Introduction

In this two-part note, we explore key issues facing the supply chain for critical minerals. In part I, we focus on the evolution of the global system from an era of energy transition to one of full-scale energy expansion, even as the supply foundations of that shift look far from certain. As electrification accelerates across sectors, driven by AI and hyperscalers, the energy system is becoming fundamentally minerals-based, with copper, lithium, nickel, and other critical inputs forming its backbone. This structural shift is already outpacing the ability of supply systems to respond – a gap that is widening rather than closing. As a result, the risk that mineral constraints will delay or derail the pace of expansion has grown, particularly in the United States and energy-deficient regions such as Africa.

At the same time, much of the downstream industry appears to be sleepwalking into a supply chain crisis, despite mounting evidence that the risks are neither distant nor abstract. Western efforts to derisk mineral supply through reshoring and friendshoring are increasingly misaligned with the priorities of mineral-rich nations, which are asserting greater control through resource nationalism, the Indigenous reframe, and a shift toward capturing more value from their resources by demanding in-country processing and industrialization. These dynamics reflect a structural realignment of the global minerals system.

Even if that alignment were achieved, the economics and physics of supply expansion are working against the West. New mining projects face decades-long timelines, rising technical complexity, persistent capital deficits, and exposure to market-shaping behavior and price volatility. Additional headwinds, including increasing supply shocks, financial fragility of non-majors, and the limited impact of recycling and substitution further constrain the ability of traditional models to deliver supply at the required scale and speed. Notably, certain critical minerals – particularly rare earth elements used in defense systems – operate outside standard market logic: their small market volumes, strategic necessity, and national security premium mean governments may rationally justify overpaying and stockpiling to lock in supply, a dynamic that sits outside the conventional price signals that would otherwise incentivize new private investment.

In part II of this note, we focus on the implications of these trends for the future of critical mineral supply. Taken together, the global forces now at play lead to a stark conclusion: the conventional playbook, anchored in large, capital-intensive new mines, will not deliver secure mineral supply chains in the required time frame. The only viable path for reshoring or friendshoring is to move beyond new large mines altogether and build a fundamentally different production platform to unlock the resources that are currently uneconomic and technically unfeasible under the current large-scale approach. The looming deficit in mineral supply also suggests a need to simultaneously radically improve the performance of the current large-scale production platform.

The provocation is intentional: a “no new large mines” future, once implausible, is beginning to look less like a provocation and more like a reality. Of course, the framework that follows still requires radical performance improvements at existing large-scale operations alongside the new production platform. While not a categorical ban on new large mines, the “no new large mines” slogan points to where the mining industry’s focus must be going forward.

1. The Breakdown of the Traditional Supply Model

Demand is accelerating rapidly, but supply is not. Electrification, digital infrastructure, and industrial growth are driving unprecedented mineral intensity, while supply systems remain slow, capital-constrained, and structurally misaligned with geopolitical realities.

The Supply Gap

The scale of the gap is now well documented. Under the International Energy Agency’s (IEA) Stated Policies Scenario (STEPS), lithium demand rises approximately fivefold by 2040, while nickel and graphite demand roughly double and cobalt and rare-earth demand grow by roughly 50–60 percent. In the IEA’s Net-Zero Emissions (NZE) by 2050 Scenario, copper demand grows roughly 50 percent by 2040 and lithium demand by approximately ninefold.^[1] Against this trajectory, the supply pipeline is materially short: the IEA’s 2025 update projects a copper supply shortfall of roughly 30 percent relative to projected demand by 2035 under the Stated Policies Scenario (STEPS), citing declining ore grades, rising capital costs, limited new resource discoveries, and long lead times.^[2]

This demand pressure is not uniform across minerals. For defense-critical materials, particularly rare earth elements used in weapons systems, guidance technology, and communications equipment, demand is strategically inelastic: small market volumes and high national security stakes mean that governments and defense procurement agencies may rationally justify above-market prices and strategic stockpiling to guarantee supply security, decoupled from the commercial price signals that would normally incentivize new private investment. This two-speed demand dynamic, with commercial minerals subject to price cycles, and defense-critical minerals subject to strategic procurement logic, shapes how different supply-side solutions should be evaluated and prioritized.

Resource Nationalism as an Access Constraint

Rising resource nationalism is reshaping access. Producer countries (e.g., Chile, Indonesia, Democratic Republic of the Congo (DRC)) are tightening fiscal regimes, export controls, and local content requirements to capture more in-country value. They are doing so in ways that make supply chains not only more fragmented, but also more politically contingent–limiting Western access to minerals.

The pattern is concrete and accelerating. Chile, holder of the world’s largest lithium reserves, announced a National Lithium Strategy in April 2023 under President Boric requiring state participation in all new lithium projects through the state-owned firms Codelco and ENAMI, and converting the Atacama operations of SQM into a public-private partnership with majority state control after current contracts expire.^[3] Indonesia, the source of roughly 61 percent of global mined nickel in 2024, banned the export of unprocessed nickel ore in January 2020, forcing in-country smelting and triggering well over $30 billion of largely Chinese-led downstream investment, concentrated in Central Sulawesi (notably the Indonesia Morowali Industrial Park).^[4] The Democratic Republic of the Congo, source of approximately 76 percent of global mined cobalt in 2024, revised its Mining Code in 2018 to raise royalties on cobalt and other “strategic” minerals to 10 percent, reduce the prior ten-year tax-stability clause to five years, and introduce a 50 percent windfall profits tax.^[5] These are not isolated events; they are a consistent pattern of producer countries asserting sovereignty over the revenue, processing, and industrial development associated with their resources, and the trend is broadening to Mexico (lithium nationalization, 2022), Zimbabwe (raw lithium export ban, 2022), Namibia (raw critical-mineral export ban, 2023), and Argentine provinces re-evaluating royalty regimes. This is a reasonable approach when you consider these resource-endowed countries wish to capture more of the value of their resources to grow their country’s prosperity beyond the life of the mines. Unfortunately, it can be at odds with western efforts to de-risk supply chains by shipping concentrate to the U.S. and Europe/U.K. for refining.

The Global Minerals Realignment

The global minerals system is bifurcating into competing supply blocs. China anchors one axis through state-directed investment, refining dominance, and long-term offtake relationships across Africa, Latin America, and Southeast Asia. The result is that China has a variety of supply chain ‘choke points’ that varies across each mineral. The U.S., EU, Australia, Japan, and allied nations are working to build a counter-network through initiatives such as the Minerals Security Partnership, but with far less coordination and capital. Increasingly assertive producer nations are choosing sides or playing both.

This increasing geopolitical bifurcation and policy volatility – including U.S.–China competition, shifting trade regimes, permitting uncertainty, and industrial policy (subsidies, tariffs, critical minerals lists) – is raising project risk, elongating timelines, and deterring coordinated, cross-border capital deployment.

The bifurcation has moved from rhetoric to actuality. China imposed export controls on gallium and germanium in August 2023, on graphite anode material in December 2023, and on rare-earth processing and magnet manufacturing technologies in late 2023 – the latter explicitly restricting the export of knowledge, not just product.^[7] The United States has tightened outbound investment screening into Chinese mining and processing entities and expanded the Entity List to include Chinese rare-earth processors. Western capital, accustomed to globally fungible mining markets, now confronts a regime in which a project’s value depends on which bloc its offtake routes through.

The core issue is not simply underinvestment: it is that the dominant model of supply expansion no longer works. Large-scale mining projects remain slow, expensive, complex, and exposed to geopolitical and economic disruption. And fundamentally, for some minerals, high quality reserves no longer exist. These qualities are structurally at odds with the pace and scale of projected demand.

2. Why New Supply Fails: The Headwinds of Mineral Supply

Concurrently, a set of reinforcing structural headwinds undermines the viability of new large-scale mining projects at many of the stages of the mining lifecycle.

The Permitting Nightmare: What Starts Now Might Operate by 2040

New mines routinely require 15–25 years to reach production, far exceeding the timelines required for energy expansion, and this is not a theoretical concern. S&P Global Market Intelligence finds the average lead time from discovery to first production for new mines globally is now approximately 16 years, with major projects routinely exceeding that average.^[9] The U.S. record is particularly telling: Resolution Copper in Arizona, one of the largest undeveloped copper resources in North America, entered formal federal National Environmental Policy Act (NEPA) review in 2013, had its Final Environmental Impact Statement rescinded in March 2021, and did not see a final Record of Decision issued until March 2026, with operational permitting still incomplete.^[10] Even if Resolution were approved today, it would be another ten years before first production.^[11] Twin Metals (Minnesota), an Antofagasta subsidiary, had its federal mineral leases cancelled by the Department of the Interior in January 2022, with a 20-year mineral-withdrawal moratorium imposed across 225,000 acres of the Superior National Forest.^[12] NorthMet/PolyMet (Minnesota) and Pebble (Alaska) have been blocked or stalled by federal action over environmental and tribal concerns. Even where projects move forward out of the permitting slump, ramp-up to nameplate capacity routinely adds another two to four years on top of construction time.

The Social License Shift from Consultation to Participation

There are several intangible yet important social licensing factors at play for multinational mining companies, resource nationalism and the Indigenous shift from consultation to participation. While Indigenous consent for projects on their lands is essential, the effort required to secure and maintain a project’s social license increases complexity, delay, and risk.

Concrete cases illustrate the shift from consultation to consent. The Conga gold-copper project in Peru (Newmont/Buenaventura/IFC) was suspended in November 2011 after sustained opposition over water impacts; partners had spent roughly $1.7 billion on the project by the end of 2015, and Newmont removed Conga from its development pipeline in 2016.^[13] (Many more recent examples exist, including in Peru, such as Hudbay’s Constancia mine in 2025).^[14] Pascua-Lama on the Chile-Argentina border (Barrick) was halted in 2013 after Chile’s environmental superintendency imposed a $16 million fine and Indigenous Diaguita communities secured injunctions; Barrick recorded a $5.1 billion impairment, the project was eventually shut by Chilean regulators, and it remains closed.^[15] Oyu Tolgoi (Mongolia) underwent multiple rounds of contractual renegotiation between 2009 and 2022 before its underground expansion proceeded.

The legal architecture is hardening: International Labour Organization (ILO) Convention 169 and the rising standard of Free, Prior and Informed Consent (FPIC) effectively give Indigenous communities a de facto veto over projects on traditional territories, a standard increasingly upheld by courts. The Brazilian Supreme Court rejected the “marco temporal” doctrine in September 2023, affirming Indigenous land rights regardless of physical occupation in 1988.^[16]

Geopolitics and Market Shaping

On the pathway to operations, financing is an ongoing concern for projects, often directly linked to commodity pricing. State-directed interventions, supply shocks, and price volatility destabilize this investment environment.

Recent episodes underscore the point. London Metal Exchange (LME) cobalt peaked above $95,000/tonne in early 2018, fell to roughly $32,000 by year-end 2018 as DRC supply surged and battery chemistry shifted toward lower-cobalt cathodes, spiked again with the 2021–22 EV demand wave, and has traded below $30,000/tonne through 2024 as Indonesian-Chinese Mixed Hydroxide Precipitate (MHP) and High-Pressure Acid Leach (HPAL) output overwhelmed the market.^[17] Lithium carbonate followed a similar pattern, rising roughly eightfold during 2021–22 to above $80,000/tonne and then falling more than 80 percent by 2024, per the IEA’s 2025 update. These are not investable price signals for projects with ten- to fifteen-year payback periods.

State-directed interventions amplify the volatility: Indonesia’s 2020 nickel ore export ban triggered an immediate price spike followed by a complete restructuring of the global nickel market; China’s 2010 rare-earth export quotas drove prices up tenfold in 18 months and then collapsed them as substitution and stockpiling responded.

However, the nickel market provides the clearest recent illustration of how market shaping can systematically price Western production out of existence. Chinese investment financed large-scale Indonesian nickel processing through high-pressure acid leach and nickel pig iron value chains, driving Indonesia’s share of global mined nickel to approximately half of global supply by the mid-2020s. LME nickel prices fell from above U.S. $50,000 per tonne in 2022 to approximately U.S. $16,400 by early 2024.^[18] The consequences for Western Australia were rapid: Panoramic Resources entered voluntary administration in December 2023; Wyloo Metals placed its Cassini, Long, and Durkin operations under care and maintenance; First Quantum suspended then closed its Ravensthorpe operation with approximately 450 jobs lost; and IGO paused construction of its Cosmos development. Australian nickel production fell from above 150,000 tonnes per year to approximately 60,000 tonnes.^[19] BHP wrote its Nickel West division down to zero and completed a full transition to care and maintenance by December 2024, committing approximately US$300 million per year to preserve the assets pending BHP’s scheduled February 2027 review.

Lithium followed structurally similar logic. Prices fell more than 80 percent from their late-2022 peak, with Goldman Sachs estimating a 2024 market surplus of approximately 200,000 tonnes of lithium carbonate equivalent (roughly 17 percent of global demand) driven by Chinese refining capacity additions outpacing demand growth. Albemarle, the world’s largest lithium producer, responded with two rounds of restructuring: approximately 300 layoffs and deferral of a $1.3 billion South Carolina refinery in January 2024, followed by a further 500 positions cut in November 2024 as third-quarter net sales fell 41 percent year-on-year.^[20]

Across both minerals, the mechanism was the same: state-backed capacity deployed at scale and below Western cost structures during precisely the period when allied-nation supply chains required price stability to develop.

This is further exacerbated by supply shocks to current production. Some estimates show around 900,000 tonnes of copper missing from the market in 2026, due to accidents and community protests.^[21] In 2025, a severe mudslide at Indonesia’s Grasberg mine (which is responsible for 3 percent of global supply) resulted in multiple deaths and impacted global copper prices.^[22] Parent company Freeport McMoRan announced in April 2026 that the mine will not return to full production until at least 2028.^[23] In Peru, ongoing community protests along the ‘copper corridor’ have reduced or stopped output at key copper mines for extended periods.^[24] 

Increasing Complexity of Technical Constraints

As projects come to operations, there are increasing technical factors playing into the complex nature of an ongoing operation, no matter its size. Declining ore grades, deeper deposits, and rising energy, water and waste intensity all increase cost and complexity.

The grade story is well documented. Peer-reviewed analyses of global copper mining find that average ore grades fell from roughly 1.6–1.7 percent Cu in the early 1990s (Cox & Singer baseline) to about 0.56–0.62 percent Cu by the late 2010s. Codelco, long one of the world’s largest copper producers, has seen grades at its legacy operations drop from above 1 percent in the early 2000s to below 0.7 percent in recent years; at Chuquicamata, three tonnes of ore are now processed for the same copper yield that one tonne produced in 2010, and Codelco’s consolidated output has fallen to multi-decade lows.^[25],[26]

Lower grades mean more rock moved, more energy consumed, more water used, and more tailings produced per tonne of metal: every economic and environmental input gets worse simultaneously. In water-scarce jurisdictions such as the Atacama, Arizona, and Western Australia, the water and energy intensity of conventional concentration is now itself a binding constraint on permitting and on social license, independent of the carbon footprint.

Refining and Processing Bottlenecks

Once an operation is up and running, the supply chain chokehold extends well beyond raw material extraction. China dominates midstream refining and processing capacity across most critical minerals: its standard model is to acquire offtake from mines globally, ship intermediate product back to China for refining, and control the processed output. Western supply strategies that focus only on new mines while neglecting refining and processing capacity will remain structurally dependent on China regardless of where the ore comes from.

The asymmetry is stark and well-documented. Per the IEA’s 2025 update, China refines roughly two thirds of global lithium, three quarters of cobalt, and over 90 percent of rare earth elements and graphite. Indonesia, largely through Chinese-financed projects, now accounts for roughly 43 percent of global nickel refining, with another ~30 percent in China; the top three refining nations control 86 percent of energy-mineral processing capacity. Concentration approaches monopoly for separated heavy rare-earth oxides and the sintered NdFeB magnets that depend on them.^[27] Commercial-scale heavy rare-earth separation in the West is limited to Solvay’s La Rochelle facility in France and small operations in Estonia; Lynas’s Malaysian operation and its newly commissioned Kalgoorlie cracking-and-leaching plant remain the principal allied alternatives. China’s December 2023 export controls on rare-earth extraction, separation, and NdFeB magnet manufacturing technology compound the dependence: even if a Western refinery is built, the engineering know-how and equipment supply chain run through China.

The Capital Drought

Chronic underinvestment in juniors, weak returns, and capital discipline by the majors constrain funding for long-cycle projects. Metals pricing is famously fickle: spot and futures markets cannot be relied upon to signal long-cycle investment reliably, and miners cannot commit decades-long capex against prices that may not be sustained. This reinforces the case for a more capex-light, modular production models that allow producers to “turn off the spigot” when prices fall, analogous to shale operators in oil and gas.

The capital math is unforgiving. UNCTAD estimates that meeting projected critical-minerals demand will require investment of $360–450 billion between 2022 and 2030, with $180–270 billion of the funding currently identified as a gap.^[28] For copper alone, Wood Mackenzie estimates an investment requirement of roughly $250 billion by 2030 to meet projected demand, against current trajectories that would leave annual deficits of 4–5 million tonnes.^[29] BHP’s CEO in 2023 stated that only $50 billion had been committed to projects over this period, leaving a significant shortfall.^[30] This requirement collides with the capital drought: the listed mining majors have collectively held capex below replacement levels for most of the past decade, returning cash to shareholders and investing in brownfields expansion rather than funding long-cycle greenfield development. Smaller developers and juniors face an even harder financing environment in both equity and debt markets – the persistent valuation gap between explorers and producers, the capital intensity and elongated time of project development, and the increasing risks leave a structural hole that traditional equity and debt markets are not closing. The durability of the promise of the Gulf Sovereign Wealth Funds, notably Saudi Arabia and UAE, has been called into question by the 2026 conflict in Iran.

Individually, these headwinds may be manageable. Taken together, these headwinds raise a more uncomfortable question: are large, capital-intensive mining projects too slow, risky, and uncertain to anchor Western supply strategies?  That is the question we’ll be turning to in Part II of this note.

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