Critical minerals for the electricity sector
What are critical minerals and why are they essential?
Energy efficiency Energy storage Renewable energy
Although we may not always be aware of it, our daily lives depend on critical minerals such as aluminium, cobalt, copper, lithium, magnesium and graphite. These are essential components of a wide range of electronic devices, from mobile phones and laptops to aircraft and medical equipment. They also play a key role in the electricity sector and are used in renewable technologies such as wind turbines, solar panels and batteries. Their importance means a constant supply is vital. Industrialised countries often rely on emerging economies for imports, either because they lack domestic resources or because existing reserves have already been depleted.
The classification of a mineral as “critical” can change over time depending on supply and demand dynamics. The emergence of new technologies, for example, can lead to an element or compound being considered “critical”, just as a new dependency on imports from politically unstable regions can.
Official lists of critical minerals help guide major public and private sector investments, as they support supply chain risk assessment and help anticipate potential disruptions. They also facilitate the allocation of resources to reduce those risks and strengthen a country’s resilience.
Definitions that vary from country to country
The exact classification of a critical mineral varies by country or organisation. In the US, for example, critical minerals are defined under the Energy Act of 2020. According to this law, a mineral is considered “critical” if it meets three criteria:
- It is essential to the economic or national security of the US
- It plays a key role in the manufacturing of products whose absence would have significant consequences for that security
- It has a supply chain vulnerable to disruption (political risks, conflict, anti-competitive behaviour, etc.)
The law also excludes fuel minerals such as oil, gas, coal or uranium, as well as water, ice and snow or even common sands.
The list of critical minerals is reviewed and published every five years by the United States Geological Survey (USGS). The latest list, published in 2022, includes 50 minerals.
Meanwhile, the European Union identifies 34 critical minerals, and the International Energy Agency (IEA) highlights those most widely used: lithium, nickel, copper, cobalt, manganese and graphite, all of which are essential for batteries. Some, such as platinum, iridium and palladium, are among the rarest elements on Earth, while others, such as aluminium or silicon, are highly abundant.
What are rare earth elements and how do they relate to critical minerals?
Rare earths, also known as rare earth elements, are a group of 17 metallic elements that include the 15 lanthanides – elements with atomic numbers 57 to 71 on the periodic table. Despite their name, they are not particularly scarce in terms of abundance, but are rarely found in economically viable concentrations, making them difficult to extract. They are classified as critical minerals because they are essential to many modern technologies and clean energy systems, and lack suitable substitutes in many applications.
The role of critical minerals in the electricity sector
Critical minerals are fundamental to the renewable energy sector. From lithium in batteries to rare earths in wind turbines and electric motors, these materials enable the efficient generation, storage and transmission of clean energy, forming the backbone of the technologies driving the global energy transition. As demand for solar panels, electric vehicles and storage systems rises, so too does the need for a stable and sustainable supply of these minerals. The infographic below shows which minerals are essential for each renewable technology.
How will the growth of renewable energy affect the demand for critical minerals and rare earth elements?
As the world moves towards renewable energy, demand for critical minerals is expected to rise significantly. Technologies such as solar panels, wind turbines, electric vehicles and storage systems require far more minerals during the construction/manufacturing phase than their fossil fuel equivalents, although they then require no material to operate (unlike combustion vehicles which rely on oil, or gas-fired power stations). For example, according to the International Energy Agency (IEA), an electric car needs six times more minerals than a conventional one, and an onshore wind farm up to nine times more than a gas power plant. This shift marks a transition from a fuel-intensive energy system to a materials-intensive one.
The IEA forecasts that, if the targets of the Paris Agreement are followed, demand for certain minerals could increase four- to sixfold by 2040. Specifically, lithium demand could rise by more than 40 times, and cobalt, nickel and graphite by between 20 and 25 times. Clean technologies will dominate the market for these materials, accounting for nearly 90% of lithium demand and more than 60% of cobalt and nickel.
This growth raises challenges around availability, investment and supply chain security. Current production is highly concentrated in a few countries: China leads the processing of critical minerals and rare earths, and the Democratic Republic of the Congo dominates cobalt production. Slow development of new projects, the depletion of high-grade mines and environmental impacts further increase the risk of disruptions. Without global cooperation and investment, these minerals could become a bottleneck for the energy transition.
The Future of Critical Minerals: Trends and Solutions
As the energy transition progresses and the world becomes more digitalised, critical mineral production will need to grow accordingly. However, according to the OECD, current supply is not keeping pace with demand.
Although developed countries are investing in domestic exploration and production, the long timelines between discovery and exploitation mean they still depend on exports from emerging economies. Moreover, some countries will remain dependent in the future as they lack these types of mineral resources.
Material efficiency and product redesign are two key strategies to address dependence on critical minerals. Material efficiency means achieving the same results with fewer resources, thereby reducing demand. Product redesign involves modifying existing designs to reduce or eliminate the need for critical minerals, which may include substituting more abundant materials or developing new technologies.
Finally, recycling and the circular economy must not be overlooked when it comes to critical minerals. Many can be recovered from products such as electric vehicles and wind turbines, although technologies for large-scale recovery from solar panels still need to advance. For supplier countries in Africa, Latin America and Southeast Asia, this demand presents an opportunity to transform their mineral wealth into sustainable economic benefits, improve social wellbeing and attract long-term investment.