The global energy transition is reshaping the economics of mining by driving unprecedented demand for critical minerals, altering geopolitical dynamics, and introducing new challenges and opportunities for the industry. Energy transition has a major impact on the mining economy. The factors involved are many and varied. In this article we will highlight the major impacts of energy transition on mining.
Surging Demand for Critical Minerals
The shift to renewable energy technologies, electric vehicles (EVs), and grid infrastructure requires minerals like lithium, cobalt, copper, nickel, and rare earth elements at scales far exceeding current production. “A typical electric car requires six times the mineral inputs of a conventional car and an onshore wind plant requires nine times more mineral resources than a gas-fired plant,” according to the International Energy Agency’s (IEA) report The Role of Critical Minerals in Clean Energy Transitions.
Minerals like cobalt, lithium, and nickel are common in the make-up of a range of tech products. Lithium, nickel, cobalt, manganese and graphite help increase the performance and improve the longevity of batteries. While the magnets inside wind turbines and electric vehicle motors require rare earth minerals (This Is Why the Energy Transition Will Be Reliant on the Mining Industry, 2021).
The World Economic Forum’s 2021 report highlights that demand for minerals like graphite, lithium, and cobalt could rise by nearly 500% by 2050 due to the growing need for clean energy technologies. This surge is driven by the increasing use of electric vehicles, wind turbines, and other clean-tech equipment, which also boosts demand for aluminium and copper.
Geopolitical and Supply Chain Shifts
Key minerals are geographically concentrated. For example, 70% of cobalt comes from the Democratic Republic of Congo, while lithium reserves are dominated by Australia, Chile, and China (mcassidy@oxfordeconomics.com, 2024). This creates supply chain vulnerabilities and trade dependencies.
Countries like Chile (copper), Indonesia (nickel), and Australia (lithium) are positioned to benefit from a potential commodity supercycle, offsetting declining fossil fuel revenues in other regions; and also Indonesia’s ban on raw nickel exports has spurred domestic refining and battery production, a model other nations may emulate to capture more value (Americo et al., 2024).
Economic and Policy Challenges
It takes around 16 years on average to fully establish a new mining operation and as many of the world’s easily accessible mineral deposits have already been mined, average grades of minerals (that is, the amount of metal within the ore body) are declining. This means that more rock needs to be mined to produce the same amount of metal, which in turn means more energy is used (The Green Energy Transition and Mining – UNEP-WCMC, n.d.). However, it’s not just the quantity of energy that is affected: initial capital and extraction costs also rise in such a context.
Domestic mining incentives (e.g., subsidies, tax breaks) may reduce import reliance but risk inflating energy transition technology (ETT) costs if supply constraints persist. Governments must provide clear long-term signals to attract private sector investment in mining and refining infrastructure.
Environmental and Social Risks
Mining and refining critical minerals can have significant environmental footprints. A recent study found that nine per cent of 1,721 disclosed tailings storage facilities around the world are located within protected areas, which could pose serious risks for biodiversity in these regions (The Green Energy Transition and Mining – UNEP-WCMC, n.d.). As of recent estimates, around 5-10% of lithium-ion batteries are recycled globally (Ahmed, 2024), highlighting the need for better recycling infrastructure to reduce primary extraction pressures.
The energy transition is transforming mining into a strategically vital sector, but its economic benefits hinge on balancing supply chain resilience, sustainability, and equitable growth. Policymakers and industry leaders must prioritize innovation (e.g., recycling, mineral substitution), strengthen international collaboration, and address environmental and social risks to ensure affordability and public acceptance of clean energy technologies.
Image rights: https://www.unep.org/news-and-stories/story/what-are-energy-transition-minerals-and-how-can-they-unlock-clean-energy-age
Reference
Ahmed, H. (2024, August 29). Global and African Insights on Lithium-Ion Battery Recycling. Beasfa- Batteries and Energy Storage for Africa Conference 2025. https://beasfa.com/recycling-lithium-ion-batteries-around-the-world-and-africa/
Americo, A., Johal, J., & Upper, C. (2024). The Energy Transition and Its Macroeconomic Effects. The Economists’ Voice, 21(2), 249–274. https://doi.org/10.1515/ev-2023-0062
mcassidy@oxfordeconomics.com. (2024, February 21). Global Industry: Energy transition will transform mining—promise and pitfalls. Oxford Economics. https://www.oxfordeconomics.com/resource/global-industry-energy-transition-will-transform-mining-promise-and-pitfalls/
The green energy transition and mining—UNEP-WCMC. (n.d.). Retrieved April 9, 2025, from https://www.unep-wcmc.org/en/news/the-green-energy-transition-and-mining
This is why the energy transition will be reliant on the mining industry. (2021, May 19). World Economic Forum. https://www.weforum.org/stories/2021/05/energy-transition-reliant-on-mining/
