Managing Geological Uncertainty in Critical Mineral Supply Chains: A POMDP Approach with Application to U.S. Lithium Resources

TL;DR

This paper introduces a POMDP-based framework to optimize critical mineral supply chains, specifically U.S. lithium resources, effectively managing geological uncertainty and improving decision-making over traditional methods.

Contribution

The paper presents a novel application of POMDPs to critical mineral supply chains, explicitly modeling geological uncertainty for the first time in this context.

Findings

POMDP policies outperform traditional methods under uncertain reserves.

Framework offers strategic insights for balancing domestic and international resources.

Demonstrates effectiveness in a U.S. lithium case study.

Abstract

The world is entering an unprecedented period of critical mineral demand, driven by the global transition to renewable energy technologies and electric vehicles. This transition presents unique challenges in mineral resource development, particularly due to geological uncertainty-a key characteristic that traditional supply chain optimization approaches do not adequately address. To tackle this challenge, we propose a novel application of Partially Observable Markov Decision Processes (POMDPs) that optimizes critical mineral sourcing decisions while explicitly accounting for the dynamic nature of geological uncertainty. Through a case study of the U.S. lithium supply chain, we demonstrate that POMDP-based policies achieve superior outcomes compared to traditional approaches, especially when initial reserve estimates are imperfect. Our framework provides quantitative insights for balancing domestic resource development with international supply diversification, offering policymakers a systematic approach to strategic decision-making in critical mineral supply chains.