MINING AND METALS

The future of mining in a clean energy world

How can the sector enable global decarbonisation without exacerbating social and environmental challenges?

The challenges

Supply is struggling to meet unprecedented demand
Emissions are high and rising as production expands
Climate impacts and regulatory risks are affecting operations
Communities often bear costs without seeing benefits

The solutions

Decarbonise mines while improving outcomes for workers and communities
De-risk and accelerate sustainable mines of the future
Scale circular business models for metals to reduce primary extraction needs

The clean energy transition is often discussed in terms of targets, timelines and technologies. Less visible, but equally urgent, are the materials that make it possible. The resources needed to decarbonise the world economy lie beneath the Earth’s surface, or pass through our hands every day, often with little thought for where they began.

A typical smartphone relies on copper to conduct electricity, lithium and cobalt for its battery, nickel for durability and aluminium for its casing. The same materials appear for similar uses in the technologies powering the green transition, scaled from grams to tonnes: copper conducts the electricity generated by renewables, carrying it vast distances across grids; lithium, cobalt and nickel underpin energy storage and electrified transport through rapidly improving batteries; and steel and aluminium constitute the backbone of clean infrastructure. Without these materials, there simply wouldn’t be an energy transition.

These resources are concentrated in surprisingly few countries, creating strategic dependencies that are reshaping global geopolitics, as governments seek to diversify supply chains through new alliances, trade relationships and military power.

This leaves the mining and metals sector with a defining set of challenges: to scale supply at a pace never seen before in an increasingly contested geopolitical landscape, while decarbonising carbon-intensive operations and managing intensifying climate risks. At the same time, the sector must ensure a just transition with benefits shared fairly with workers and communities.

They’re lofty tasks, but with system-level thinking, achievable ones. Now, the mining and metals sector has the opportunity to shape not just the speed of global decarbonisation, but also its resilience and legitimacy in the years to come.

In numbers:

Source: IEA Global Critical Minerals Outlook 2025

"The next decade of mining investment will lock in outcomes for emissions, resilience and local development for generations. Getting it right really matters."

Reinhardt Arp, Manager, South Africa The Carbon Trust

THE CHALLENGES:

1. Supply is struggling to meet unprecedented demand

'By 2040, the copper shortfall is forecast to reach around 10 million tonnes annually: almost one-quarter of today's global production.'

Clean energy technologies are far more material-intensive than their fossil fuel predecessors. A standard 3 MW wind turbine requires around five tonnes of copper wiring (equivalent to around 10km of cable), plus three tonnes of aluminium and two tonnes of rare earths. Electric vehicles (EVs) require approximately six times more minerals than conventional cars.1

Reaching Net Zero by 2050 implies an eightfold increase in global wind capacity and the deployment of hundreds of thousands of new turbines. Global EV fleets are expected to expand from around 60 million vehicles today to close to one billion by mid-century. Combined with the material intensity of clean technologies, this is driving mineral demand growth at a pace and scale without historical precedent.

Supply is already struggling to keep up. Global copper demand is projected to surge 50% by 2040, from 28 million tonnes (Mt) today to 42 Mt. Yet existing and planned mining projects are expected to peak at just 27 Mt in 2030 before declining. By 2040, the resulting shortfall is forecast to reach around 10 Mt annually: almost one-quarter of today's global copper production. This represents a huge bottleneck just as clean energy deployment urgently needs to accelerate.

Closing this gap requires new mine developments at scale. Yet bringing new supply online remains exceptionally difficult. Around 83% of major mining projects experience cost or schedule overruns, with megaprojects averaging 79% over budget and 52% behind schedule. In the US, permitting a new mine takes an average of 29 years.2 Extreme fluctuations in metal prices alongside major geopolitical and regulatory uncertainty, including abrupt policy reversals in major economies, raise hurdle rates and delay investment decisions across already highly concentrated supply chains. The result is a structurally underdeveloped pipeline: copper exploration budgets remain about 34% below their 2012 peak, despite increasing demand.

These supply bottlenecks are compounded by acute geopolitical concerns. Across the six key transition metals, the top three producing countries control an average of 77% of global supply. China particularly dominates processing, refining 65% of global lithium, 74% of cobalt and 90% of rare earths. This creates dependencies that major economies are racing to address, turning commercial decisions about mineral supply chains into matters of economic sovereignty and national security.

Increasing secondary supply through recycling and reuse is therefore essential on three fronts. First, primary extraction alone cannot meet projected demand, even with accelerated new mine development. Second, scaling recycling could reduce the need for new mining by 25-40%. Third, developing robust secondary supply chains could help defuse geopolitical tensions by reducing the scramble to secure control over new primary sources.

While some materials already benefit from mature recycling systems – most notably steel (around 85-90% recycling rate) and aluminium (around 70-75%), and to a lesser extent copper (around 35-40%) – end of life recovery rates for many key transition metals remain strikingly low, at around 10% for cobalt, 4% for lithium and below 1% for rare earth metals. Even copper, one of the most recyclable transition metals, has seen its secondary supply share fall from 37% to 33% since 2015, as recycling has failed to keep pace with surging demand.3 As it stands, linear business models and product design, low collection rates and weak incentives across value chains limit progress in better leveraging this existing supply.

Future critical mineral supply remains highly concentrated

Just 12 countries rank in the top 3 producers for critical energy transition minerals: copper, lithium, cobalt, nickel, graphite and rare earths. Hover over the map to see country, mineral type and concentration level.

Source: Our World in Data

Projected demand growth for critical minerals to 2040 (Net Zero Scenario) Source: IEA Global Critical Minerals Outlook 2024

Annual copper demand and supply, 2020-2040 (in million metric tonnes):

Source: S&P Global

Note: Supply projections assume no meaningful expansion beyond existing and committed projects.

2. Emissions are high and rising as production expands

'Mining is one of the hardest-to-abate sectors because its core activities are energy-intensive and often technologically constrained.'

Mining consumes 1.7% of global energy yet produces a disproportionate 4-10% of global greenhouse gas emissions, depending on what is accounted for. Metals processing adds a further major carbon burden, with steel and aluminium production contributing a further 7% and 2% of global emissions respectively.4

Mining and metals is one of the hardest-to-abate sectors because its core activities are energy-intensive and often technologically constrained. Operations rely on diesel-powered equipment, including haulage trucks weighing up to 400 tonnes, and often operate in remote locations far from grid infrastructure. Processing and refining require sustained high temperatures, often exceeding 1,000C, which remains difficult to electrify at scale. Viable zero-emission alternatives such as electric trucks and green hydrogen often remain costly and limited in availability.

These pressures are being compounded by declining ore grades. Copper grades have fallen by around 25-30% globally since the early 2000s, with grades in Chile now roughly half their historic levels. As grades decline, larger volumes of material must be mined, moved and processed for the equivalent quantity of metal to be extracted, driving higher energy use despite efficiency improvements.

Geography and policy contexts further shape the emissions challenge. Many critical minerals are produced in emerging markets where electricity grids remain carbon-intensive, increasing reliance on on-site generation. Inconsistent or misaligned policies can also slow progress by separating industrial expansion from energy transition strategy, for example, introducing carbon pricing before miners have access to clean power, or incentivising processing capacity tied to coal-based systems.

Copper mining emissions by source:

Source: ICA

Note: Average emissions profile shown for copper. Profiles vary significantly by metal – precious metals typically have lower processing emissions, while iron ore has higher processing emissions due to steelmaking requirements.

Many of the world’s critical mineral reserves are concentrated in regions already experiencing more frequent droughts, floods and extreme heat, with the impacts of climate change fast becoming an operational reality.

3. Climate impacts and regulatory risks are affecting operations

'Expanding circular approaches could reduce primary mineral demand by 25-40% by 2050, depending upon the metal and technology pathway.'

Many of the world’s critical mineral reserves are concentrated in regions already experiencing more frequent droughts, floods and extreme heat, with the impacts of climate change fast becoming an operational reality.

Water stress is one of the most immediate pressures. Nearly one-quarter of global critical mineral mines are located in areas facing water scarcity, placing water-intensive processing operations in direct competition with local communities, agriculture and ecosystems. Other pressures include extreme heat, which affects worker safety, and extreme weather events which damage infrastructure and disrupt production. These impacts can affect production and company performance while increasing tensions with both local communities and host governments.

Physical risks are reinforced by growing transition pressures. As jurisdictions introduce carbon pricing and border measures, such as South Africa’s carbon tax, Chile’s carbon pricing and the EU’s Carbon Border Adjustment Mechanism (CBAM), the cost of emissions-intensive production is rising.5 Investors are raising their expectations, with science-based Net Zero targets and credible transition strategies increasingly being required to secure capital.

Progress depends on overcoming a fundamental mismatch. Adapting mining operations to rising heat, water stress and extreme weather requires planning and investment over decades, yet the mining and metals sector operates within short-term cycles. Commodity prices can swing by over 100% in a single year and have become especially volatile in the past five years. These short cycles are both a symptom and a driver of underinvestment in resilience: long-lived assets exposed to growing climate risk are often managed through near-term price signals, delaying adaptation until disruption occurs.

16% of global critical mineral mines, deposits and districts are in areas of high or extremely high water stress.

65% of known lithium resources are in areas of medium to very high water stress.

Source: World Resources Institute

4. Communities often bear costs without seeing benefits

The energy transition will only succeed if it works for the people whose lives are shaped by mining. Those living and working near mine sites often bear the environmental and health costs of extraction, from biodiversity loss, ecosystem degradation and contaminated air, water and soil to unsafe labour conditions, health effects and the erosion of traditional livelihoods. These burdens fall on both mine workers and surrounding local and regional communities.

These impacts are urgent, not least because mining underpins livelihoods at an enormous global scale. The formal sector employs around 8.5 million people globally, alongside many more supported through supply chains and mining-adjacent services. Beyond this, the sector extends into a much broader ecosystem of livelihoods, including artisanal and small-scale mining (ASM), reinforcing the opportunity for larger operators to set standards and expectations that shape best practice across mineral supply chains.

As it stands, only a small share of the wealth generated by mining flows back to workers and local communities. Many leading mineral-producing countries experience high levels of income inequality, environmental degradation and dispossession, highlighting a persistent disconnect between extraction and inclusive development. This is most prevalent in the Democratic Republic of the Congo (DRC), which accounts for 76% of global mined cobalt and ranks 171 out of 193 countries globally on the Human Development Index.

THE SOLUTIONS:

The pressures mining and metals face are already reshaping how the sector operates, and across the industry, there is growing recognition that incremental fixes will not be enough. Fortunately, well-designed interventions can create positive ripple effects, strengthening resilience across supply, operations and communities simultaneously.

1. Decarbonise mines while improving outcomes for workers and communities

A large share of the minerals needed for the next phase of the energy transition will come from announced projects, existing mines and brownfield expansion, including around 80% of copper needs to 2030. Transitioning these existing assets to be both low carbon and socially responsible at scale depends on mining companies having robust, site-level transition strategies in place that integrate decarbonisation, climate resilience, and community and workforce impacts, especially for large and internationally exposed producers.

Detailed Scope 1-3 emissions footprinting and transition strategies help make the investment case clear. At large open-pit, diesel-reliant operations, cleanly electrifying haulage can reduce 30-50% of onsite Scope 1 emissions, while delivering 20-30% lower maintenance costs.6 Doing so alongside electrifying mobile equipment and site power can bring down miners’ operating costs by around 5-15%. Once you factor in the co-benefits of reduced exposure to fuel price volatility and greater competitiveness through alignment with carbon costs and regulation, including green premiums for low carbon metals, this is increasingly the pragmatic pathway for existing mines.7

Climate resilience is a key feature of robust transition strategies for existing mines. This can include a mix of tailored approaches, from reducing and recycling water in water-scarce areas, to building climate-ready infrastructure and rehabilitating land in damaged ecosystems. Crucially, effective transitions also reshape on-site work and opportunities, improving social and health outcomes while shifting skills demand towards digital and systems-based roles. When designed inclusively, this creates scope for local training programmes, fair wages and durable career pathways, particularly in remote and resource-dependent regions.

Electrifying existing mines delivers immediate climate and economic benefits:

reduction in Scope 1 emissions (from electrifying haulage)

reduction in operating costs

Supporting mines to integrate renewable power, electrification and climate-resilient infrastructure from the start improves cost certainty, cuts exposure to fuel price swings and carbon costs, and reduces physical climate risks.

"The key constraint on new mining supply isn’t geology or technology – it’s how early-stage risks are allocated, priced and managed."

Renata Lawton-Misra, Co-Head of Africa The Carbon Trust

2. De-risk and accelerate sustainable mines of the future

'A mine asset transition accelerator could play a catalytic role in driving needed progress.'

Closing the global supply gap will also require accelerating new mine development, but only in ways that are low carbon, climate resilient and socially responsible. Delivering supply aligned with global climate goals is set to require USD $2-2.5 trillion in new mining investment by 2050, particularly in copper, lithium and nickel.8 The central challenge in meeting this demand, perhaps surprisingly, is not resource availability. Instead, it is the stacking of early-stage technical, financial and social risks that raises the cost of capital and slows delivery, particularly where projects fail to secure early social consent and alignment with local communities.

A mine asset transition accelerator could play a catalytic role in driving needed progress. The idea is quite straightforward: bring together key stakeholders (miners, financiers, local communities and host governments) and the financial instruments miners need (including guarantees, contracts for difference and blended finance) with the technical, permitting and ESG expertise that gets projects built. This approach has all-round benefits of lowering the costs of capital while absorbing early development risks. Just as importantly, aligning these elements from the feasibility stage onwards means environmental and social performance gets designed in rather than bolted on, carrying through the whole mine pipeline to closure and post-life.

Supporting mines to integrate renewable power, electrification and climate-resilient infrastructure from the start improves cost certainty, cuts exposure to fuel price swings and carbon costs, and reduces physical climate risks. Evidence suggests this approach can reduce lifecycle emissions by 30-50% compared with conventional developments, while strengthening operational resilience over the long term.9 It also means designing for robust environmental and community safeguards upfront, which aligns with international expectations and reduces permitting delays renowned for derailing mining projects.

Junior miners are set to benefit most from this fresh approach. They account for around 40-45% of global exploration spending, but often can't carry early-stage risk alone, lacking both financing and internal capacity.10 An accelerator structure could help level the playing field, providing access to expertise and capital structures that are currently often ring-fenced for majors due to affordability. This also creates space for credible community engagement, benefit-sharing and local skills development early in the project cycle, embedding just transition outcomes at the stage when risks and rewards are allocated.

Designing climate performance in from the start cuts future risk, cost and emissions at scale:

$2-2.5 trillion needed in new mining investment by 2050

reduction in lifecycle emissions (vs conventional developments)

of global exploration spending comes from junior miners (who need support most)

Mine asset transition accelerator: How it works

3. Scale circular business models for metals to reduce primary extraction needs

In principle, metals can be recycled indefinitely. In practice, circularity has taken hold most strongly where it already makes commercial sense or has been reinforced by policy. While steel and aluminium now achieve recycling rates of around 90% and 75% globally respectively, this is not yet the story for other minerals crucial to the energy transition. Rare earths, lithium and cobalt value chains especially remain structured around linear extraction and sale. The future benefits of circularity are significant and needed: expanding circular approaches could reduce primary mineral demand by 25-40% by 2050, depending on the metal and technology pathway.11

Alongside boosting stocks of sustainable metals, moving to circular value chains can unlock new economic and societal value while cutting emissions. This potential hinges on a shift in how metals are owned and managed, away from one-off sales and towards models that keep materials in circulation.

Under the Metals as a Service business model, ownership and use of metals are separated. A dedicated entity retains ownership of the material and leases its functional use to downstream actors, such as manufacturers and product leasers, even as the metal becomes embedded in buildings, wind turbines, or EVs. Once these assets reach the end of their useful function, the materials are recovered and recycled under the oversight of the owner.

This shift supports practical incentives and results. When owners know they will see the metal again, there is a stronger rationale for future circularity high in the value chain. In practice, this involves metals being designed for identification and recovery purposes, including through product passports or IDs, standardised alloys, clear labelling and design for disassembly. Where these approaches are coordinated and centralised, processing systems can absorb secondary feedstocks and turn would-be waste into dependable sources of supply. Outcomes are then shared across the value chain; downstream users benefit from reduced upfront costs and exposure to price swings, while upstream users capture value over the material’s full life rather than just the point of sale.