Paradigm Shift for Critical Mineral Investment

Massive Government Investment & Policy Intervention should Spur Critical Mineral Investment Boom

Commodity Insights

The U.S. Bipartisan Infrastructure Law. The European Green Deal. The Critical Minerals Facility in Australia. These are just a few of the enormous new infrastructure programs being enacted by governments around the world to change global energy to a more sustainable, carbon neutral model. Just as programs like the Federal-Aid Highway Act of 1956 transformed U.S. society and the economy by creating the interstate highway system, the cumulative impact of these programs will be momentous, and is already the subject of wide-ranging coverage in the global media. But curiously, the effect on the mining industry has been somewhat overlooked, despite the fact that mined metals and minerals are critical inputs to almost every aspect of energy transition.

More than 190 nations have signed the Paris Agreement1, vowing to reduce global warming by lowering CO2 emissions by about 45% by 2030. The shift from fossil-based energy sources will necessarily alter the economics of supply away from hydrocarbons and toward the mined metals and minerals necessary to create zero-carbon and renewable energy sources including wind, solar, hydro, geothermal and nuclear power. Governments are in wide agreement that these will not only enable society to reduce greenhouse gas emissions that contribute to global warming/climate change; they also mean improved global access to clean and affordable energy, enhanced energy security and resilience, and more jobs and economic opportunities.

Governments are also recognizing the need for greater mineral security, as supply chain issues and increasing geopolitical tensions have revealed vulnerabilities in how countries access critical minerals. Many of the critical minerals required for the energy transition and their processing are concentrated within relatively few countries. To address this, these new initiatives are directing support across almost all of the supply chain downstream of mining, with the aim of advancing toward self-sufficiency and reducing reliance on imports, as well as encouraging sustainable and responsible practices, along with increased transparency and accountability. 

A large focus is on reducing emissions from primary energy.   Looking at the energy storage market in detail, the metal & mining material input3 requirements to battery factories must grow by 10x to meet a total increase in the battery factory capacity from 761.5 GWh to 8492.5 GWh (11.2x) from Jan 2021 to Dec 2030.   Notably, the anticipated estimate of 2030 battery factory capacity has grown by 73% for GWh and 59% for material inputs for the same year, as more plants are announced.   In distinct plant numbers, the potential total of active plants (by Dec 2030) has moved from 261 to 379 in just the past 16 months.   Although Benchmark Minerals doesn’t focus on the larger metals markets, demand for other critical metals such as copper and aluminum will also rise dramatically4. These commitments alone will soon start to strain existing critical mineral supplies, but the governments’ initiatives deal with a wide range of issues beyond transportation including agriculture, technology, buildings, reforestation, carbon capture, green fuels, and reducing industrial and power plant emissions. Without doubt, all of these efforts will require significant metal and mineral inputs.

Figure 1: Government Funding for Critical Minerals since 2020 (USD/millions)

Government Responses Recognize the Need for Increased Mining Investment

The International Energy Agency notes that dozens of critical mineral policies are being implemented by governments around the world. Among other goals, they are designed to increase production, streamline the supply chain, and reduce dependency on any single nation. Some of the largest initiatives from Western governments, including the U.S. and the EU, incorporate direct funding for energy transition related initiatives, tax credits, streamlined permitting, international cooperation agreements, and other measures.


United States

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Government Responses Key Takeaway Spending
The Inflation Reduction Act Both initiatives contain significant provisions and spending designed to facilitate green energy transition and related infrastructure; generous tax incentives and other measures are designed to increase domestic production of critical minerals and decrease dependence on global supply chains. IRA: $392 billion
The Bipartisan Infrastructure Law The Bipartisan Infrastructure Law: US$1.5 billion over the next 5 years5
CHIPS & Science Act Aims to catalyze investments in domestic semiconductor manufacturing capacity; supports research and development to advance critical minerals mining strategies and technologies CHIPS & Science Act: US$280 billion over 10 years

European Union

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Government Responses Key Takeaway Spending
The European Battery Alliance A broad initiative to secure raw material access from abroad and develop domestic supply resources; also streamlines project permitting and allocates funds for research and worker training to position Europe as a leader in battery manufacturing. €925 million6
European Green Deal A comprehensive set of cross-sector policies and legislation aimed at enabling the EU to achieve climate neutrality by 2050. Initiatives that cover climate, environment, energy, transport, industry, agriculture, and sustainable finance as well as ensuring access to critical materials. European Green Deal: €1 trillion8
EU Critical Raw Materials Act (CRMA) The CRMA specifically aims to ensure the EU’s secure and sustainable supply of critical raw materials with support and direct funding of “Strategic Projects.”7
Net Zero Industry Act The Net Zero Industry Act is a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem.


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Government Responses Key Takeaway Spending
30% Critical Mineral Exploration Tax Credit The Canadian government is providing generous funding and tax incentives for exploration, production, R&D, and technology deployment related to critical metals, and to support capacity funding for Indigenous groups to benefit from critical minerals extraction. Strategic Innovation Fund: $C8.0

30% Critical Mineral Exploration Tax Credit: $3.8B
Up to C$3.8 billion in support over 8 years9
Strategic Innovation Fund for critical mineral projects between 2024–2030 Strategic Innovation Fund: up to C$8 billion over 7 years


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Government Responses Key Takeaway Spending
The Critical Minerals Facility New initiatives designed to help this mineral-rich nation increase domestic processing capabilities and strengthen ESG certification standards to facilitate export opportunities to consumer nations. Critical Minerals Facility: A$2 billion10
The Modern Manufacturing Initiative Modern Manufacturing Initiative: A$1.3B
The Future Battery Industries Cooperative Research Centre FBICRC: Funding of A$53 million11

United States

Inflation Reduction Act

Passed in 2022, the Inflation Reduction Act (IRA) commits to, among other things, reducing US greenhouse gas emissions by 40% between 2005 and 2030. To this end, it allocates US$369 billion in tax credits and research and development funding for domestic energy production, energy security, and climate spending. This includes credits for hydrogen and zero-emission nuclear power production projects and manufacturing tax credits for components of wind, solar, and battery technology12.

Key to reducing overall emissions is promoting the widespread adoption of electric vehicles by providing consumer and manufacturer tax credits for EV purchase and production and establishing a self-sufficient EV & battery supply chain within North America. Notably, the tax credits for EVs are only available for vehicles whose final assembly occurs in North America and requires that EV batteries contain a minimum percentage of critical minerals or components that are sourced from domestic or allied countries13, a percentage that will rise 10% each year to a maximum of 80% in 2027. This is a challenging timeline that could have a significant effect on the mining industry by driving demand for domestic and allied production of critical minerals, including nickel, graphite, lithium, and cobalt, and may encourage more investment in battery manufacturing and recycling.

Also relevant are the Act’s tax breaks equal to 10% of production costs for domestic mining companies excavating “applicable critical minerals”14 that meet defined purity thresholds.

Bipartisan Infrastructure Law

The Bipartisan Infrastructure Law (BIL), passed in 2021, invests heavily in upgrading American infrastructure, including roads, power grids, and public transit15. It allocates US$3 billion to invest in refining battery materials such as lithium, cobalt, nickel, and graphite, and battery recycling facilities; US$510.7 million for the US Geological Survey16 to conduct new mapping in areas with potential for critical mineral resources, and another US$156 million for a facility to extract and separate rare earth elements and critical minerals from waste streams from mining, energy production, and related activities17.

Another US$1.5 billion is earmarked to help build and install EV chargers over 75,000 miles of highway, furthering the transition away from carbon-fueled transportation.

CHIPS and Science Act

Designed to boost competitiveness, innovation, and national security, the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act aims to catalyze investments in domestic semiconductor manufacturing capacity. It directs US$280 billion in spending over the next ten years, including US$53 billion for semiconductor manufacturing, R&D, and workforce development and US$24 billion in tax credits for chip production. The Act also supports research and development to advance critical minerals mining strategies and technologies and facilitates interagency coordination by establishing a subcommittee of the National Science and Technology Council18

The Semiconductor Industry Association noted in December 2022 that the new law has already stimulated private investment of over US$210 billion19.

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European Union

The European Battery Alliance

The European Battery Alliance was launched in 2018 in an effort to make Europe a global leader in sustainable battery production and use. With it, the EU adopted a Strategic Action Plan on Batteries  to develop a domestic battery supply chain and position Europe as a global leader in producing the batteries required to meet the forecast production of more than 11 million EVs annually by 2030. 

Regulatory and non-regulatory measures in the Plan include:

  • Securing access to battery raw materials from outside the EU while developing domestic supply sources
  • Streamlining and accelerating the permitting process for battery raw material projects
  • Strengthening research and innovation to create advanced and disruptive technologies in the batteries sector
  • Developing a skilled workforce that can support the EU battery cell manufacturing industry
  • Improving and facilitating access to funding for battery raw material projects

Green Deal

Launched by the European Commission in December 2019, the European Green Deal is a comprehensive set of policies and legislation designed to achieve climate neutrality in the EU by 2050. The package emphasizes the need for a cross-sector approach, with initiatives that cover climate, environment, energy, transport, industry, agriculture, and sustainable finance. 

Among its many initiatives, the Green Deal streamlines the regulatory frameworks around green technology, making it easier and faster for clean technology companies to begin operating. To support this effort, the Green Deal has proposed the Critical Raw Materials Act (CRMA) which is intended to ensure access to the minerals and metals necessary for clean technology21. The Net-Zero Industry Act is part of the Deal’s industrial plan to simplify the regulatory environment and promote investments in the production capacity of products that are key in meeting the EU’s climate neutrality goals22

The plan also seeks to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55%, compared with 1990 levels. A significant portion of the NextGenerationEU Recovery Plan, as well as the EU’s seven-year budget, will be used to finance the European Green Deal, which is regarded as a crucial factor in helping the EU recover from the COVID-19 pandemic.

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Canada and Australia

Other countries with significant interest in mining and mineral security have launched similar initiatives designed to increase mineral exploration and development and reduce dependency on adversarial nations.


Canada has created several initiatives aimed at supporting economic growth, promoting climate action, and enhancing global security and partnerships with allies. These include a 30% Critical Mineral Exploration Tax Credit for targeted critical minerals including lithium, rare earth elements (REE), graphite, and others; government funding for exploration, R&D, and technology deployment for critical metals; C$1.5 billion funding via the Strategic Innovation Fund for critical mineral projects between 2024–2030; and formalizing additional bilateral cooperation with allies including Australia, the UK, and Korea to advance secure critical minerals supply chains.

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In Australia, the government is taking steps to diversify markets and facilitate new trade opportunities, develop domestic processing abilities for critical minerals, and advance the development of low emissions technologies. Steps it has taken include A$2 billion funding available via the Critical Minerals Facility; A$1.3 billion of Modern Manufacturing Initiative funds available for mid-stage critical minerals projects; and the establishment of the Future Battery Industries Cooperative Research Centre to develop a national ethical certification scheme for critical minerals.

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Alternative Capital Steps In: Investing in the Fundamental Inputs of Energy Transition

Government initiatives alone will not meet the needs of the mining industry, but they are helping to spur growth. Meeting the demands of the energy transition will require nearly US$2 trillion of investment in new mining and processing assets by 204023. Significant amounts of capital from the private sector will be required for the industry to meet the growing demand for metals and minerals—and it will be needed across the supply chain and over the long term. 

Capital, however, remains scarce. As commodity prices declined from 2011–2016, investors lost their appetite for mining, turned off by negative median returns and long lead times. Meanwhile, miners focused on returning capital to shareholders and have cut back on capital investment and spending, a trend that is likely to continue into 2023, with capital spending set to decrease by 11% and exploration spending by 10–20%24, despite rising commodity prices and a growing market. While commodity prices are starting to rise again, there is still significant volatility, thanks to a combination of inflation, supply chain disruptions, and fears of recession globally.

However, the energy transition creates compelling opportunities for those willing to look for them, particularly in critical transition metals and the American and European battery value chains. As traditional financing sources pull back, alternative capital is emerging as a critical source of much-needed capital for the industry25. RCF believes that energy transition investment in the downstream parts of the market needs to be complemented by substantial investment at the fundamental level – in mining companies – that supply the materials required by all parts of the energy transition value chain. With proper insight and guidance, investors in mining companies can benefit from access to both growth and value orientated strategies such that attractive, through cycle returns are available. 

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