Novel Indicators for the Quantification of Resilience in Critical Material Supply Chains, with a 2010 Rare Earth Crisis Case Study

We introduce several new resilience metrics for quantifying
the resilience of critical material supply chains to disruptions and
validate these metrics using the 2010 rare earth element (REE) crisis
as a case study. Our method is a novel application of Event Sequence
Analysis, supplemented with interviews of actors across the entire
supply chain. We discuss resilience mechanisms in quantitative terms–time
lags, response speeds, and maximum magnitudes–and in light
of cultural differences between Japanese and European corporate practice.
This quantification is crucial if resilience is ever to be taken into
account in criticality assessments and a step toward determining supply
and demand elasticities in the REE supply chain. We find that the
REE system showed resilience mainly through substitution and increased
non-Chinese primary production, with a distinct role for stockpiling.
Overall, annual substitution rates reached 10% of total demand. Non-Chinese
primary production ramped up at a speed of 4% of total market volume
per year. The compound effect of these mechanisms was that recovery
from the 2010 disruption took two years. The supply disruption did
not nudge a system toward an appreciable degree of recycling. This
finding has important implications for the circular economy concept,
indicating that quite a long period of sustained material constraints
will be necessary for a production-consumption system to naturally
evolve toward a circular configuration.