The Critical Minerals Conundrum: What You Should Know

The world is racing to increase supplies of lithium, cobalt, copper and other "critical minerals" that are building blocks of modern technology. Not only are these minerals used in industries like defense, healthcare and electronics, but they are also key to producing the clean energy technologies that are increasingly powering our lives.

Yet critical minerals present an environmental and social conundrum. While necessary in the fight against climate change, mining and processing of these minerals can drive greenhouse gas emissions, pollute the environment and bring risks to nearby communities. Mining and production are also concentrated in a small handful of countries, and surging demand is adding to geopolitical tensions — from trade disputes to global debates over the prospect of deep-sea mining.

There is no question the world will need a lot more of these minerals, and quickly. But how do we meet this demand in a way that's responsible and equitable?

What Are Critical Minerals and Why Do They Matter?

Critical minerals are those that are essential to countries' economies or development. They are generally in high demand and prone to supply chain disruptions, although countries differ on which minerals they define as "critical" depending on their level of access, what the minerals are used for, their export value and national supply risks.

Most countries' critical mineral lists include copper, lithium, nickel, cobalt, graphite and rare earth elements. These are used widely in clean energy technologies, such as wind turbines, solar panels, EV batteries and motors, as well as in energy transmission infrastructure like power lines. Additional minerals important for the energy transition include aluminum, manganese, silicon and silver, among others.

Many critical minerals are integral to other industries as well. NATO includes several on its list of essential raw materials for defense. And they are needed to manufacture the semiconductors that underpin our electronics, from smartphones and computers to lighting and medical devices.

While the terms "rare earth elements" and "critical minerals" are sometimes used interchangeably, the two are not the same. Rare earth elements are a subset of critical minerals that includes 17 elements (such as neodymium, promethium and cerium) used extensively in clean energy systems and other advanced technologies. Contrary to their name, rare earth elements tend not to be rare. The challenge is that they are often found in very low concentrations and are intermingled with other minerals, making it difficult and uneconomical to extract them.

Can the World Meet Growing Mineral Demand?

Rapid growth in zero-carbon technology has supercharged the world's need for critical minerals, and demand is expected to keep climbing. The International Energy Agency (IEA) estimates that if governments are to meet their announced energy and climate pledges, critical mineral demand could more than double from 2022 levels by 2030 and quadruple by 2050.

Despite this high demand, there are likely enough critical minerals to meet the world's need. But the reality of accessing them is complex. Some critical minerals, like aluminum and palladium, have stable reserves on land that can fulfil the world's demand through 2050 and likely beyond. For others, like copper, nickel and cobalt, current reserves are likely to come up short, and it will take a combination of more exploration, technological advances and economic incentives to increase supply.

New mining requires long lead times.

Part of the challenge with scaling up critical mineral supplies is that mining operations move slowly. From discovery to first production, it takes an average of 15.5 years to develop new mining projects, depending on the mineral, location and mine type. Long lead times raise questions about the world's ability to ramp up output as demand grows, especially if companies wait for deficits to emerge before committing to new projects.

Mining and processing are concentrated in a handful of countries.

Extraction and processing of critical minerals are highly concentrated, both in terms of geography and ownership. For example, in 2023, Indonesia held 42% of global nickel reserves and 54% of global nickel production, while the Democratic Republic of Congo held 55% of global cobalt reserves and 74% of global cobalt production.

Once mined, the majority of these minerals are shipped to China for processing before they can be applied in end uses. China processes more than half of the world's lithium, two-thirds of its cobalt, one-third of its nickel and nearly all rare earth elements.

China's dominance in processing stems from early strategic investments in global mining and its history of looser environmental standards — although lax regulations are tightening as harms from irresponsible mining come to light. The country's longstanding investment in clean energy development has also propelled it as a leader in mineral-intensive EV battery and solar panel manufacturing, driven by a combination of relatively low, capital and land costs.

How Is the World Responding to Supply Risks?

As countries move to protect their national security and energy independence, critical minerals have become a central point of conflict. Some with a healthy mineral supply, like China, have imposed export restrictions as a geopolitical lever, heightening the urgency for other countries to build up their domestic supplies. For example, the EU's Critical Raw Materials Act aims to establish a secure and dependable critical minerals value chain for the bloc. In the U.S., the Mine of the Future initiative provides nearly $100 million in funding to accelerate research, innovative mining technologies and commercialization, while the Defense Production Act elevates critical minerals as a national security imperative.

Some countries — such as the U.S., EU, Australia, Canada, Japan and South Korea — have joined international initiatives like the IEA Critical Minerals Security Programme and the Minerals Security Partnership to work together on strengthening critical mineral security and scaling up investments in sustainable supply chains. China's partnerships through its Belt and Road Initiative, which supports infrastructure development mainly in developing and emerging economies, have been instrumental in the country's ability to dominate mineral processing.

Several countries and companies are also racing to pursue deep sea mining, a frontier area of exploration. The ocean floor is estimated to hold significant reserves of copper, cobalt, nickel, zinc, silver, gold and rare earth elements. Recent technological advancements have made it possible to readily access these minerals; however, little is known about the deep ocean, and research suggests mining it could pose grave environmental threats.

What Are the Dangers Associated with Critical Mineral Mining?

All mining has social and environmental impacts. These can sometimes be positive; for example, responsible, industrialized mining may bring jobs, income and services to areas with few other economic opportunities. But there are also serious risks to nature and communities, particularly when it comes to irresponsible and illegal extraction.

For one, extracting, processing and shipping minerals releases planet-warming emissions. Global mining already represents about 8% of the world's carbon footprint, and emissions from critical mineral production will grow alongside demand.

Mining can also strain water quality and supplies. Sixteen percent of critical mineral mines, deposits and districts are in highly water-stressed areas (places that already use 40% of their available water each year to meet demand). This means there is high competition for water and sometimes not enough left over to sustain important freshwater ecosystems. If mining waste isn't managed properly, it can leach hazardous materials like acidic mine drainage or tailings impoundments (process waste) into the surrounding environment and contaminate groundwater.

Between 2001 and 2020, the world lost nearly 1.4 million hectares of forest to mining and related activities, an area of land roughly the size of Montenegro. Felling trees not only releases emissions (36 million tonnes of carbon dioxide equivalent a year), but also harms ecosystems. And it often involves extensive removal of vegetation and soil that Indigenous and local communities depend on for food and livelihoods.

While mining may help bolster local economies, it has a track record of social harm when not well regulated. For example, of the 255,000 workers engaged in small-scale mining in the Democratic Republic of Congo, 40,000 are children — some as young as six years old. Communities may face also forced displacement, loss of traditional livelihoods, and health risks linked to pollution from mines.

When it comes to ocean mining, there are many unknowns. But the research available suggests the practice could irreparably harm fragile deep-sea ecosystems. It could also affect species beyond the ocean floor, including fish like tuna that are vital to food security.

How Can the World Scale Up Mineral Supplies Responsibly?

The key question is how to balance the world's growing need for critical minerals with the inherent risks of mining — particularly when these minerals are essential to securing a stable climate and a safer future. This will require: 1) ensuring that all mining is done responsibly, and 2) encouraging a circular mineral economy to minimize demand for new extraction.

Mainstream responsible mining.

Responsible mining means extracting critical minerals in a way that safeguards the environment and respects people and communities. Several different levers can support responsible mining, including:

• Standards: An overarching international framework for critical minerals can help regulate and compare companies' environmental, social and governance efforts in a meaningful way. There are numerous protocols already in place — such as the Initiative for Responsible Mining Assurance, Toward Sustainable Mining and The Copper Mark — but they need to be used more widely. Efforts to harmonize industry-led standards, such as the Consolidated Mining Standard Initiative, are currently underway.
• Regulations: Countries can encourage or even require responsible mineral supply chains through policymaking. Regulatory levers may address trade and export controls, resource management, international cooperation and supply chain security. The EU's Conflict Minerals Regulation, for example, requires that gold, tin, tungsten and tantalum be sourced from conflict-free areas across the world.
• Technology: Technological advancements can help mining companies reduce their impact. For example, mining companies operating in water-scarce areas are increasingly required to develop desalination plants so they don't put pressure on limited freshwater supplies.
• Transparency and accountability: Through groups like Extractive Industries Transparency Initiative (EITI), countries can commit to disclose information along their mineral value chains. Organizations like the Accountability Accelerator can help hold stakeholders responsible for their mining activities, with consequences for inaction.
• Market-based incentives: Large buyers like governments and companies can exert their influence through green procurement, committing to purchase only critical minerals that have been responsibly mined. Companies can also join forces through corporate buyers' clubs and can opt to pay a green premium for products that have met specific environmental, social and governance targets. Financing is also an important lever, and groups like Mining 2030 are looking to define the role of finance in realizing a socially and environmentally responsible mining sector.

Promote a circular economy.

A shift from our current economic model of "make-use-discard" to one that emphasizes reduction, reuse and recycling can ease resource pressures, helping to minimize the need for new mining and the impacts that come with it.

Critical mineral use can be reduced through material-efficient products. For example, more and more EV models on the market are SUVs and other larger passenger vehicles that require larger batteries and therefore more minerals. Governments can encourage car manufacturers and consumers to opt for smaller vehicles through measures like the EU's recently announced Small Affordable Cars Initiative. New technologies can also help substitute demand; for example, cobalt-free EV batteries rely on cheaper, more abundant resources, such as iron and phosphate.

Reusing older clean energy components after the end of their "first life" can keep minerals in circulation. Retired EV batteries, for example, often retain 70%-80% of their capacity and could be used in renewable energy storage, EV charging stations and microgrids. Retired commercial solar panels could power off-grid structures like electric bike stations or community solar systems. This can help reduce waste while creating new jobs and expanding access to clean energy. However, second-life use needs to be properly managed to avoid becoming a loophole for waste dumping in lower-income countries. ​

Increasing mineral recycling could reduce the need for new mine development by 40% for copper and cobalt and 25% for lithium and nickel by 2050. Though in near-term, improvements in recycling may be outpaced by rising material consumption. For instance, the share of total copper demand that was supplied by secondary or recycled copper actually fell from 37% in 2015 to 33% in 2023.

Fortunately, policy momentum in support of recycling is gaining strength. Since 2022, more than 30 new policies related to critical mineral recycling have been introduced globally. These include India's 2022 Battery Waste Management Rules, which regulate the recycling and management of all batteries, and Vietnam's Decree No.8/2022/ND-CP, which mandates recycling rates and specifications for producers and importers of specific products, including batteries and solar cells.

Confronting the Mineral Conundrum

Critical minerals underpin the world's efforts to build a cleaner, safer future for all. But they are not without risks. As surging demand spurs geopolitical tensions and environmental and social concerns, the need for meeting this demand responsibly is paramount. Countries and companies must work together to ensure that supply chains are not only secure, but sustainable — and that we're making the most of the minerals already in play to minimize the need for new extraction as much as possible.