Critical minerals: The backbone for decarbonizing our economy

Critical minerals such as lithium, cobalt, nickel, and rare earth elements are vital to the transition to net zero, enabling EVs, renewable power generation, and large-scale battery storage. Their unique properties - lightweight, heat-resistant, and conducive to high energy density - make them indispensable for EV batteries, wind turbine magnets, and solar panel wiring. Organizations like the IEA¹ and IRENA² forecast exponential growth in electric mobility and renewable capacity, fueling demand for these minerals. However, securing reliable, responsible supplies is increasingly difficult due to geopolitical tensions, resource constraints, and environmental risks.

Figure 1. Global critical minerals demand in the net zero emissions scenario

Note: Figures for copper are based on refined copper. Those for rare earth elements are for magnet rare earth elements only. Growth rates (in red) are between 2023 and 2040.
Source: IEA (2024), Critical Minerals Data Explorer, IEA, Paris https://www.iea.org/data-and-statistics/data-tools/critical-minerals-data-explorer

Facing mineral realities
Critical mineral supply chains are highly concentrated, creating significant vulnerabilities for global industries. The Democratic Republic of the Congo (DRC) produces about 70% of the world’s cobalt³, while China dominates 50–70% of lithium and cobalt refining and nearly 90% of rare earth processing.⁴ This concentration poses risks such as price volatility, trade disruptions, and shortages. Political instability in the DRC, for instance, threatens the global battery supply chain, potentially leading to higher costs and supply disruptions. Beyond the risks associated with mining locations, refining and processing bottlenecks introduce further vulnerabilities. For example, China’s dominant position in mineral refining gives it strategic leverage over supply chains, as demonstrated by its past export restrictions on rare earth elements resulting in sharp price hikes.

Figure 2. The concentration of mineral supply chains
Share of the top three producing countries in total production, 2023

Source: UNEP, Critical Transitions, 2024.

Beyond supply risks, critical mineral extraction has severe environmental and social consequences. Lithium extraction in arid regions like the Atacama Desert consumes vast amounts of water, endangering local communities and biodiversity. Tailings from nickel and cobalt mines can leach heavy metals into rivers and soil, harming ecosystems and agriculture. In Indonesia and the Philippines, large-scale nickel mining has contributed to significant deforestation and, in some cases, ocean dumping of tailings, threatening marine ecosystems. Artisanal and small-scale mining (ASM) often involves child labour, unsafe conditions, and local displacement, with communities receiving little economic benefit. Without robust regulatory frameworks and industry oversight, the race to secure critical minerals risks exacerbating social and environmental injustices. However, emerging technologies offer potential solutions to mitigate these impacts.

Reinventing mineral extraction
One promising approach is Direct Lithium Extraction (DLE), a method that provides a more efficient and potentially sustainable way to produce lithium, critical for batteries used in electric vehicles and renewable energy storage. Unlike traditional evaporation pond processes that can take months and consume large amounts of water and land, DLE uses advanced filters, membranes, or adsorption materials to extract lithium ions directly from underground brine. By rapidly reinjecting depleted brine back into the ground, this technique can significantly reduce water usage, lower the environmental footprint, and minimise land disruption.

Biomining, or bioleaching, presents another innovative method, utilising microorganisms to extract metals like nickel and cobalt from ores and mining waste, offering a greener alternative to traditional smelting. Biomining is not a completely risk-free solution due to the release of microorganisms in the environment but it reduces energy use and avoids harsh chemicals. For example, researchers at the Australian Institute for Bioengineering and Nanotechnology (AIBN) are advancing biomining to process red mud, a hazardous byproduct of bauxite mining, recovering valuable metals while detoxifying waste. Early trials highlight its potential to make mining cleaner and more sustainable.

Similarly, hydrometallurgical processing is gaining traction as a cleaner and more efficient method for refining metals like nickel and cobalt. By using water-based solutions instead of high-temperature smelting, this technology significantly reduces emissions and waste. It enables the selective extraction of valuable metals while minimising energy use and harmful by-products, making it an increasingly important tool for sustainable mineral refining. Yet even these advances in extraction methods cannot fully address the ever-growing demand for critical minerals.

Closing the loop
A sustainable supply chain must go beyond extraction. Recycling and second-life applications are essential to reducing dependence on virgin resources. However, today’s complex battery and electronic designs often make efficient recovery challenging. To address this, advanced hydrometallurgical processes, which use chemical solutions to extract and purify metals, and pyrometallurgical techniques, which rely on high-temperature smelting, are increasingly effective at recovering valuable materials.

Beyond direct recycling, second-life applications for retired batteries and other components further extend the lifespan of critical minerals. When designs prioritise modularity and easier disassembly, reuse becomes more practical, strengthening the overall supply chain while reducing environmental burdens. This closed-loop approach - maximising recycling and reusing materials - underscores the importance of circularity. By fully harnessing the materials already in circulation, industries can lessen their dependence on virgin resources, stabilise prices, and move closer to a truly sustainable clean energy future.

Conclusion
Critical minerals are indispensable for a successful low-carbon transition, with demand surging at an unprecedented pace. The path ahead will test the limits of technology, policy, and global cooperation. Whether these resources can be responsibly sourced and recycled will determine how quickly we can secure a low-carbon future while protecting the planet.

¹ IEA, Global Critical Minerals Outlook, 2024
² IRENA Critical Materials Batteries for EVs 2024
³ IRENA, Geopolitics of the Energy Transition, 2023
⁴ https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/executive-summary