have been criticized as inadequate, with many linked to low-quality or unverifiable offset projects. Environmental groups have documented deforestation, habitat destruction, and air pollution in communities surrounding the nickel processing facilities.
• Electric vehicle battery supply chains: Automakers, including Tesla, Volkswagen, and General Motors, have promoted their electric vehicles as sustainable, highlighting traceability initiatives for battery minerals. However, reports from Amnesty International and Global Witness have revealed persistent labor abuses in cobalt supply chains, including child labor and hazardous working conditions in the DRC. While companies have adopted blockchain solutions and supplier codes of conduct, these measures often fail to detect or prevent abuses at the mining and processing stages.
• Misleading water use claims in Australian lithium operations: Lithium producers in Western Australia have marketed their operations as low-impact due to their use of hard rock (spodumene) mining rather than brine extraction. However, independent studies have shown that hard rock mining consumes significant energy and water, particularly in processing and refining stages. Companies like Pilbara Minerals and Mineral Resources have faced criticism for presenting incomplete sustainability metrics that ignore water-intensive chemical processing.