Trending Forward: Metals & Mining

In Brief

• Metals and mining are becoming increasingly strategic as theenergy transition, electrification, AI, and industrial resiliencedrive long-term demand for critical minerals. ​

• Supply remains difficult to scale due to long project timelines,geographic concentration, and refining bottlenecks, makingmineral security a key priority for governments, industries, and investors. ​

• Responsible mining, recycling, and stronger ESG practices willbe central to meeting rising mineral demand while supportinga more resilient and sustainable economy.

Metals and mining sit at the center of several long-term secular themes, including the energy transition,electrification, digital infrastructure, industrial resilience, and national security. As essential inputs for moderneconomies and the sustainable transition, the sector is increasingly becoming a strategic component of long-termeconomic growth. ​

As critical minerals become more essential to the global economy, scaling supply responsibly remains a majorchallenge. Supply remains constrained by geographic concentration, regulatory challenges, and long projecttimelines. At the same time, the sector faces significant environmental and social risks, reinforcing the need forresponsible mining practices. ​

These dynamics are transforming minerals from a traditional commodity story into a strategic investment themecentered on security of supply, industrial competitiveness, and sustainable resource development.

The Role of Metals and Mining in a Changing Economy​

Energy transition: Renewable power generation, battery storage, electric vehicles, and modern grid infrastructure aremore mineral intensive than conventional energy systems. As countries invest in decarbonization, demand forcopper, lithium, nickel, graphite, rare earths, aluminum, and other critical materials continues to rise.​
BY 2040, MINERAL DEMAND FROM CLEAN ENERGY TECHNOLOGIES IS EXPECTED TO INCREASE BETWEENTWOFOLD TO FOURFOLD¹.

Electrification: Electric mobility, charging networks, industrialelectrification, and expanded transmission networks all requiresignificant volumes of metals. Copper is essential for electricitytransmission, power distribution, motors, chargers, renewablegeneration, and data center infrastructure while aluminumsupports grids and transport.​
A TYPICAL ELECTRIC CAR REQUIRES SIX TIMES THE MINERALINPUTS OF A CONVENTIONAL CAR².​

AI and digitization: AI and digital infrastructure are emergingsources of mineral demand and are reshaping metals valuechains. Data centers are particularly resource intensive, requiringlarge amounts of electricity, power equipment, cooling systems,semiconductors, and connectivity infrastructure in addition tometals such as copper, aluminum, specialty steels, and advancedmaterials. The growth of AI also reinforces the need for expandedelectricity networks.​
AI INFRASTRUCTURE IS MUCH MORE RESOURCE INTENSIVETHAN TRADITIONAL CLOUD, REQUIRING 65-70 TONS OFMETALS PER MW, LARGELY IN POWER AND COOLINGSYSTEMS³.​

Reindustrialization and supply chain resilience: Critical mineralshave become a strategic priority as countries seek to strengthendomestic manufacturing, reduce supply-chain dependencies, andsupport industrial competitiveness.​
CHINA’S SHARE OF REFINING IS AROUND 35% FOR NICKEL, 50-70% FOR LITHIUM AND COBALT, AND NEARLY 90% FOR RAREEARTH ELEMENTS⁴.​

Defense and security: Minerals also support defense and securityapplications including advanced electronics, aircraft, vehicles,communications systems, and guided technologies. 
MORE THAN 60 STRATEGIC PLANS TO ENSURE MINERALSUPPLY RELIABILITY AND RESILIENCY ARE CURRENTLY INPLACE ACROSS MAJOR ECONOMIES⁵.

However, supply is difficult to scale quickly. Even wheremineral resources are available, the ability to developthem responsibly, sustainably, and within a reasonabletimeframe remains a bottleneck for the industry. ​
ON AVERAGE, NEW MINING PROJECTS TAKEOVER16 YEARS TO START PRODUCING MINERALS⁶.​

The sector’s geographic concentration createsadditional supply chain risk, as critical mineral mining isheavily concentrated in a small number of countries. ​THE AVERAGE MARKET SHARE OF THE TOP THREEMINING NATIONS FOR KEY ENERGY MINERALSROSE FROM 73% IN 2020 TO 77% IN 2024⁷. ​

The market is even more concentrated when it comesto refining. The top three refining countries increasedtheir combined market share from 82% in 2020 to 86%in 2024, driven largely by Indonesia in nickel and Chinain cobalt, graphite, and rare earths⁸.​
Critical minerals are increasingly being used asinstruments of trade policy and geopolitical influence. The growing US-China trade conflict has demonstratedthat access to minerals can be weaponized with Chinaimposing export controls on materials such as gallium,germanium, and graphite in response to Westerntechnology restrictions.​
THERE WERE 3X MORE CRITICAL RAW-MATERIALEXPORT RESTRICTIONS IN 2025 VERSUS 2024⁹.​

In response, governments across North America andEurope are using major policy initiatives such as the USInflation Reduction Act (2022) and the EU Critical RawMaterials Act (2023) to strengthen supply securitythrough domestic production, friend-shoring, recycling,and strategic partnerships while maintainingenvironmental and social standards. ​
Recycling and circularity are also becomingincreasingly important, and we see strong long-termopportunities in this space as it can help reducepressure on primary extraction, improve supplysecurity, lower environmental impacts, and create newbusiness models across the value chain.

Supply & Demand Outlook for Key Minerals & Metals ​

Aluminum demand continues to rise across traditional uses such as construction and manufacturing as well asenergy transition applications including solar infrastructure, electric vehicles, and grid expansion. Aluminumproduction is highly energy- and emissions-intensive, so recycling represents a significant opportunity to reduceenvironmental impact and strengthen supply.​
Lithium is essential for lithium-ion batteries used in EVs and energy storage. Demand is expected to rise from ~205kt in 2024 to ~700 kt by 2035¹⁰. Despite near-term oversupply, the current project pipeline points to a potential 40%deficit, requiring continued investment and an estimated 55 additional average-sized mines.​
Copper stands out as one of the most significant supply bottlenecks of the energy transition. Copper is essential forelectrification, supporting grids, renewables, EVs, charging networks, data centers, and industrial power systems.Demand is expected to rise as electricity plays a larger role in final energy consumption. The IEA (InternationalEnergy Agency) estimates that demand will grow from 27Mt in 2024 to 33Mt by 2035 and 37Mt by 2050. However,supply growth is struggling to keep pace as the industry faces declining ore grades, reserve depletion, rising capitalcosts, permitting challenges, and a lack of major new discoveries. As a result, the IEA estimates a potential 30% supply deficit before even considering more ambitious electrification scenarios. Recycling can help ease shortagesas copper can be reused repeatedly without losing its properties and already supports one of the world’s largestrecycling markets.
Steel is necessary for wind turbines, transmission towers, solarinfrastructure, and broader clean energy buildout. Supply is relativelyresilient, but decarbonizing steel production remains a key challenge.​
Manganese is mainly used in steelmaking, but it is also an input forlithium-ion batteries. Demand for manganese is rising with batterygrowth driven by EVs and grid storage systems. 
Rare earths demand is expected to grow 50-60% by 2040 driven by permanent magnets used in EVs, wind turbines, and industrial motors¹¹. While announced projects should broadly meet demand, supply chains remain highly concentrated, making rare earths a significant supply security risk due to China’s dominant position across the value chain.

Processing (smelting/refining): After extraction and concentration,critical minerals are smelted and refined into saleable materials throughprocesses that vary by mineral (high temperature processes, brine-extraction, electrolyzing). Processing is the most energy-intensive partof the supply chain. It also generates tailings (a slurry waste) from oreprocessing and impurity removal which are stored in dedicated facilitiesand can pose environmental and health risks if not properly managed.​
Recycling: Given increased demand for critical minerals and geopoliticalvulnerabilities in the supply chain, recycling will likely become a moreimportant source of materials. According to the IEA, recycling couldreduce new mining requirements for key minerals by 10–30%. Whilerecycling is well established for base metals such as steel andaluminum, it remains much less developed for rare earth elements andother critical minerals. In the US, 57% of aluminum, 35% of copper, and16% of silver were recycled in 2023 compared with estimated globalrecycling rates of only 5–10% for rare earth elements¹².

Mining is highly resource-intensive, contributing to greenhouse gas emissions, pressure on local water resources, biodiversity loss, pollution, and long-term ecosystem impacts. These environmental risks are amplified when operations are located in water-stressed or biodiversity-sensitive areas and can translate into financial risks by delaying projects, increasing capex needs, or affecting companies’ licenses to operate. The sector is also associated with human rights concerns including weak governance, worker safety risks, challenging working conditions, community opposition, and impacts on Indigenous Peoples and local communities, which have made it prone to controversy over the years. As a result, the sector requires careful sustainability assessment to understand and manage the full impact of the sector’s value chain. 

De-risking global critical mineral supply chains remains a long-term challenge, but the urgency is growing. Our approach combines strict minimum standards covering fossil fuel exposure, operations in high-risk countries, and breaches of international norms such as the UN Global Compact and OECD Guidelines. We conduct in-depth qualitative analysis to understand how companies may be positioned to manage these risks and contribute credibly to the transition. This analysis is not only relevant for companies involved in mining activities, but for other industries and value chains that rely on the sector as a material input. ​

Responsible mining practices are increasingly guided by recognized standards and frameworks, such as the Initiative for Responsible Mining Assurance (IRMA), which works with both corporate and community stakeholders to raise the bar on environmental and social standards for mining. Leading companies are adhering to these frameworks and working to lower operational emissions, improve energy efficiency, protect biodiversity through better site planning and rehabilitation, and invest in cleaner equipment and technologies. Recycling and circularity will also play a critical role by reducing pressure on primary extraction and improving supply security. ​

However, most standards remain voluntary and unevenly applied. For this reason, engagement is an important lever for encouraging more sustainable practices and managing sustainability risks. Many mining companies are key targets for collaborative engagement initiatives (e.g., Climate Action 100+, Nature Action 100, PRI Advance), reflecting both their significant environmental and social footprint and the potential for engagement to drive improvements. However, the sector’s structurally high ESG risks mean engagement alone may not be sufficient to reduce risks. Engagement should therefore be complemented by additional levers, including strong investment selection, escalation strategies where progress is insufficient, and support for stronger regulation and industry-wide transparency.

The securities mentioned above are shown for illustrative purpose only and should not be considered as a recommendation or a solicitation to buy or sell. The information provided reflects MIROVA’s opinion as of the date of this document and is subject to change without notice. The reported data reflect the situation as of the date of this document and are subject to change without notice. This information is intended for non-professional and professional clients as defined by MiFID.

1. IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA, Paris https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions. The information provided reflects MIROVA’s opinion as of the date of this document and is subject to change without notice. The reported data reflect the situation as of the date of this document and are subject to change without notice. This information is intended for non-professional and professional clients as defined by MiFID.
2. IEA (2021), The Role of Critical Minerals in Clean Energy Transitions, IEA, Paris https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions.
3. BofA - Transition Investing - Matter over mind? AI's 10 secret ingredients.
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