Balancing act: working globally to support the green and digital transition

The world is in the early stages of a multi-decade digital revolution that depends on an unprecedented supply of critical minerals. Rapid adoption of AI is ramping up demand for power while the energy transition requires widespread electrification that can’t happen without materials such as copper, lithium and rare earths.

However, on the current trajectory of announced mining projects, there’s likely to be a significant shortfall in some critical minerals. Consider copper and lithium. Looking forward to 2035, anticipated mining supply from announced projects meets only 70% of copper and 50% of lithium requirements, according to the International Energy Agency.

Illustrating the magnitude of the digital revolution and its huge appetite for power, in the UK alone data centres already consume around 2.5% of electricity, according to a Parliamentary briefing. Yet the sector’s electricity consumption is expected to rise four-fold by 2030.¹

How to bridge the gap? The United States and Western Europe have a reduced capacity in terms of mining engineers and processing infrastructure more generally across the supply chain – from mining to processing and electric vehicle (EV) battery production – while China has continued to invest. The challenge is to harness complementary strengths amidst the complexities of geopolitical competition in pursuit of global goals.

After a hiatus in new mining projects by some mining majors following the end of the last supercycle a decade ago, when the prices of metals collapsed, such mining companies significantly reduced investing in new projects. That means they often face overheads, slow decision-making pathways, and a smaller engineering talent pool that reduces speed and efficiency vis-a-vis a Chinese counterpart. By contrast, China’s leading mining companies continued to develop mines. They did so at a more competitive cost and speed.  

Today, after 150 years of industrial mining, the easily accessible ore bodies have mainly been developed and the harder to access deposits tend to be what’s left – making new projects more complex and costly. As European and US companies own a substantial proportion of the world’s mining assets, especially for key minerals such as copper and lithium supplies, there is potential in providing Chinese companies with an incentive for compromise.

To give a sense of the scale of investment required, and according to the IEA² to meet the net zero objectives of the 2015 Paris Agreement, mineral demand for clean energy technologies would need to double between now and 2030 in a scenario that reflects today’s stated government policies regarding clean energy. Depending on the scenario, the agency envisages an investment requirement of USD590 billion – USD800 billion to build out capacity.

China’s momentum meets US and EU strategic response

In recent decades, China has built a strong position in ownership of critical minerals, as well as in processing and refining. In 2025, for instance, Chinese companies delivered almost half (46%) of refined copper and two thirds (67%) of lithium carbonate. The rest of the world, meanwhile, produced just a fifth (20%) of refined copper and a third (33%) of lithium carbonate. While copper’s properties as an electrical conductor make it essential for cables and wiring, lithium carbonate is needed chiefly for the lithium-ion batteries powering electric vehicles.

A clue as to China’s current approach to procuring minerals may come from recent merger and acquisition data. In 2025, Chinese entities acquired 167 mining businesses for a total value of USD75 billion, half the value of the 177 acquisitions by Western companies at a total of USD158 billion. We interpret this as Chinese groups appearing to have a preference for single asset deals rather than larger public transactions over companies with diversified mining assets.

Another example of China’s active investment in the industry is the number of newly qualified mining engineers. Across China, there are 45 mining engineer programmes producing about 3,000 graduates a year. In terms of the rest of world, the pool of mining engineering talent is being mostly developed in India and Latin America.

Chinese expertise extends beyond building the mines to the surrounding infrastructure. For instance, in the Simandou high-grade iron-ore mine in the highlands of Guinea, the world’s largest mining project, Chinese contractors have built more than 650 kilometres of railway together with port facilities to export the iron ore.

Further, some Asian and African countries now seek what’s called downstream beneficiation, meaning they require processing activities to be conducted within their market so that they capture a greater proportion of the supply chain’s value. While traditional mining companies may view this as too expensive, a growing number are taking a broader approach to a project’s economics. They may look at how they might generate power or redesign the grid to keep costs down.

In response to China’s growing momentum, the United States and European Union are actively developing policies and programmes to secure critical minerals and reduce dependency risks. The EU’s Critical Raw Minerals Act, effective from May 2024, sets ambitious targets to boost domestic extraction, processing and recycling, facilitating faster permitting and strategic financing. Similarly, the US International Development Finance Corporation has expanded its remit to provide loans and guarantees for both domestic and overseas projects with a proposed USD5 billion fund, in partnership with private investors, that aims to secure access to copper, cobalt, and rare-earth assets.

The US administration is also pursuing a more hands-on approach to securing critical minerals. For instance, the Department of Defense recently invested USD400 million in MP Materials, positioning the government to be the company’s largest shareholder. This includes a USD150 million loan to expand heavy rare earth separation at Mountain Pass mine in California.

Western mining makers are also increasing production and embracing innovation. Rio Tinto announced in May 2025 a partnership with Chile’s state-owned Codelco to develop the Salar de Maricunga lithium project, investing up to USD900 million. Freeport-McMoRan is advancing multi-billion-dollar expansions of Arizona copper mines, including novel copper recovery from stockpiles. Glencore reports production and cost improvements following a major portfolio review. These efforts indicate sustained Western investment momentum, complementing and diversifying global supply chains.

Signs of practical collaboration

There are signs of increasing compromise and collaboration with local and international partners. For example, in Indonesia, which has the world’s biggest nickel reserves, Chinese companies have swiftly moved from importing raw nickel to helping the country move up the value chain. After the Indonesian government entirely banned the export of raw nickel in 2020, Chinese companies quickly established industrial parks refining the ore into battery-grade nickel.

Chinese companies are now taking the model of industrial parks to markets in Africa. For instance, Zimbabwe banned the export of raw lithium ore in 2022, the same year that Chinese investors got approval to build a large battery metals plant, processing lithium, nickel and platinum. Clustering manufacturing and processing firms brings supply chain synergies, and the provision of infrastructure such as roads and power can lower costs and act as an enabler.

Turning to Morocco, which benefits from a free trade agreement with both the EU and the US, the Chinese EV battery manufacturer Gotion has invested USD6 billion in a factory providing an example supporting the country move up the value chain by bringing to it relevant intellectual property.

Chinese companies have also shown a willingness to build EV battery factories in the countries where EVs will be assembled and sold rather than simply seeking to export them from China. For instance, Chinese-owned Envision AESC is building the UK’s only large-scale battery factory at Sunderland, with initial plans to produce enough batteries for 100,000 cars a year. It is doing so at a time when Britishvolt, a UK EV battery startup has collapsed, as has Sweden’s Northvolt.

The need to find a new vision

For the world to develop the supply chains needed to meet the next few decades’ unprecedented electrical revolution, the metals and mining industry has an opportunity to extend its models of collaboration. In mining, especially, there’s a need to find a way of structuring projects where a Chinese company may construct the mine and its infrastructure, but Western companies own it, operate it and control the offtake.

However, there are obstacles to this such as the fact that having a Chinese company involved in a project may limit access to Western governments critical minerals funding. For instance, public entities give grants, loans and purchase commitments to mining and processing projects. But any Chinese interest may be deemed a strategic risk.

Canadian company Ivanhoe Mines’ Kamoa copper mine in the Democratic Republic of Congo is a rare example of a jointly owned project where there is a shared offtake. China’s Zijin Mining Group has co-developed and jointly owns the project, which is one of the world’s largest copper mines.

One further model of collaboration could see a Western company own and operate a mine with the offtake going to the US or Europe, while a Chinese contractor delivers the engineering, procurement and construction (EPC) both for the mine and adjacent infrastructure. If the Chinese company needed retained ownership in that scenario, a special purpose vehicle (SPV) could be set up to ring fence the mine and its production, owned by Western shareholders and, possibly, the local government. A Chinese-owned SPV could build the infrastructure and earn the profits from doing so, drawing on funding from Sinosure, China’s export credit agency. Depending on the success of EPC work, the only drawback would be that the mine itself would suffer from project-on-project risk – meaning that the risk of one project’s performance depends on its linked project being completed or operating successfully. If either project underperforms or is delayed, it jeopardises the cash flows of the other financed project.

Western companies will continue to bring standards that improve safety, and environmental, social and governance standards. This requires building a safety culture across large organisations. It’s relevant not just in mines but also in other areas of the supply chain such as processing. Working with the International Council on Mining and Metals (ICMM) a mining industry body, which spearheads the application of safety standards, Western companies could help a broad range of international peers improve safety.

Harnessing the strengths of Western and Chinese companies – across policy frameworks, financial depth, ESG standards, engineering capacity, speed and low costs – offers the fastest route to scale and secure responsible supplies of minerals for AI and electrification. To do so, though, the metals and mining sector must overcome differences and find shared ambition in a bid to power the global digital revolution.

–ENDS-

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¹ Data centres: planning policy, sustainability, and resilience – House of Commons Library 26 August 2025

² IEA. Global Critical Minerals Outlook 2024. This estimate assumes a scenario in which governments meet all their announced net zero or carbon neutrality pledges in full.