Boston Consulting Group has identified three weaknesses in how industrial manufacturers assess critical mineral shortages, warning that purchasing data can conceal dependencies capable of interrupting production even when the materials involved account for a negligible share of expenditure.
Research published on 27 October examines the value of minerals embedded in products, exposure through manufacturing equipment and the concentration of processing capacity. Its estimates point to demand for selected inputs, including rare earth elements, graphite, copper and lithium, reaching roughly 120% to 250% of forecast supply through 2040. These are modelled balances for different materials and periods, not a prediction that every mineral will face the same deficit.
The analysis places particular emphasis on materials that BCG calls mosquito minerals. Their individual markets can be small, yet they support manufactured products whose value is orders of magnitude greater. Gallium is the clearest example: the consultancy estimates annual production at approximately 900 tonnes and the global market at less than US$350 million, while about US$3.5 trillion worth of finished products depend on technologies incorporating the material.
Those downstream products include power and high-speed semiconductor devices and communications hardware. The US$3.5 trillion estimate is the value of dependent products, not the amount of gallium consumed or sold. The exposure arises because the functionality of a finished system can depend on a component that cannot be replaced quickly without redesign or requalification.
In power electronics, for example, substituting a semiconductor technology can change switching losses, thermal management and the supporting circuit. Even where an alternative component is technically available, a manufacturer may need to test it across the relevant operating conditions and revise the production process before use.
BCG’s first identified blind spot is the tendency to rank supply risks by purchasing value. This approach draws attention to expensive materials but can miss small-volume inputs whose unavailability prevents an entire assembly from being completed. Rare earth elements used in permanent magnets account for a small proportion of the value of an electric vehicle, yet they can be central to the performance of its traction motor.
The second blind spot lies beyond the manufacturer’s direct supplier base. Minerals can reach an assembly plant inside purchased motors, magnets, power modules, sensors and optical components. The immediate supplier may provide a finished subassembly without making the upstream refining and material dependencies obvious to the customer.
The same issue affects production equipment. Tungsten carbide cutting tools bonded with cobalt are used to machine demanding engineering materials, including aerospace components. A shortage of appropriate cutting tools can constrain production even though neither tungsten nor cobalt appears in the bill of materials for the finished component.
A machining process is qualified around the properties of the tool, workpiece and equipment. Changing tool grade may require adjustment of cutting speeds, feeds, cooling and inspection procedures. The availability of an alternative tool therefore does not always provide an immediately usable replacement for a production line.
The third blind spot concerns the difference between mineral extraction, processing location and control of refining assets. A diversified list of mine locations may conceal dependence on a small number of facilities capable of turning concentrates into material suitable for industrial use. Ownership concentration can also persist when processing takes place across several countries.
BCG highlights China’s dominant role in processing rare earth elements and substantial shares of other critical mineral supply chains. It also identifies Chinese ownership in parts of Indonesia’s nickel refining sector as a reason that geographic diversification may not always deliver genuinely independent sources.
Processing requirements differ considerably between minerals. Obtaining a concentrate does not establish that a producer can manufacture battery-grade compounds, high-purity semiconductor inputs or materials meeting an individual customer’s specification. Chemical conversion, impurity control and consistent testing may require equipment and experience that cannot be added quickly.
Some specialist minerals are recovered as byproducts of operations driven by larger commodity markets. Gallium, germanium and arsenic can consequently have limited supply flexibility: even a sharp increase in the price of a minor byproduct may not justify expanding the underlying host-metal operation. For ultra-high-purity arsenic, BCG estimates that a single producer supplies about 60% of global demand for the specified grade.
The potential consequences extend into finance. BCG cites roughly US$65 billion of public critical-mineral financing commitments in advanced economies in 2025, while finding that deployment of capital under some national programmes remains below 10% of allocations. A funding commitment is not equivalent to cash already invested in a mine or refinery.
New processing projects commonly need credible prospective customers, commercial offtake arrangements and technical specifications before capital can be committed. A manufacturer unable to quantify its dependence on a material may struggle to support the commitments needed to develop an alternative source.
The consultancy recommends mapping dependencies beyond direct purchases, qualifying independent suppliers, designing products for greater material flexibility, developing circular recovery routes and securing supplies through appropriate commercial agreements. Each measure introduces engineering and financial work rather than removing exposure by declaration.
Recycling, for example, is useful only where collection, separation and refining can return materials at the grade required for manufacturing. Product redesign also depends on demonstrating that substitutes satisfy performance, reliability and safety requirements under real operating conditions.
The research does not announce a new export restriction or establish that a particular factory has run out of material. It identifies gaps in industrial risk assessments that could leave production exposed long before shortages become visible through ordinary purchasing expenditure. Supplier maps need to cover both critical inputs inside components and specialist materials consumed by the equipment used to manufacture them.
