Materials are fundamental to the manufacturing of products that sustain modern life. Many are embedded in the components and systems of critical infrastructure such as energy, communications, transportation, and water, making them essential to national security and economic resilience.

However, like oil and gas, these materials are finite. Once extracted or locked within long-lived assets, they become effectively unavailable unless economically recovered through recycling or alternative resources of conventional mining. Acknowledging this vulnerability, countries worldwide have developed policies and formal lists to identify and monitor critical and strategic raw materials. Bodies and institutions such as the European Commission and the U.S. Department of Energy regularly publish and update these lists every three years or as needed, and have created policies around these materials that are highly exposed to supply chain disruptions.  

Why do these materials matter so deeply?

Geographic concentration: Reserves and processing capabilities are highly concentrated in a limited number of regions, such as China and Africa, increasing exposure to geopolitical risks.  China extended controls beyond raw ore to refined/processed materials: e.g. gallium, germanium, graphite, aluminium alloys. Reuters reports China banned Ga/Ge exports to the US in December 2024.

Market volatility: Price fluctuations are driven by restricted supply and accelerating demand across energy and industrial sectors. 

Lack of substitutes: Most critical raw materials have no direct substitutes, making industries dependent on a narrow resource base.

Environmental and social impact: Extraction involves intensive energy use, altered land use, high water consumption, significant waste generation, and often hazardous mining practices, raising serious ESG concerns. 

Declining resource quality: The quality of accessible resources is deteriorating, increasing the cost and complexity of extraction. 

Limited recyclability: Many CRMs are embedded in long-life assets and cannot be recovered at scale due to technological or economic barriers.

Most impacted sectors

Which sectors are most impacted by critical and strategic materials, and why is demand increasing so rapidly? The world’s most essential development sectors, which directly enhance and maintain quality of life, now depend on more technologies that use greater quantities of critical raw materials. 

Graphic 1: Table of critical materials used by technology and sector

The artificial intelligence boom is fuelling an unprecedented surge in semiconductor demand, projected to reach USD 697 billion by 2025 and on track for USD 1 trillion by 2030. Advanced processors depend heavily on gallium and germanium materials, which are now under increased supply scrutiny following recent export controls.

Global water systems are evolving rapidly due to water scarcity, technologies, and demographic growth. The smart water meter market alone is expected to double from USD 4.61 billion in 2024 to USD 9.04 billion by 2030. These devices embed additional quantities of copper and silver, expanding the reach of critical raw materials into municipal infrastructure. 

Transport electrification is redefining automotive material needs. A typical battery-electric vehicle contains roughly six times more mineral inputs than its internal combustion counterpart, including lithium, nickel, cobalt and rare-earth elements, driving up demand with every new unit deployed. 

The energy transition itself acts as a powerful multiplier. According to the IEA’s Net-Zero Emissions scenario, lithium demand is set to increase sixfold, while demand for nickel and rare earths may triple. Copper, a foundational material across all low-carbon technologies, is forecast to rise by 50% by 2040 as global deployment of batteries, solar panels, wind turbines, green hydrogen electrolysers, and grid infrastructure accelerates.  

Graphic 2: Table of critical material used across the energy value chain

Current supply chain bottlenecks for energy technologies 

 The production of many energy transition minerals is highly concentrated. The top three producing nations account for more than 75% of global output, with some instances where a single country is responsible for nearly half of the total supply. This concentration is even more pronounced in processing activities, where China dominates the value chain. 

Graphic 3: Current supply chain bottlenecks by country share in the mining and refining of critical materials, segmented by energy-sector technology

Global copper demand for power systems and vehicles has jumped. However, new mine projects are insufficient: under current plans, the IEA projects a 30% copper deficit by 2035. 

Solar and wind technologies rely on their critical minerals. Wind turbines use neodymium/terbium magnets (rare earths) and copper; solar PV uses silver, polysilicon, and often gallium/germanium in high-efficiency cells. According to IEA, nearly all solar PV supply-chain capacity is in China (over 80% of modules).

As hydrogen gains traction, demand for iridium and platinum-group metals will soar. Proton exchange membrane (PEM) electrolysers use iridium and ruthenium anodes, while fuel cells use platinum catalysts. Currently, ~93% of iridium is a by-product of platinum mining in South Africa.

What the critical-materials crunch means for energy companies 

The critical-materials crunch is reshaping the energy sector, impacting costs, supply security, regulation, innovation, circularity, and financing. Understanding these challenges is essential for energy companies navigating this complex landscape.

Costs & Margins 

Sharp fluctuations in lithium, nickel, copper, and rare-earth prices drive both CAPEX and OPEX volatility, reducing returns across energy transition projects such as hydrogen, storage, and hybrid plants. In the US, grid-equipment suppliers report connection delays and budget overruns in hybrid solar-plus-storage projects that require large transformers. Transformer prices have increased by 60–80 % since January 2020, following a 50 % rise in copper prices over the same period. 

Meanwhile, PEM electrolysers used for green hydrogen production have experienced cost increases of about 30% between 2021 and 2023, mainly due to price volatility in platinum and iridium, prompting developers to renegotiate terms in several tenders. 

Supply Security  

Three producer nations control over 75 % of global transition mineral mining, with China dominating refining. This concentration risks project delays from geopolitical shocks or permitting issues. Securing volumes for transition tech is now more complex, making negotiations fragile and procurement vulnerable.

Regulation & Compliance 

In Europe, the Critical Raw Materials Act (CRMA) establishes 2030 targets of at least 10 % extraction, 40 % refining, and 15 % recycling within the bloc, while limiting reliance on any third-country supplier to 65 %. The US Inflation Reduction Act, Section 45X, provides production tax credits for manufacturers demonstrating their inputs are “friend-shored”. Developers will need audit-ready traceability and cradle-to-gate carbon data for magnets, cables, and batteries before licences, grants, or green PPAs are approved.

Innovation 

Securing critical materials now requires alternative pathways beyond conventional mining practices: 

Producers extend beyond conventional material sources by utilising natural or industrial brines, seawater, and hydrothermal fluids. Energy companies are increasingly implementing Direct Lithium Extraction (DLE), a selective process that isolates lithium from brines using advanced chemical techniques. For example, ExxonMobil is drilling into Smackover brines in Arkansas to repurpose mature oilfields, aiming to produce battery-grade lithium by 2027. 

Deep-sea exploration is the new challenge, and companies are investing in campaigns to find mineral reserves in polymetallic nodules, hydrothermal vents, and cobalt-rich crusts. On the Pacific seabed, the Metals Company’s NORI-D targets nodules with its collector test in the Clarion-Clipperton Zone, supported by a USD 85 million investment from Korea Zinc. It plans to extract nickel, cobalt, and manganese from a depth of 4,000 m. 

Rio Tinto and the University of Queensland are converting bauxite refinery “red mud” into fertile soil and piloting methods to extract titanium and rare earths, demonstrating how hazardous industrial waste can become a mineral feedstock.

Circularity 

Beyond simply sourcing alternatives, circularity has evolved from a sustainability aim to a core business necessity, prompting a shift in focus from energy efficiency to resource efficiency. This is no longer a future concept but an ongoing trend: announced battery and cable recycling capacity has more than doubled since 2023, driven by market momentum and regulatory demands. The EU Critical Raw Materials Act (CRMA) mandates the industry to reuse 25–30kt of lithium and 20kt of rare earths annually by 2030, creating new revenue opportunities for vertically integrated utilities, covering collection, second-life applications, and urban mining.

Recyclable waste streams include Waste of Electrical and Electronic Equipment (WEEE) from catalysts, photovoltaic panels, wind turbines, storage systems, electric motors, and e-waste, forming a vital resource base for the circular transition. A notable example is EnergyLOOP—a joint initiative by Iberdrola and FCC, establishing the first dedicated plant in the Iberian Peninsula to recycle wind turbine blades. With wind turbines typically reaching end-of-life after 20–25 years, and over 66,630 blades currently installed in Spain alone, this project marks a crucial step towards large-scale circularity in renewables.

Financing  

Multilateral banks and private lenders such as the European Bank for Reconstruction & Development, European Investment Bank (EIB), Inter-American Development Bank (IDB), and World Bank Group now link credit spreads to verified sourcing strategies for critical minerals. Borrowers lacking traceability can pay more for debt or lose access to EU/EIB funds. Meanwhile, venture investment in recycling and DLE start-ups increased 160% annually to USD 1.4 billion in 2022, signalling market recognition of the risk premium.  

EU strategic projects and national circular-economy schemes, such as the 2025 European Commission projects, 22 focused on lithium, 12 on nickel, 11 on graphite, and 10 on cobalt, giving them priority permitting and preferential EU funding.  

Supporting energy players

Metyis supports energy players across five strategic fronts to mitigate material and technology supply disruption. 

Critical material gap assessment

Based on current assets and the strategic pipeline, a baseline of materials and technologies needed by asset type (e.g., PV, wind, storage, hydrogen, grids) is developed. Following this, scenarios are built to simulate material availability, demand forecasts, price trends, and policy shocks in order to identify exposure windows. To support ongoing visibility, a live observatory is established with KPIs tracking availability trends and market volatility in critical materials. The value for the business lies in enabling strategic planning based on data.

Value chain risk management

This involves assessing supplier risk based on exposure to critical materials in the company’s technology stack. In parallel, life-cycle assessments (LCA) are conducted on key materials used in current operations. Additionally, waste streams are evaluated across regions to ensure compliance and to assess recycling potential for critical-material recovery. The value for the business comes through reducing the risk of supply disruptions affecting materials and technologies.

Resource and technology strategy

This starts with defining and implementing a sourcing strategy for materials and technologies aligned with company projects. At the same time, an active innovation radar is maintained to evaluate emerging opportunities. Complementing these efforts, due diligence is conducted on technologies developed externally by companies or research institutions. The value for the business is a clear roadmap for materials and technologies sourcing strategy implementation.

Financing structure

This involves mapping project-finance instruments, green bonds, and public support mechanisms for relevant initiatives. In parallel, tailored financing cases are built to access multilateral funding and strategic regional programs. The value for the business is access to lower-cost capital and the acceleration of project execution.

Sourcing portfolio diversification

It begins by assessing the feasibility of recycling projects and alternative resource extraction methods, such as brines, urban mining, and industrial waste. Following this, the best execution model is evaluated—whether to make, partner, or acquire—based on the financial impact on the P&L. The value for the business lies in the creation of new business lines and ensuring regulation compliance.

Finding impact in the global energy transition

The global energy transition relies on a secure and sustainable supply of critical materials, whose limited availability, geographic concentration, and market volatility are already having significant impacts on clean energy projects. In this context, Metyis positions itself as the ideal strategic partner for companies in the energy sector, offering a comprehensive approach to mitigating the risks associated with raw material shortages. From assessing material gaps and supply chain risks to defining sourcing, circularity, and technology innovation strategies, Metyis combines analytical capabilities, business insight, and industry expertise to turn these challenges into long-term competitive advantages. Its ability to structure financing that leverages emerging regulations and multilateral funding further reinforces its value as a key ally in advancing material efficiency and secure sourcing as pillars of energy security.