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Value addition or Subtraction? A Comparative case analysis of policy pathways for value addition and their role in optimising critical mineral driven industrialisation in upstream producer states

Austin Rezola, Ottavia Nina LU (2025) In IIIEE Master Thesis IMEM01 20251
The International Institute for Industrial Environmental Economics
Abstract
In the coming decades, the twin energy and digital transitions will require the rapid scaling and deployment of renewable energy technologies and advanced technologies within ‘critical raw materials’ (CRMs) are essential components. At the same time, as CRM reserves are heterogeneously distributed, concentrated in a few countries with refining in even fewer still, demand is expected to outstrip supply in the short to medium term. Transforming global mineral value chains across all actors and segments, this comes with the implicit recognition that the energy transition will require the expansion and diversification of extractive activities. In this vacuum, there is increasing consensus from mineral-rich producer states on need to leverage... (More)
In the coming decades, the twin energy and digital transitions will require the rapid scaling and deployment of renewable energy technologies and advanced technologies within ‘critical raw materials’ (CRMs) are essential components. At the same time, as CRM reserves are heterogeneously distributed, concentrated in a few countries with refining in even fewer still, demand is expected to outstrip supply in the short to medium term. Transforming global mineral value chains across all actors and segments, this comes with the implicit recognition that the energy transition will require the expansion and diversification of extractive activities. In this vacuum, there is increasing consensus from mineral-rich producer states on need to leverage their strategic positioning to move beyond extraction and pursue ‘value addition’ in order to advance CRM-driven industrialisation. Indeed, in September 2024, the United Nations Secretary General established the Panel on Critical Energy Transition Minerals, whose report which called for ‘development fostered though benefit sharing, value addition and economic diversification’. However, competitively moving up mineral value chains is a complex, capital intensive and inherently risky policy strategy influenced by a wide variety of contextual, mineral specific, and market factors which influence competitiveness and integration capacity.
Although the topic of value addition has gained momentum in domestic and international domains, to date, very few low-middle income mineral rich states have managed to successfully translate value added intentions into value added realities. In this frame, considerable uncertainty persists around what successful, equitable and sustainable value addition policies could look like, and if, or under which conditions this strategy can be pursued. As described in the UNSG Gap analysis report (NRGI, 2024), it is to this empirical, conceptual and methodological gap that this research seeks to contribute.

Embracing complexity, this study adopts a comparative case study approach, to trace design, effectiveness and impacts of Nickel value addition policy mixes in Indonesia and New Caledonia. Combining aspects of global value chain analysis (GVCA) and public policy analysis (PPA) methodologies, specifically programme theory and stakeholder driven evaluation. This approach offers a comprehensive methodology allows researchers and policy makers to systematically trace and account for how the often contradictory economic and environmental-social goals of industrial policy, revealing the trade-offs and externalities which shape domestic policy outcomes. Informed by stakeholder perspectives and interviews, this research uses case analysis to shed light into both the value addition and value subtraction, providing currently understudied insight into sustainability dimensions of critical mineral-driven industrialisation.

Tracing the Indonesian and New Caledonian experiences, the findings show that value addition cannot be assumed or approached as a benefit sharing solution to the decarbonisation divide: it too will have its own winners and losers. Rather if critical-mineral driven industrialisation is to deliver intended outcomes for society, its goals and design must be pragmatic, dynamic, and tailored to both their domestic industrial contexts and reflective of the rapidly shifting dynamics of global mineral value chains. Furthermore, this research motivates that if the outcomes of future value addition policies are equitable in the long term, a key conceptual starting point should be to clarify and problematize the purely economic utilization of the term. Instead, this research argues for future advancement of a more integrated, holistic, and sustainability-centered approach that pays more attention to the question: value addition for whom? (Less)
Popular Abstract
In the coming decades, the twin energy and digital transitions will require the rapid scaling and deployment of renewable energy technologies and advanced technologies within ‘critical raw materials’ (CRMs) are essential components. At the same time, as CRM reserves are heterogeneously distributed, concentrated in a few countries with refining in even fewer still, demand is expected to outstrip supply in the short to medium term. Transforming global mineral value chains across all actors and segments, this comes with the implicit recognition that the energy transition will require the expansion and diversification of extractive activities. In this vacuum, there is increasing consensus from mineral-rich producer states on need to leverage... (More)
In the coming decades, the twin energy and digital transitions will require the rapid scaling and deployment of renewable energy technologies and advanced technologies within ‘critical raw materials’ (CRMs) are essential components. At the same time, as CRM reserves are heterogeneously distributed, concentrated in a few countries with refining in even fewer still, demand is expected to outstrip supply in the short to medium term. Transforming global mineral value chains across all actors and segments, this comes with the implicit recognition that the energy transition will require the expansion and diversification of extractive activities. In this vacuum, there is increasing consensus from mineral-rich producer states on need to leverage their strategic positioning to move beyond extraction and pursue ‘value addition’ in order to advance CRM-driven industrialisation. Indeed, in September 2024, the United Nations Secretary General established the Panel on Critical Energy Transition Minerals, whose report which called for ‘development fostered though benefit sharing, value addition and economic diversification’. However, competitively moving up mineral value chains is a complex, capital intensive and inherently risky policy strategy influenced by a wide variety of contextual, mineral specific, and market factors which influence competitiveness and integration capacity.
Although the topic of value addition has gained momentum in domestic and international domains, to date, very few low-middle income mineral rich states have managed to successfully translate value added intentions into value added realities. In this frame, considerable uncertainty persists around what successful, equitable and sustainable value addition policies could look like, and if, or under which conditions this strategy can be pursued. As described in the UNSG Gap analysis report (NRGI, 2024), it is to this empirical, conceptual, and methodological gap that this research seeks to contribute.

Embracing complexity, this study adopts a comparative case study approach, to trace design, effectiveness and impacts of Nickel value addition policy mixes in Indonesia and New Caledonia. Combining aspects of global value chain analysis (GVCA) and public policy analysis (PPA) methodologies, specifically programme theory and stakeholder driven evaluation. This approach offers a comprehensive methodology allows researchers and policy makers to systematically trace and account for how the often contradictory economic and environmental-social goals of industrial policy, revealing the trade-offs and externalities which shape domestic policy outcomes. Informed by stakeholder perspectives and interviews, this research uses case analysis to shed light into both the value addition and value subtraction, providing currently understudied insight into sustainability dimensions of critical mineral-driven industrialisation.

Tracing the Indonesian and New Caledonian experiences, the findings show that value addition cannot be assumed or approached as a benefit sharing solution to the decarbonisation divide: it too will have its own winners and losers. Rather, if critical-mineral driven industrialisation is to deliver intended outcomes for society, its goals and design must be pragmatic, dynamic, and tailored to both their domestic industrial contexts and reflective of the rapidly shifting dynamics of global mineral value chains. Furthermore, this research motivates that if the outcomes of future value addition policies are equitable in the long term, a key conceptual starting point should be to clarify and problematize the purely economic utilization of the term. Instead, this research argues for future advancement of a more integrated, holistic, and sustainability-centered approach that pays more attention to the question: value addition for whom? (Less)
Popular Abstract (French)
Dans les décennies à venir, les transitions énergétique et numérique jumelles nécessiteront le déploiement et la mise à l'échelle rapides des technologies d'énergie renouvelable et des technologies avancées au sein desquelles les « matières premières critiques » (MPC) constituent des composants essentiels. Dans le même temps, comme les réserves de MPC sont distribuées de manière hétérogène, concentrées dans quelques pays avec un raffinage dans moins de pays encore, la demande devrait dépasser l'offre à court et moyen terme. Transformant les chaînes de valeur minérales mondiales à travers tous les acteurs et segments, cela s'accompagne de la reconnaissance implicite que la transition énergétique nécessitera l'expansion et la diversification... (More)
Dans les décennies à venir, les transitions énergétique et numérique jumelles nécessiteront le déploiement et la mise à l'échelle rapides des technologies d'énergie renouvelable et des technologies avancées au sein desquelles les « matières premières critiques » (MPC) constituent des composants essentiels. Dans le même temps, comme les réserves de MPC sont distribuées de manière hétérogène, concentrées dans quelques pays avec un raffinage dans moins de pays encore, la demande devrait dépasser l'offre à court et moyen terme. Transformant les chaînes de valeur minérales mondiales à travers tous les acteurs et segments, cela s'accompagne de la reconnaissance implicite que la transition énergétique nécessitera l'expansion et la diversification des activités extractives. Dans ce vide, il existe un consensus croissant de la part des États producteurs riches en minéraux sur la nécessité de tirer parti de leur positionnement stratégique pour aller au-delà de l'extraction et poursuivre la « création de valeur ajoutée » afin de promouvoir l'industrialisation axée sur les MPC. En effet, en septembre 2024, le Secrétaire général des Nations Unies a établi le Panel sur les minéraux critiques de la transition énergétique, dont le rapport a appelé à un « développement favorisé par le partage des bénéfices, la création de valeur ajoutée et la diversification économique ». Cependant, remonter de manière compétitive les chaînes de valeur minérales est une stratégie politique complexe, intensive en capital et intrinsèquement risquée, influencée par une grande variété de facteurs contextuels, spécifiques aux minéraux et de marché qui influencent la compétitivité et la capacité d'intégration.

Bien que la thématique de la création de valeur ajoutée ait gagné en importance dans les sphères nationales et internationales, à ce jour, très peu d'États dotés de ressources minérales et caractérisés par des revenus faibles à moyens sont parvenus à concrétiser leurs intentions de création de valeur ajoutée. Dans ce contexte, une incertitude considérable demeure quant à la configuration que pourraient revêtir des politiques de création de valeur ajoutée efficaces, équitables et durables, ainsi que sur la faisabilité et les conditions de mise en œuvre de cette stratégie. Comme l'expose le rapport d'analyse des lacunes du Secrétaire général des Nations Unies (NRGI, 2024), c'est précisément à cette lacune empirique, conceptuelle et méthodologique que la présente recherche entend contribuer.

Embrassant la complexité, cette étude adopte une approche d'étude de cas comparative, pour retracer la conception, l'efficacité et les impacts des combinaisons de politiques de création de valeur ajoutée du nickel en Indonésie et en Nouvelle-Calédonie. Combinant des aspects de l'analyse des chaînes de valeur mondiales (ACVM) et des méthodologies d'analyse des politiques publiques (APP), spécifiquement la théorie de programme et l'évaluation dirigée par les parties prenantes. Cette approche offre une méthodologie complète permettant aux chercheurs et aux décideurs politiques de retracer et de rendre compte systématiquement de la façon dont les objectifs économiques et environnementaux-sociaux souvent contradictoires de la politique industrielle, révélant les arbitrages et les externalités qui façonnent les résultats des politiques domestiques. Informée par les perspectives des parties prenantes et les entretiens, cette recherche utilise l'analyse de cas pour éclairer à la fois la création de valeur ajoutée et la soustraction de valeur, fournissant un aperçu actuellement sous-étudié des dimensions de durabilité de l'industrialisation axée sur les minéraux critiques.

L'analyse des expériences indonésienne et néo-calédonienne révèle que la création de valeur ajoutée ne saurait être présumée ou appréhendée comme une solution de partage équitable des bénéfices face aux inégalités de la décarbonisation : elle génère également ses propres gagnants et perdants. Pour que l'industrialisation fondée sur les minéraux critiques produise les résultats escomptés pour la société, ses objectifs et sa conception doivent être pragmatiques, dynamiques et adaptés tant aux contextes industriels nationaux qu'aux évolutions rapides des chaînes de valeur minérales mondiales. En outre, cette recherche démontre que pour garantir des résultats équitables à long terme des futures politiques de création de valeur ajoutée, il convient de clarifier et problématiser l'acception purement économique du terme. Cette recherche plaide ainsi pour le développement futur d'une approche plus intégrée, holistique et centrée sur la soutenabilité, accordant une attention particulière à la question fondamentale : création de valeur ajoutée pour qui? (Less)
Please use this url to cite or link to this publication:
author
Austin Rezola, Ottavia Nina LU
supervisor
organization
course
IMEM01 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Value Addition, Critical Raw Materials, Indonesia, New Caledonia, Resource-driven Industrialisation, Sustainability, Just Transition
publication/series
IIIEE Master Thesis
report number
2025:09
ISSN
1401-9191
language
English
id
9209573
date added to LUP
2025-09-19 14:01:11
date last changed
2025-09-19 14:01:11
@misc{9209573,
  abstract     = {{In the coming decades, the twin energy and digital transitions will require the rapid scaling and deployment of renewable energy technologies and advanced technologies within ‘critical raw materials’ (CRMs) are essential components. At the same time, as CRM reserves are heterogeneously distributed, concentrated in a few countries with refining in even fewer still, demand is expected to outstrip supply in the short to medium term. Transforming global mineral value chains across all actors and segments, this comes with the implicit recognition that the energy transition will require the expansion and diversification of extractive activities. In this vacuum, there is increasing consensus from mineral-rich producer states on need to leverage their strategic positioning to move beyond extraction and pursue ‘value addition’ in order to advance CRM-driven industrialisation. Indeed, in September 2024, the United Nations Secretary General established the Panel on Critical Energy Transition Minerals, whose report which called for ‘development fostered though benefit sharing, value addition and economic diversification’. However, competitively moving up mineral value chains is a complex, capital intensive and inherently risky policy strategy influenced by a wide variety of contextual, mineral specific, and market factors which influence competitiveness and integration capacity. 
Although the topic of value addition has gained momentum in domestic and international domains, to date, very few low-middle income mineral rich states have managed to successfully translate value added intentions into value added realities. In this frame, considerable uncertainty persists around what successful, equitable and sustainable value addition policies could look like, and if, or under which conditions this strategy can be pursued. As described in the UNSG Gap analysis report (NRGI, 2024), it is to this empirical, conceptual and methodological gap that this research seeks to contribute. 

Embracing complexity, this study adopts a comparative case study approach, to trace design, effectiveness and impacts of Nickel value addition policy mixes in Indonesia and New Caledonia. Combining aspects of global value chain analysis (GVCA) and public policy analysis (PPA) methodologies, specifically programme theory and stakeholder driven evaluation. This approach offers a comprehensive methodology allows researchers and policy makers to systematically trace and account for how the often contradictory economic and environmental-social goals of industrial policy, revealing the trade-offs and externalities which shape domestic policy outcomes. Informed by stakeholder perspectives and interviews, this research uses case analysis to shed light into both the value addition and value subtraction, providing currently understudied insight into sustainability dimensions of critical mineral-driven industrialisation. 

Tracing the Indonesian and New Caledonian experiences, the findings show that value addition cannot be assumed or approached as a benefit sharing solution to the decarbonisation divide: it too will have its own winners and losers. Rather if critical-mineral driven industrialisation is to deliver intended outcomes for society, its goals and design must be pragmatic, dynamic, and tailored to both their domestic industrial contexts and reflective of the rapidly shifting dynamics of global mineral value chains. Furthermore, this research motivates that if the outcomes of future value addition policies are equitable in the long term, a key conceptual starting point should be to clarify and problematize the purely economic utilization of the term. Instead, this research argues for future advancement of a more integrated, holistic, and sustainability-centered approach that pays more attention to the question: value addition for whom?}},
  author       = {{Austin Rezola, Ottavia Nina}},
  issn         = {{1401-9191}},
  language     = {{eng}},
  note         = {{Student Paper}},
  series       = {{IIIEE Master Thesis}},
  title        = {{Value addition or Subtraction? A Comparative case analysis of policy pathways for value addition and their role in optimising critical mineral driven industrialisation in upstream producer states}},
  year         = {{2025}},
}