Critical mineral demand rises amid energy and digital transitions

The global transition toward renewable energy, electric vehicles, and digital infrastructure is driving an unprecedented demand for critical minerals, including copper, lithium, nickel, cobalt, and rare earth elements. This surge in demand creates a complex interplay between the benefits of decarbonization and the environmental and strategic costs of mineral extraction.

A prospective life cycle assessment (pLCA) published on the SSRN preprint server suggests that while the metal footprint of net-zero technologies poses local environmental and social challenges, the overall environmental damage is significantly outweighed by the climate damage avoided through a faster transition to net zero. The study examined the impacts of 37 different metals to provide an economy-level perspective on these trade-offs.

Simultaneously, the transition faces significant supply chain vulnerabilities. The production and processing of these essential materials are highly concentrated in a small number of countries, making the energy and digital transformations susceptible to trade restrictions, political instability, and export controls. The expansion of data centers for artificial intelligence and cloud computing further intensifies this pressure, as they require massive amounts of electricity and physical infrastructure materials like copper, aluminum, and steel.