Critical minerals: The role of tech, geopolitics, social and environmental factors on demand-supply dynamics
Global Investment Insights
with Tim Werner, Senior Lecturer, School of Geography, Earth & Atmospheric Sciences, University of Melbourne
Tim Werner is a Senior Lecturer at the University of Melbourne’s School of Geography, Earth and Atmospheric Sciences. He is currently focused on examining land use impacts of mining critical minerals. His interests span many topics, including mineral supply chain resilience and dynamics, land use changes, and exploring critical metal supply chain impacts at both local and global scales.
Tim has collaborated with industry, government, and institutions like Columbia University and Geoscience Australia, securing over A$1.3 million in research funding. Recognised with multiple awards, he received the Dean's Award for Research Excellence (2023) and the ISM Young Scientist Award (2023).
In this exclusive interview with Global Investment Institute, Tim discusses the rapidly evolving landscape of critical minerals, examining demand drivers, supply chain vulnerabilities, environmental and social concerns, and innovations shaping the sector's future.
CURRENT DEMAND TRENDS
Q. Which industries and applications are driving the highest demand for critical minerals today, and how is this expected to evolve in the near future?
A. The energy transition is massively shaping critical mineral demand, with EVs and renewable energy infrastructure as primary drivers. EVs alone account for ~60% of lithium demand and ~35% of cobalt consumption, as battery chemistry requires ~200 kg of minerals per vehicle (about 6x more than conventional cars).
Lithium-ion batteries dominate the battery sector, but nickel-rich cathodes and graphite anodes are also important for energy density and longevity. At the same time, wind and solar infrastructure demands vast quantities of copper for wiring, rare earths like neodymium for turbine magnets, and silver for photovoltaic cells. For example, an onshore wind turbine requires ~8 metric tons of critical minerals per megawatt, with copper constituting ~25% of this.
Looking ahead, the International Energy Agency (IEA) projects lithium demand to grow ninefold by 2040 under net-zero scenarios, while graphite and nickel demand may quadruple. Emerging sectors like grid-scale battery storage might further strain supply, including for platinum-group metals and iridium.
It is difficult to predict future mineral demands because trajectories hinge on technological shifts. Solid-state batteries could reduce cobalt reliance, while perovskite solar cells might lower silver intensity. Lithium iron phosphate batteries could potentially disrupt nickel demand, and we are seeing some car manufacturers consider these alternatives due to concerns about current supply chains. Investors will need to monitor these innovations to avoid stranded asset risks.
SUPPLY CHAIN VULNERABILITIES
Q. What are the most significant supply chain challenges facing the critical minerals industry, and how can they be addressed to ensure long-term stability?
A. Critical mineral supply chains face many challenges, as exemplified by China’s recent barring of rare earth exports to the United States. The challenges can often be grouped under geographic distribution (or concentration), infrastructure gaps, and regulatory fragmentation. Over 70% of cobalt is sourced from the Democratic Republic of Congo, while China refines 90% of rare earths and 65% of lithium.
This concentration creates chokepoints, also as seen in 2022 when COVID-19 lockdowns disrupted Chinese graphite exports. Remote mining operations - such as Australia’s Pilbara lithium mines or Chilean copper deposits - compound logistics challenges, with transport costs often exceeding 20% of total operating expenses.
Multiple strategies are needed to combat these vulnerabilities, including:
Diversification: Australia’s Critical Minerals Hub aims to expand lithium refining capacity, reducing reliance on Chinese processing.
Technology adoption: Diverse technologies must be a part of a modern energy and transportation mix that require a wide array of minerals, ensuring that disruption of any one supply chain comes with minimised impact to society. Blockchain-enabled traceability systems can also improve resource discovery and ethical sourcing.
Policy coordination: Efforts to harmonise standards and incentivise support from allies are increasing through minerals partnerships / bilateral agreements.
Investors can prioritise companies with vertical integration, such as those controlling mining and refining assets across jurisdictions, to buffer against geopolitical shocks.
GEOPOLITICAL AND TRADE DYNAMICS
Q. How are geopolitical tensions and trade policies influencing the global availability and pricing of critical minerals?
A. We are certainly living during historic times on this front. Geopolitical rivalries are redrawing supply chains, with China’s dominance and Western decoupling efforts creating bifurcated markets. China’s “going out” strategy has secured lithium assets in Zimbabwe and cobalt in Indonesia, while its export controls on graphite (2023) and rare earths (2009-2010, and again just recently) spotlight its leverage.
The US Inflation Reduction Act mandated that 50% of battery minerals must originate from Free Trade Agreement partners by 2026, favouring Australian lithium and Chilean copper, but with tariffs changing on a regular basis right now, there’s simply too much uncertainty to make concrete assertions.
More generally, we can at least say that trade policies are increasingly prioritising resource nationalism. Indonesia’s nickel export ban (2020) forced foreign firms to invest in domestic processing, while Chile’s lithium nationalisation (2025) underscores risks for extractive industries. Conversely, the EU’s Carbon Border Adjustment Mechanism penalises mineral imports with high emissions, advantaging low-carbon producers like Canada’s hydropower-fed aluminium smelters.
Investors need to consider jurisdictions with stable trade pacts (Australia has partnerships with India and South Korea). There’s also a need to consider whether a nation’s tendencies for protectionism are aligned with their desire to attract foreign investments (e.g. with royalty agreements).
ENVIRONMENTAL AND SOCIAL IMPACTS
Q. What are the key environmental and social challenges associated with critical minerals extraction and processing, and how is the industry working to mitigate them?
A. The environmental and social challenges facing the industry are massive, as the frontier of mining expands closer towards communities and important ecosystems. Mine sites face particular challenges with water stress, biodiversity loss, and community displacement risks.
Lithium brine extraction in South America’s Atacama Desert consumes 500,000 litres of water per ton of lithium, exacerbating regional shortages. Similarly, nickel mining in Indonesia has degraded 1.2 million hectares of rainforest since 2020. Socially, artisanal cobalt mining in the DRC involves ~200,000 workers, many in hazardous conditions without formal contracts.
The primary responses from industry are to institute various ESG frameworks, e.g. for water, Chile’s SQM now recycles 90% of brine water in lithium operations. Certification schemes are increasingly important, e.g. the Initiative for Responsible Mining Assurance (IRMA) certifies 18 mines globally for ethical practices. This, however, is a very low number, and greenwashing remains a common issue.
Investors should prioritise firms with third-party audits and measurable, science-based targets, such as Glencore’s pledge to achieve net-zero by 2050 via methane capture and electric haul trucks.
TECHNOLOGICAL ADVANCEMENTS
Q. How are innovations in extraction, refining, and recycling improving the efficiency and sustainability of critical minerals production?
A. Innovations are reshaping extraction and recycling. Direct lithium extraction (DLE) technologies, such as Eramet’s adsorption process, reduce water use by 50% and increase recovery rates to 90%, compared to 40% in evaporation ponds.
Similarly, bioleaching - using bacteria to extract copper from low-grade ores - lowers energy intensity by 30%.
In recycling, hydrometallurgical methods now recover 95% of lithium and cobalt from spent batteries. AI-driven ore-sorting systems at BHP’s Olympic Dam mine improve copper recovery by 15%, reducing waste.
Some sites are also integrating renewables as energy sources for mining operations.
FUTURE DEMAND AND SUBSTITUTION
Q. Which critical minerals are at the highest risk of supply shortages, and what alternative materials or technologies could help reduce dependency on them?
A. ‘Supply shortages’ depends strongly on whose perspective you’re considering. Amidst the massive trade uncertainties, we are likely to see a multitude of supply chain effects, increasing both greater and weaker access to certain critical minerals, or the products that rely on them, depending on where in the world you are.
If we zoom out beyond the current tensions and think more broadly about demand trends for sectors like energy and transportation, the IEA have identified that some elements, like lithium, cobalt, and dysprosium likely face more acute supply risks.
In terms of solutions, we can look at many different options from the circular economy toolbox. Firstly, we can look at substitution. There are many alternative chemistries and technologies that allow metals with concerning supply chains to be replaced, but there are often drawbacks in terms of performance, e.g. sodium-ion batteries. CATL’s 2024 rollout avoids lithium and cobalt, albeit with lower energy density. We can also look at ferrite magnets that may reduce rare earth needs in EVs by 50%.
Besides substitution, we can also ensure that critical materials are used more efficiently. For example, BASF’s closed-loop systems recover 98% of platinum from fuel cells. Tesla’s 4680 battery cell uses 15% less nickel per kWh. Manufacturing steps can make the most of scrap recovery options (where feasible).
Investors can diversify across both primary producers and innovators in alternative chemistries, while also demanding material efficiency benchmarks.
Tim was a featured speaker at this year’s Net Zero Investment Forum hosted by Global Investment Institute where he shared his expertise on critical minerals with a senior delegation of institutional investment leaders representing ~A$2.24 trillion in assets under management from across Australia and New Zealand.
The Net Zero Investment Forum will be hosted again on Thursday, 26 March 2026 in Melbourne CBD, Victoria.
To register your interest in attending, or if you have a best-in-class net zero strategy you would like to present at the event, please email zlatan@globalii.com.au.
Tim Werner, Senior Lecturer, School of Geography, Earth & Atmospheric Sciences, University of Melbourne
Tim is a Senior Lecturer at the University of Melbourne’s School of Geography, Earth and Atmospheric Sciences. He is currently focused on examining land use impacts of mining critical minerals. His interests span many topics, including mineral supply chain resilience and dynamics, land use changes, and exploring critical metal supply chain impacts at both local and global scales.
Tim has collaborated with industry, government, and institutions like Columbia University and Geoscience Australia, securing over A$1.3M in research funding. Recognised with multiple awards, he received the Dean's Award for Research Excellence (2023) and the ISM Young Scientist Award (2023).
Tim earned his PhD from Monash University in 2017 and held research roles at RMIT before joining the University of Melbourne in 2018. He has also held Visiting Scholar positions at Yale University and the Vienna University of Economics and Business.
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