BAKU, Azerbaijan, November 2. Kazakhstan's ability to strengthen its position in global supply chains will depend not only on its mineral resources but also on its capacity to process them domestically, according to a study by Boston Consulting Group (BCG) titled "Why Critical Mineral Shortages Are a CEO Issue".
"Amid the growing dependence of global industry on critical minerals, Kazakhstan's role in global supply chains will be determined not only by its resource base but also by the development of its own processing capacity. Kazakhstan is already taking steps to move from raw material exports towards deeper processing and the development of higher value-added production. Attracting international partners, investment, and advanced technologies is becoming an important area of focus," said Mikhail Volkov, Managing Director and Partner at BCG.
BCG also noted that even if a company purchases virtually no critical minerals directly, it may still be heavily dependent on their supply, as these minerals are used in electric motors, magnets, power modules, lasers, and sensors. They are also used in the equipment and manufacturing processes involved in producing these components, ranging from crucibles, catalysts, and dies to production machinery itself.
For example, turbine blades, engine blocks, and structural components of aircraft are machined using tungsten carbide cutting tools with cobalt binders. A manufacturer that has never purchased these metals directly may nevertheless face production stoppages due to a shortage of such tools. At the same time, this type of dependence is not reflected in the material specifications of the final product.
"Companies also tend to assess risks based on the geographical distribution of critical mineral extraction. However, for some minerals, the main bottleneck is not extraction but processing. At the same time, the geographical locations of production assets and their ownership structures may differ significantly. Therefore, changing suppliers, which may appear to be diversification at first glance, does not always reduce a company's actual dependence," the BCG report says.
