Technologies essential for achieving net-zero emissions, such as batteries, solar, wind, nuclear and hydrogen power generation, rely heavily on critical minerals. However, a new report warns that challenges in mining these minerals could hinder the global pursuit of net-zero goals. At the same time, another study suggests that recycling critical minerals could help alleviate supply issues.
Over 70 countries have committed to net-zero targets, with more striving to reduce emissions. However, achieving these goals requires access to vital minerals. The 2024 edition of GlobalData’s Critical Minerals Report identifies 15 minerals crucial for the energy transition, with lithium, cobalt, copper, nickel and rare earth elements (REEs) among the most critical. The report highlights four significant risks to the supply of these minerals.
The report notes: “The rapid scale-up of clean energy technologies required to reduce carbon emissions depends upon the intensive mining of several minerals. As demand increases with the energy transition, the risks to supply chains—such as resource depletion, monopolization, geopolitical tensions, and environmental concerns—could disrupt global energy transition goals.” It also points to the strain on existing mines and the long lead times for new mines, which can take more than a decade to develop. This delay in mining production could slow the rollout of green technologies, potentially pushing back emissions reduction targets.
Further compounding the issue, many critical minerals are concentrated in specific regions, making global supply chains vulnerable to volatility. “The uneven distribution of mineral resources has led to volatile market dynamics, which are vulnerable to sudden changes in export quotas and production volumes within these regions,” the report states.
China’s dominance in mineral processing exacerbates these risks. The country controls over 90% of global REE processing, more than 70% of cobalt, around 65% of lithium, 45% of copper and 25% of nickel. This geopolitical leverage allows China to assert significant influence over countries dependent on these minerals. The report also highlights how the U.S. has used sanctions to limit China’s technological expansion, disrupting the global supply chain.
In addition to geopolitical risks, the ongoing Russia-Ukraine war has had a tangible effect on mineral supply chains, deterring investment and disrupting trade due to sanctions. Another growing concern is water scarcity. Mining processes require large amounts of water, which is increasingly in short supply in some regions. As droughts become more frequent and severe, some mines are already resorting to seawater, though this adds extra costs and complications.
Despite these challenges, the International Energy Agency (IEA) has found that scaling up critical mineral recycling could significantly reduce the need for new mining. The IEA’s report suggests that by mid-century, recycling could reduce the growth in new mining supply by between 25% and 40%.
Though the current use of recycled materials has not kept pace with rising demand, the IEA sees significant potential for expanding recycling efforts, provided the right policy incentives are in place. The IEA’s Critical Minerals Policy Tracker notes that over 30 new policy measures aimed at boosting recycling have been introduced globally, with the market value of critical minerals recycling projected to reach $200 billion by 2050. Such growth could help build mineral reserves, reduce dependence on imports, and protect against future supply shocks and price volatility.
Fatih Birol, executive director of the IEA, stated: “Recycling is vital to tackling the challenges around critical mineral supplies and ensuring long-term sustainability. Investment in new mines and refineries remains crucial, but there is ample opportunity for recycling to maximize the resources already at our disposal. As we move into the Age of Electricity, we must take advantage of the treasure trove of worn batteries and electrical devices that could be revived and reused. To do so, we must develop a mature marketplace for recycling to make it attractive and easily accessible.”
In conclusion, while the mining of critical minerals faces significant hurdles, including geopolitical tensions, environmental concerns, and resource scarcity, increased recycling could play a pivotal role in mitigating these challenges and ensuring a smoother transition to a sustainable, net-zero future.
