Navigating the Complexities of Transition Minerals Supply Chains

Minerals for technologies like wind turbines, solar panels, and electric batteries will be essential to achieve the net-zero green transition. However, global efforts towards increasing the supply of these transition minerals to meet expected demand face a myriad of challenges.

Fragmented Multilateral Approaches

A large range of institutions are actively engaged in addressing the complexities surrounding transition minerals, but the landscape is marked by a lack of coordination, integration and information exchange, hampering the effectiveness of interventions. The current framework is also deficient in terms of representation and inclusivity of Global South countries and non-state actors, and does not adequately represent the diverse interests and perspectives of all stakeholders.

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Illiquid and Opaque Mineral Markets for Global Trade

The small market size for transition minerals and their high market concentrations, in terms of both industry and geography, result in price volatility, supply uncertainty and geopolitical vulnerabilities that can exacerbate global trade tensions.

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Lack of Long-Term Development and Industrialization Benefits for Mineral-Rich Countries

While transition minerals are often exploited in emerging economies, their role continues to be generally limited to extraction and exportation of raw materials. Advancing to processing industries can present an opportunity to industrialize and develop, hence numerous mineral-rich countries have expressed their objective of moving down the value chain, and have adopted policies generally associated with resource nationalism. However, these policies often incur high costs and are difficult to enforce, such that most efforts have been unsuccessful.

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Financing of Responsible Mining Projects

An estimated USD 1.7 trillion investment in mining will be needed over the next 15 years to meet market demand. However, attracting finance is proving difficult, with challenges such as cyclical and volatile prices, long and uncertain lead times, increasing production costs, ESG risks, and geopolitical uncertainties. While government intervention, such as through tax credits and national funds, is on the rise, there is a need for a long-term strategy integrating both financing and industrial policy, that will also signal to financial markets and other stakeholders of the coherence of sustainability policies, expectations and actions in the transition minerals space.

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Environmental and social sustainability along the supply chain

Finally, mining is associated with significant impacts including major land use change and damage to natural habitats, water depletion, air pollution and GHG emission; as well as poor working conditions, social conflict and corruption. Multiple international standards and binding policies as well as upwards of 400 voluntary standards on responsible mining and processing exist, but require harmonization and integration with international due diligence instruments to improve their effectiveness and efficiency.

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