Investment in the production and exploration of many key minerals and metals increased in 2021, and high prices are expected to spur additional investment in 2022. Nevertheless, current supply and investment plans do not make sufficient provision for the quantity of materials needed for the world to achieve the Paris Agreement goals. For example, demand for nickel could grow to two to three times current production by 2030, and lithium demand could rise three‑ to seven-fold.

Nickel production, 2021 and projected demand in climate-driven scenarios, 2030


Lithium production, 2021, and projected demand in climate-driven scenarios, 2030


Critical mineral supply projects have long development lead times. In fact, analysis of major mines that became operational between 2010 and 2019 shows that it takes more than 16 years on average to develop projects from discovery to first production, although exact duration varies by mineral, location and mine type. These long lead times raise doubts about whether supply output can be ramped up quickly enough to meet rapid demand rises.

Governments can reduce the potential for supply shortages by facilitating and supporting investment in new critical mineral exploitation. Targeted policy actions could include providing financing to develop new supply sources; offering tax incentives; enhancing geological surveys to provide information on potential resources; spurring innovation by incentivising research and development; and encouraging recycling by financing new recycling facilities or instituting regulatory measures to improve collection and recycling rates.

Policy snapshot: Promoting exploration, production and innovation

Policy makers are using pandemic recovery funding to catalyse investment in critical minerals

Many governments have mobilised considerable fiscal resources in response to the Covid-19 pandemic to stabilise and rebuild their economies, with some support packages including financing mechanisms to ensure funding for new critical mineral developments – particularly in the areas of recycling and technological innovation. Grants, subsidies, preferential loans, loan guarantees and other financial incentives have been offered.

These financing mechanisms could also spur development in emerging areas of the value chain, such as waste re-mining and mine reclamation. For instance, the US Infrastructure Investment and Jobs Act modified the Department of Energy’s loan guarantee programme to include projects that will enlarge supplies of domestically produced critical minerals, including end-use efficiency technologies and recycling technologies. The law also authorised funding for a grant programme aimed at battery materials, which includes extraction, processing, and recycling projects that increase supplies of lithium, nickel and graphite, and a demonstration facility to extract rare earth elements from unconventional resources such as coal waste, coal ash and acid mine drainage. 

Furthermore, the US Inflation Reduction Act has established a production tax credit for producers of critical minerals, and it also incorporates incentives for domestic mineral production into the electric vehicle tax credit.

In addition to offering recovery funding, policies can provide a more stable framework for longer-term investment in the critical minerals sector. For example, in 2021 the Australian government established a AUD 2‑billion Critical Minerals Facility to offer loan guarantees or preferential loans as a complement to private financing to help launch projects involved in extracting or processing minerals for export. The facility supports projects aligned with the Australian government's Critical Minerals Strategy, which aims to ensure supply stability, sovereign capability and regional jobs and growth.

Countries that do not have domestic critical mineral reserves can also invest abroad to secure new supplies. For instance, the Japan Oil, Gas and Metals National Corporation (JOGMEC) has a system of equity participation, loans and debt guarantees for overseas mineral resource development projects involved in exploration, development and production. These mechanisms, together with technical support for mine development, allow the JOGMEC to offer flexible financial support. The amount of support available ranges from several billion to several tens of billions of Japanese yen.

Meanwhile, the Japan Bank for International Cooperation (JBIC) maintains a separate system of loans and debt guarantees for overseas mineral resource development projects at the development and production stages. The bank acts as a majority lender in large-scale project financing for sizeable mining projects that have relatively low technical risk. Loans from the JBIC range from tens of billions to hundreds of billions of Japanese yen.

Enlarging national geological surveys can encourage private investment

National geological surveys have been instrumental for compiling and disseminating data on locations and quantities of critical mineral resources. As access to this information facilitates policy making and industry decision-making, and also informs investment choices, reinforcing and enlarging national surveys could be crucial to expand the exploration and development of critical mineral sources.

For this reason, the United States has announced that it will improve its mapping of critical mineral deposits, as only a small percentage of its territory has been charted at the necessary scale. At the same time, Japan is providing subsidies for both public and private resource exploration projects and is also investing in expanding knowledge of its submarine mining deposits. In Australia, the government has launched a programme to fund projects that use innovative technologies to improve geological surveys.

Further gains can also be realised through effective international co‑ordination. Since 2019, Australia, Canada and the United States have been working together on a Critical Minerals Mapping Initiative to improve their collective understanding of critical mineral resources and to promote exploitation in all three countries. International co‑ordination on mineral surveys can also improve and standardise methodologies, which can further facilitate discovery, exploration and, ultimately, exploitation.