An unprecedented surge in demand for critical minerals on the back of global transitions to clean energy is posing significant challenges in meeting these goals, as the critical minerals sector experiences various challenges, says data and analytics company GlobalData.

“The global transition to clean energy is gaining momentum, heavily relying on renewable technologies such as solar PV cells and wind turbines, alongside energy transition solutions like hydrogen, energy storage and carbon capture,” GlobalData explains, adding that this growing demand is putting pressure on minerals supply.

The company finds in its latest Strategic Intelligence report on critical minerals the main challenges to scaling clean energy technologies are mineral depletion, resource monopolisation, geopolitical tensions and water scarcity.

Strategic Intelligence analyst Martina Raveni says the near-term depletion of critical minerals raises concerns, especially as instability in the green technologies market causes price volatility.

She adds that lower-grade ores complicate extraction, making it less efficient, particularly in the copper industry.

To this end, recycling is expected to play a key role in diversifying supply chains.

Many critical minerals are concentrated in specific regions, creating uneven resource distribution and volatile market dynamics.

For example, much of the world’s lithium reserves are concentrated in South America and Australia, while the Democratic Republic of Congo dominates international cobalt supply, as is the case with nickel in Indonesia. 

“Geographic monopolies worsen supply risks and are further exacerbated by geopolitical tensions; environmental, social, and governance disclosure rules; and environmental factors such as water scarcity.

“The race to control these critical minerals has intensified rivalries between China, the US and the EU, with China currently dominating the mineral supply chain and energy transition technologies,” Raveni states.

These tensions have led to the introduction of sanctions by Western nations to level the playing field, which has disrupted global supply chains, leading to market volatility. In response, China banned rare earth elements exports in 2023, escalating the situation further.

“Given these issues, there are concerns that shortages of critical minerals may make it harder for nations to achieve energy transition goals,” Raveni concludes.