5 min. read
Last updated May 19, 2025
Key takeaways
Critical minerals are foundational to the manufacturing of advanced technologies, including those used for clean energy and data centers.
Geopolitical, environmental, and market forces are reshaping critical mineral supply chains, presenting a strategic opportunity for decarbonization.
Environmental attribute certificates enable more transparent, low-carbon sourcing of critical minerals and rare earth elements.
Critical minerals: Economically significant and geopolitically vulnerable
Critical minerals are essential to enabling the global transition to a low-carbon economy, serving as vital inputs for clean energy technologies like solar panels, wind turbines, and electric vehicle batteries. Beyond energy security, these minerals also underpin the future of computing, advanced consumer electronics, and national defense applications. Their strategic importance is growing rapidly as demand accelerates across sectors.
What are critical minerals?
Critical minerals are natural resources that are vital to the economy and clean energy technologies, with a high risk of supply disruption. Their classification as “critical” is based on both their economic importance and the fact that their production is often dominated by a few countries. Disruption in critical mineral supply chains can have significant downstream consequences on manufacturers and national security. Examples include lithium, cobalt, and nickel, which are essential for batteries, semiconductors, and renewable infrastructure.
An inflection point for supply chain decarbonization
Given recent shifts in global geopolitics, critical mineral supply chains are likely to be reconfigured as users of critical minerals seek out stable sources of material and processing equipment. Today, critical mineral extraction and processing is currently concentrated in a few countries. A 2022 report from the US Geologic Survey reports that China was the largest source of US imports for 26 of 50 critical minerals, including both resource and refining capacity.
As President Trump focuses on onshoring critical mineral production and China responds by restricting key imports of critical minerals and refining equipment, the reconfiguration of the critical mineral supply chain presents a key opportunity to reduce its environmental impact. As new extraction, processing, and refining capacity comes online, integrating low-carbon technologies and efficiency improvements can drive significant emissions reductions. Future industries reliant on these minerals, such as transportation and renewable energy infrastructure, face their own decarbonization challenges and will increasingly value suppliers that can reduce the embodied emissions of critical minerals.
Decarbonization strategies for suppliers and buyers
For suppliers of critical minerals, decarbonization may involve the development and deployment of technologies that can significantly reduce emissions across the supply chain. Electrification of mining, transportation, and process heating can reduce producers’ scope 1 emissions and enable the use of low-carbon energy, which in turn lowers buyers’ scope 3 emissions. However, the feasibility of electrification varies significantly across critical minerals due to differences in the technical and thermal demands of extraction and refining. Waste materials, like fly ash from coal combustion or mine tailings from mining, can serve as alternative raw materials for mineral extraction. Utilizing waste material not only helps reduce the environmental burden of extraction but may also lower overall emissions by repurposing industrial byproducts that would have otherwise been discarded.
Buyers of critical minerals can signal demand for low-carbon materials upstream in the supply chain in several different ways. For example, Tesla has publicly committed to direct long-term offtake agreements for nickel mined in an ‘environmentally friendly’ manner. Movements like the Initiative for Responsible Mining Assurance (IRMA) help establish clear standards for the sustainability of critical minerals, and a number of automakers have joined this initiative. Similarly, Apple has publicly committed to exclusively procuring recycled cobalt to lower scope 3 emissions and contribute to broader corporate sustainability goals. However, direct procurement of low-carbon critical minerals may not be feasible for all buyers, given the limited availability of such offerings and the geographic distance from suppliers.
A public commitment may not be able to resolve a geographic mismatch between buyers and low-carbon mineral producers, refiners, and suppliers. A market instrument such as an environmental attribute certificate (EAC) can help address this challenge. Carbon Direct can support buyers and sellers by advising on strategies for EAC offtakes (in lieu of direct procurement) and by evaluating EAC offerings to confirm alignment with conservative carbon accounting practices that support scalable, catalytic technologies. For example, technical diligence can confirm whether mineral EACs meet key criteria such as additionality, verifiability, and market impact before they are used in procurement decisions for critical mineral supply chains.
Navigating geopolitical supply chain risks
Amid recent geopolitical tensions and growing concerns over supply chain resilience, critical minerals have emerged as a focal point of US economic and national security strategy. Recent moves by the Trump Administration, along with global developments from China to Ukraine, underscore the urgent need to secure domestic sources of these essential materials.
Under the Trump Administration, a new probe launched under Section 232 of the Trade Expansion Act could lead to tariffs on critical minerals, citing national security risks from heavy US dependence on foreign suppliers. The move reflects President Trump's broader use of tariffs to disrupt global trade flows and push for domestic reshoring of key supply chains, including those supporting military and energy infrastructure.
On April 30, the US and Ukraine signed an ‘economic partnership’ agreement that grants the US access to some of Ukraine’s natural resources. Ukraine has deposits of 22 of the 50 critical minerals including uranium for nuclear power applications, and lithium and manganese which are used in battery manufacturing.
China has recently limited exports of key minerals materials, such as 7 of the 17 rare earth elements, on top of existing restrictions on tungsten, indium, bismuth, tellurium, molybdenum, germanium, gallium, and antimony. With over 80% of rare earth element processing occurring in China, these moves highlight significant supply chain risks for industries that rely on these materials.
Although the US and EU possess substantial critical mineral resources, including those found in mine wastes and tailings, they currently lack the mining and refining capacity needed to process them domestically. Building the infrastructure, workforce, and public trust required to bring these resources to market will take at least 10 to 20 years. Unlocking the full potential of US and EU critical mineral reserves will also require a significant scale-up in processing capabilities, which has been a recent focus for the Trump Administration following a large bipartisan effort from prior administrations.
What's next: Science-led solutions for supply chain resilience
The critical mineral supply chain is being restructured due to recent geopolitical events involving the US, China, EU, and Ukraine. This restructuring offers a chance to create new supply chains that incorporate lower emissions extraction, processing, and manufacturing technologies from the start, thereby reducing scope 3 emissions for industries dependent on these materials.
Carbon Direct brings together scientific expertise, policy insight, community impact planning, and market analysis to help organizations secure low-carbon, sustainable sources of critical minerals and rare earth elements while advancing both climate impact and competitive advantage.
Contact us to explore how Carbon Direct can help you build a resilient, decarbonized supply chain.
