Using supersized diggers to gouge tonnes of virgin rock from the earth may not seem synonymous with a greener future, yet they are intricately linked. The minerals harvested from mined rock are core ingredients to enable the global transition towards a greener future – the energy industry’s biggest overhaul yet. Solar panels, wind turbines, electric vehicles (EVs) and batteries are among the workhorses required to make net zero a reality worldwide.

What was once a niche part of the mining ecosystem is now moving more centre stage. The market size for key energy transition minerals has doubled over the last five years, reaching $320bn in 2022, according to the International Energy Agency (IEA) – similar to the market for iron ore mining. The financial clout behind energy transition minerals is also climbing fast. Despite headwinds in the wider venture capital sector, critical minerals start-ups raised a record $1.6bn in 2022, marking a 160% year-on-year increase.

Plus, the Inflation Reduction Act (IRA) in the US – the largest climate investment in the nation’s history – will likely propel appetite in energy transition minerals from what is already a significant investor. That the IEA released its inaugural Critical Minerals Market Review last year also reflects how buy-in across the energy sector has turned a corner.

Up, up, up   
By mid-century, renewable energy capacity could grow sixfold, says the World Economic Forum, in order to meet the needs of what will then be a staggering global population of 9.7 billion people. Electricity networks and batteries could drive 75% of the need for critical minerals up to 2050 according to analysis by the Center for Strategic and International Studies (CSIS), while the percentage of EVs in worldwide car sales is forecast by Goldman Sachs to soar from 2% to 60% between 2020–2040, reaching 73 million units.

Grid-scale battery storage is also expected to rise 35-fold from 2022–2030, to nearly 970 GW, as per the IEA’s net zero scenario. The impact of an energy-hungry global population, especially rapidly growing middle-class economies, is already a key reason demand for lithium tripled in 2017–2022, as well as cobalt (+70%) and nickel (+40%). Such growth will become commonplace; the production of nickel alone must increase by 200–300% by 2050, says the Carbon Trust.

Flipping the script   
Meeting this massive appetite relies heavily on the reinvention of mining. Environmentalists and mining companies often fail to see eye-to-eye. But mounting demand for minerals to underpin the energy transition is ticking boxes in both camps, creating strong win-win incentives for the first time.

Environmentally, the faster the energy transition happens the better, and the greening of the mining industry – considered to be one of the world’s dirtiest sectors – is a stepping stone towards net zero (see Box below: ‘Walking the walk’). For mining companies, supporting the energy transition sharpens its competitive edge, boosts long-term relevance, deepens customer loyalty and potentially broadens their customer portfolio. In contrast, there are strong calls to halt investment in, and eventually phase out, other dirty industries, most notably fossil fuels.

Pressure points   
More than 33% of mining CEOs see their company as highly or extremely exposed to climate-related risks, according to PwC’s 26th global CEO survey. Mining companies’ assets tend to be in areas that are geographically vulnerable to climate change. More than 50% of today’s lithium and copper production is concentrated in areas with high water stress levels. Meanwhile, major producing regions like Australia, China and Africa are subject to extreme heat or flooding, none of which is easily conducive to a sustainable supply and safe employees.

There are also questions surrounding resource value. Quantity does not guarantee quality and producing lower grade products carries a heftier environmental price tag. For example, the average copper ore grade in Chile declined by 30% over the past 15 years, according to the IEA. Plus, the fact that it takes well over a decade to take a mine from discovery to becoming operational speaks volumes about the need to start addressing projected supply volumes now, rather than waiting for mineral shortages to emerge.

Extracting energy transition minerals also carries a big environmental cost – with 78 tonnes of CO₂ emissions per tonne of nickel, for example, according to the Carbon Trust. This high environmental cost continues through to the final products. A typical electric car requires six times the mineral inputs of a conventional car, while an onshore wind plant requires nine times more mineral resources than a gas-fired plant, according to IEA calculations.

Clearly, mining companies’ climate journeys are tricky, tasked with simultaneously sustaining vast existing operations, bolstering operations for energy transition minerals and dramatically reducing environmental footprints. Mining already accounts for up to 7% of global greenhouse gas (GHG) emissions, according to Global Data, versus 2% for aviation and 3% for shipping, says the United Nations Conference on Trade and Development (UNCTAD) – the backbone of global trade. Therein lies a glimpse of the challenge ahead. Leveraging circular principles and digital tools will be pivotal to successfully moving the needle.

In a monumental shift in cultural and operational mindset, all major mining entities now have operational targets to be net zero before or by 2050. Helping the mining community navigate this journey is vital. There is no time to start digging from scratch. Their failure to transition quickly threatens our collective failure to reach net zero.

In a monumental shift in cultural and operational mindset, all major mining entities now have operational targets to be net zero before or by 2050.

Geopolitical chessboard   
There are more than 5,000 types of minerals worldwide, but only some are significant in the energy transition, and they are often found in specific countries. Nearly 70% of the planet’s cobalt production comes from the Democratic Republic of Congo, while 90% of lithium comes from Chile, China and Australia. Plus, just three nations control up to 99% of the processing capacity of lithium, rare earth elements (REEs) and cobalt, according to the IEA.

In this new era of energy, importing countries are keen to avoid repeating over-reliance on a small number of suppliers. Europe’s move away from Russian gas is very fresh in energy stakeholders’ memories. This may be why Green Lithium is building the UK’s first merchant lithium refinery and Pensana is developing a rare earth separation facility – just one of three outside China.

Clear and transparent policies will be key in trying to minimise the power of monopolies over minerals, with lessons learned from how leading oil suppliers (in the US, Saudi Arabia and Russia) and gas suppliers (in the US, Russia and Qatar) have deeply influenced geopolitical trends for several decades. Also considering that energy transition minerals are more concentrated than oil or natural gas, this potentially magnifies the geopolitical implications. While a degree of monopolisation is inevitable – as the location of mineral assets was decided millions of years ago – the mining, production, transport, trade and re-trade must be handled delicately.

This is especially necessary considering that many mining operations are in developing nations and the well-being and prosperity of local populations must be prioritised. More than 40 million people worldwide work in artisanal and small-scale mining – equivalent to the entire population of Poland – with 25% of this total living in Sub-Saharan Africa, according to the World Bank.

This is just one of the many areas that will be addressed by weaving environment, social and governance (ESG) into mining companies’ operational norms: embracing the acronym, rather than fearing it. So far, mining executives rank ESG as the biggest risk to their business, marking the third consecutive year it has topped the EY risk register. Mining is an ally in mitigating the worst effects of climate change, but it needs to be much cleaner environmentally, socially and politically.

The changing landscape for energy transition minerals means existing policies must be updated and new policies must be introduced to ensure a safe, clean and equitable scale-up. Initiatives like the European Union’s Critical Raw Materials (CRM) Act, the US IRA, Australia’s Critical Minerals Strategy and Canada’s Critical Minerals Strategy are examples of steps in the right direction. Minerals are the building blocks of our collective future, so their environmental performance must stack up in a clean energy world.

• Further reading: ‘Rare metals: the battery conundrum’. Charlie Bush, former Senior Editor, New Energy World, explains that although batteries represent the powerhouse of the future, we need to ensure that we are using their rare materials in a sensible and sustainable way to avoid a future energy crisis.
• Find out more about how mining for uranium in India is impacting the land, health and way of life of the Khasi tribe.