Projections of continued geographic concentration of supply chains and the associated risk posed to national energy transition ambitions, are catalysing political support for new investment in critical minerals value chains. Over 100 new critical minerals policies and regulations have been established globally in the last few years,8 with a fivefold rise in export restrictions.9 Major importers of critical minerals value chain products are enacting policies to shore up security of supply by encouraging investment into supply chains domestically and in partner countries. Recent examples include the EU’s Critical Raw Materials Act and the critical minerals provisions in the US’ Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law. Meanwhile, governments of mineral-rich countries like Australia and Canada are seeking to capitalise on the push for supply chain diversification by implementing policies to attract investment across the value chain, with a particular focus on ramping up local mineral processing and manufacturing.
With policy tailwinds behind critical minerals, the pipeline of announced extraction projects is nearing a level sufficient to meet the requirements of government energy transition ambitions by 2030.6 Whilst encouraging, this pipeline falls well short of the level needed to be on track for net zero by 2050 and would still require a major pivot from the historical norm to be delivered on time, as mining projects currently take over 15 years, on average, between discovery and production.10 Projects are often delayed by slow planning approvals and permitting, public opposition and lengthy negotiations with governments on issues like taxes, royalties and ownership structures. These hurdles must be addressed to speed production growth while maintaining environmental and social protections.
In the push for expansion, the sustainability of critical minerals value chains is coming under increased scrutiny. Fortunately, the industry has many solutions at its disposal to address its most pressing sustainability issues.
Addressing sustainability challenges in critical minerals value chains is imperative to maximising their climate and socioeconomic benefit, and to gaining backing for new projects. However, managing environmental impact has historically been an area of difficulty for the mining and minerals processing industry. Analysis of leading mining industry companies found that between 2018 and 2021, water withdrawals doubled and greenhouse gas emissions intensity remained high and broadly flat.6 The industry is looking to address these issues and most leading mining groups have developed sustainability strategies targeting phased reductions in emissions and their broader environmental footprint.
Another environmental concern is that the extraction and processing of critical minerals tends to be more emissions- and water-intensive than other minerals. Whilst the absolute figures for critical minerals emissions and water use are relatively low currently, they could grow markedly as production volumes rise.3 Compounding this is the fact that growing mineral demand is making it economic to mine deposits with lower resource quality and undertake further processing steps to yield higher value products. Exploiting these newer production pathways tends to require more energy and produce more waste. As the energy supply tends to come from fossil fuels like coal and diesel, the new pathways tend to be even more emissions intensive.
An example of a newly economic production pathway is the conversion of nickel pig iron produced from low-grade laterite ore into nickel matte and ultimately nickel sulfate which can be used in EV batteries. While this pathway has markedly increased the supply of EV-grade nickel, it is also, on average, nearly six times as emissions intensive as extraction from sulfide ores given the use of coal in the conversion process.6