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Equities

Why critical minerals matter for long-term growth

August 18, 2026 - 5 min

Critical minerals have become a strategic pillar of the modern economy, supporting everything from electrification and artificial intelligence (AI) to industrial resilience and national security. As demand for these materials grows, governments and industries are increasingly focused on securing reliable sources of supply.

Here, Mirova’s Marine Michiels, equity analyst, Sustainable Equity, discusses how rising demand, constrained supply, and evolving sustainability expectations are transforming metals and mining from a traditional commodity sector into a long-term investment theme.

Key takeaways

  • Critical minerals are becoming increasingly important as electrification, AI, and industrial policy drive long-term demand growth.
  • Limited supply growth and concentrated production are making resource security a strategic priority.
  • Responsible mining, recycling, and stronger sustainability practices will be essential to meeting future demand.

The role of metals and mining in a changing 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. With it compromising the essential inputs for modern economies and the sustainable transition, the sector is increasingly becoming a strategic component of long-term economic growth.

Energy transition
Renewable power generation, battery storage, electric vehicles, and modern grid infrastructure are more mineral intensive than conventional energy systems. As countries invest in decarbonization, demand for copper, 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 between twofold and fourfold.1

Electrification
Electric mobility, charging networks, industrial electrification, and expanded transmission networks all require significant volumes of metals. Copper is essential for electricity transmission, power distribution, motors, chargers, renewable generation, and data center infrastructure, while aluminum supports grids and transport. A typical electric car requires six times the mineral inputs of a conventional car.2

AI and digitization
AI and digital infrastructure are emerging sources of mineral demand and are reshaping metal value chains. Data centers are particularly resource intensive, requiring large amounts of electricity, power equipment, cooling systems, semiconductors, and connectivity infrastructure in addition to metals such as copper, aluminum, specialty steels, and advanced materials. The growth of AI also reinforces the need for expanded electricity networks. AI infrastructure is much more resource intensive than traditional cloud computing, requiring 65-70 tons of metals per megawatt, largely in power and cooling systems.3

Reindustrialization and supply chain resilience
Critical minerals have become a strategic priority as countries seek to strengthen domestic manufacturing, reduce supply chain dependencies, and support industrial competitiveness. China’s share of refining is around 35% for nickel, 50–70% for lithium and cobalt, and nearly 90% for rare earth elements.4

Defense and security
Minerals also support defense and security applications including advanced electronics, aircraft, vehicles, communications systems, and guided technologies. More than 60 strategic plans to ensure mineral supply reliability and resiliency are currently in place across major economies.5

Long-term value drivers 

Rising structural demand combined with constrained and geographically concentrated supply are creating long-term opportunities across the minerals and mining sector. Meeting this demand will require substantial investment across the value chain, from new mines and refining capacity to infrastructure, processing, and recycling.

However, supply is difficult to scale quickly. On average, new mining projects take over 16 years to start producing minerals.6 The average market share of the top-three mining nations for key energy minerals rose from 73% in 2020 to 77% in 2024.7 Refining is even more concentrated, with the top-three refining countries increasing their combined market share from 82% to 86% during the same period.8

Critical minerals are increasingly being used as instruments of trade policy and geopolitical influence. There were 3x more critical raw-material export restrictions in 2025 versus in 2024.9

In response, governments across North America and Europe are pursuing policies designed to strengthen domestic production, recycling, strategic relationships, and supply chain resilience.

Recycling and circularity are expected to play an increasingly important role in addressing supply challenges while reducing environmental impacts and dependence on primary extraction.


Mined supply of energy transition metals and minerals in 2024 by top-producing country
Mined supply of energy transition metals and minerals in 2024 by top-producing country Source: BloombergNEF. Note: Graphite is not included because only its refined production is considered in BNEF's Transition Metals Outlook. DRC refers to the Democratic Republic of Congo.
Geographical distribution of refined material production for key energy transition minerals in the base case, 2023–2040
Geographical distribution of refined material production for key energy transition minerals in the base case, 2023–2040 Source: IEA (2024), Geographical distribution of refined material production for key energy transition materials in the base case, 2023–2040, IEA, Paris. Graphite extraction is for natural flake graphite. The figures for rare earth elements are for magnet rare earth elements only. The figure depicts the value of the top-three producing countries in a given year.

Supply and demand outlook for key minerals and metals

Aluminum
Demand for aluminum continues to rise across traditional applications such as construction and manufacturing, as well as energy transition uses including solar infrastructure, electric vehicles, and grid expansion. Because aluminum production is highly energy intensive, recycling represents an important opportunity to reduce emissions and strengthen supply security.

Lithium
Lithium remains a critical component of lithium-ion batteries used in electric vehicles and energy storage systems. Demand is expected to increase substantially through 2035. Although the market currently faces near-term oversupply, projections point to a potential supply deficit that will require continued investment in new mining projects.

Copper
Copper is one of the most important minerals supporting electrification. It is used in power grids, renewable energy systems, electric vehicles, charging networks, data centers, and industrial power infrastructure. While demand is expected to increase significantly over the coming decades, supply growth is being constrained by declining ore grades, reserve depletion, permitting challenges, rising costs, and a lack of major new discoveries. Recycling will play an important role in helping address future shortages.

Steel, manganese, and rare earth minerals
Steel remains essential for wind turbines, transmission towers, solar infrastructure, and broader clean-energy development. Manganese demand is increasing alongside growth in battery technologies, while rare earth minerals demand is expected to rise significantly due to their use in electric vehicles, wind turbines, and industrial motors. Despite planned new projects, highly concentrated supply chains continue to present a strategic challenge, particularly in rare earth minerals.

Metals and minerals value chain

The critical minerals value chain includes extraction, processing, and recycling. Mining can take place through underground or open-pit methods, while processing transforms raw materials into usable products through energy-intensive refining and smelting activities. Recycling is expected to become an increasingly important source of supply as demand grows and geopolitical risks persist. According to the International Energy Agency, recycling could reduce new mining requirements for key minerals by 10%–30%.10

ESG risks and responsible practices

Growing demand for critical minerals also highlights a central challenge for the energy transition. While these materials are essential to the transition toward a lower-carbon economy, their extraction and processing can create significant environmental and social risks. Mining can contribute to greenhouse-gas emissions, water stress, biodiversity loss, pollution, worker-safety concerns, and community impacts, making careful sustainability assessment increasingly important.

Responsible mining practices are evolving through frameworks such as the Initiative for Responsible Mining Assurance (IRMA), which seeks to strengthen environmental and social standards across the industry. Leading companies are working to improve operational efficiency, reduce emissions, protect biodiversity, and expand recycling initiatives. However, because many standards remain voluntary, engagement, investment discipline, and policy support will continue to play important roles in improving industry practices and managing long-term sustainability risks.

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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. 

4 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

5 JP Morgan – Critical minerals: Unearthing alpha across equities and credit. 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.

6 JP Morgan – Critical minerals: Unearthing alpha across equities and credit. 

7 IEA (2025), Global Critical Minerals Outlook 2025, IEA, Paris. https://www.iea.org/reports/global-critical-minerals-outlook-2025

8 International Energy Agency (IEA). 

9 Global Trade Alert – Import and Export Restrictions: Critical Minerals. 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.

10 U.S. Geological Survey. (n.d.). Recycling statistics and information. National Minerals Information Center.

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.

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