U.S. and EU policies to secure critical minerals
Recently, the Trump administration announced plans to allocate nearly USD 1 billion through the Department of Energy to foster domestic supply chains for critical minerals and downstream production of batteries. One notable element of this effort is USD 135 million in funding to support the development of technologies to recover and refine rare earth elements (REEs) from mining tailings. In an earlier move, on the other side of the Atlantic, the EU’s Critical Raw Materials Act entered into force in May 2024, setting bold targets to have 10% of raw critical materials and 40% of refining capacity in European supply chains. Funding streams through the Strategic Technologies for Europe Platform and Economic Security in Technologies and Resources programs provide resources to EU companies promoting economic resilience, though the funds are a fraction of the U.S.’ outlay. The motivations behind all these actions are quite transparent. China controls 70% of mining and over 90% of refining of REEs, and controls at least 60% of refining capacity for lithium, cobalt, nickel, and graphite. Supply dependencies on China create political risk and vulnerability for Western firms. In the latest intense round of sparring over international trade, China used its dominance in critical minerals supply chains (especially REEs) to gain leverage.
Can technology overcome critical mineral supply risks?
Is technological innovation the answer to this dilemma? Can the right investments in R&D and project scale-up change the picture for Western countries? There are a few big reasons to think that technology investments won’t make much difference. First, the timelines for conventional mining projects are extremely long. Permits for new mines in the U.S. require an average of 28 years. Construction and commissioning add several more years. Second, technology innovations in isolation cannot recreate an entire ecosystem. Part of the reason for China’s success in expanding its market share has to do with clustering effects. The proximity and expertise in those industrial clusters keep production efficient and low-cost.
Where new technologies can make an impact
Where new technologies can make a dent is in unlocking new sources of supply and mitigating the environmental impacts that pushed critical mineral supply chains out of Western countries in the late 20th century. Let’s review three technologies to understand the potential impact.
Direct lithium extraction (DLE)
Traditional hard rock mining of lithium spodumene ores from Australia and evaporating lithium-rich brines from salt lakes in South America dominate lithium supply today. The evolution of new technologies under the umbrella of DLE is effective for lower-concentration lithium brines from underground aquifers, geothermal brines, and even oil and gas wastewaters, unlocking novel sources in parts of North America and Europe that promise to increase lithium recovery and lower the use of water and chemicals. By 2035, Lux estimates that DLE will supply around 25% of the lithium market, rising from a meager 5% today. DLE projects like Lilac Solutions’ Kachi brines are already demonstrating lower operating costs than traditional mining, while the entry of experienced energy players such as Chevron, ExxonMobil, Equinor, and others can rapidly scale up production capacity by the end of the decade.
Biomining
The dramatic decline in the quality of certain ores of copper, nickel, and REEs has made extraction of these critical minerals more expensive. Biomining uses microbes to leach, oxidize, or adsorb metals from complex mineral matrices, including waste streams. It offers an opex-friendly approach by lowering the energy spent on crushing and agglomeration and operates under atmospheric conditions. Bioleaching already is commercially available for copper and gold mining, but startups such as BioMetallica, Maverick Metals[BV1] , and Locus Fermentation are developing naturally occurring microbes to extract precious metals, lithium, and REEs from mines and e-waste recycling plants. Even corporate miners like Rio Tinto and Anglo American have invested in biomining startups and partnered with academic institutions; their projects seek to identify next-generation synthetic biology routes that outperform existing chemicals leaching to produce minerals sustainably.
Rare earth refining
It is hard to ignore how crucial REEs are to the energy transition and advanced technologies, which is why these minerals (especially neodymium, praseodymium, terbium, and dysprosium) are used as instruments of trade negotiation. Western companies must start building a downstream refining and recycling value chain to derisk future REE supply. Efforts in building new refineries have increased in the U.S. as companies like Ucore, American Rare Earths Phoenix Tailings, and others focus on integrated mining and refining supply chains. Recyclers Cyclic Materials, which recently partnered with Microsoft and EV automakers to source their e-waste, and Noveon Magnetics, which is building its first 600,000-tonne/y REE recycling-to-magnet-manufacturing facility, each have raised over USD 50 million in funding.
Timing challenges for critical mineral technologies
These technologies illustrate the challenges of timing for critical mineral supply: It’s a long-term contest with few quick wins. Only select few REE recycling and DLE projects will commission within a timeframe to matter for the Trump administration. Biomining is appealing but will require more years of R&D to have commercial impact outside of gold and copper.
Long-term outlook: competing with China’s dominance
Once we extend the time horizon into the 2030s, difficult questions of predicted supply and demand arise. China will continue to subsidize its critical minerals industry as long as doing so maintains its strategic advantage and cost dominance over the West. It will be very difficult for Western projects to compete on cost with Chinese suppliers, even with these innovations. To achieve geostrategic goals of economic security, governments likely will have to make future contract guarantees to attract long-term investments.
What companies should do now
In the private sector, companies should focus their immediate attention on recycling and refining. Improved refining technology could act as a toll booth for both e-waste (or other waste streams) and mine-source minerals to produce materials for domestic supply chains. Making the most of materials already circulating in the economy (i.e., recycling) is an effective strategy to alleviate supply risks. To learn more about this topic and understand how Lux Research evaluates the critical mineral supply risks in the hydrogen economy, please be sure to watch our upcoming webinar “Are Critical Minerals Fueling or Failing the Future of Green Hydrogen?”