Introduction

The energy transition depends on a reliable supply of critical minerals, essential for technologies like electric vehicles and solar panels. According to the International Energy Agency (IEA), demand for these minerals could increase by 250% by 2030 under the Net Zero Emissions by 2050 scenario. Despite recent progress, the supply may fall short, posing risks to the global decarbonisation efforts and the energy transition. This report addresses the financial, regulatory, and innovation barriers that must be overcome to ensure a secure supply chain.

Barriers to investment and innovation

Several barriers hinder critical mineral supply, notably high capital costs for early-stage mining projects and financial risks related to scaling innovations. The report highlights that capital expenditures are uncertain, particularly during exploration and construction phases, making it difficult to attract investors.

Additionally, the regulatory environment poses challenges, with lengthy permitting processes and policy complexity slowing down the development of new mining projects. Permitting delays contribute to the average 16-year gap between the discovery of a deposit and its first production. Furthermore, the report emphasises a lack of ESG standardisation, which creates hesitancy for investors due to inconsistent sustainability frameworks across jurisdictions.

Skilled labour shortages and insufficient supporting infrastructure further complicate the development of the critical minerals supply chain. The mining industry also suffers from negative perceptions, leading to resistance from local communities and slowing down projects.

Unlocks for the supply-demand imbalance

The report suggests multiple approaches to address the supply-demand imbalance. Direct and indirect financial support, including $300-400 billion per year in mining investments, is needed to ensure sufficient supply through 2030. Financial measures such as tax credits for exploration, low-interest loans, and government-backed funding can reduce risks for investors.

Innovation also plays a crucial role, with advancements in mining technologies that allow for faster exploration and better ore recovery. Recycling and secondary supply, such as recovering minerals from waste, is another potential solution to meet demand. Companies must invest in innovative methods to minimise environmental impacts while boosting mineral production.

Policy reforms are essential to streamlining permitting and reducing regulatory burdens. The report stresses the need for ESG standardisation to foster investor confidence and improve sustainability practices across the value chain.

Stakeholder collaboration

Collaboration between governments, industry players, and other stakeholders is critical to success. International cooperation can address geopolitical risks and improve trade policies for critical minerals. Initiatives like the UN’s Resource Management System and the Minerals Security Partnership promote global collaboration to diversify supply chains and reduce dependencies on specific regions.

Furthermore, capacity building through mining education programmes can help address the skilled labour shortage. Public and private sectors can work together to create a supportive environment for future mining talent, particularly by aligning educational initiatives with industry needs.

Recommendations

To ensure an orderly energy transition, the report recommends:

• Accelerating permitting processes by aligning regulatory policies across jurisdictions.
• Public-private partnerships to support investment in innovative mining technologies and improve recycling capacity.
• Harmonising ESG standards to promote sustainable practices and attract green finance.
• Investing in secondary supply and improving infrastructure to enable recycling and reduce reliance on virgin mineral extraction.
• Addressing community concerns through proactive engagement and improving the mining industry’s reputation by adhering to strict ESG protocols.