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Why the energy transition hinges on a reformed mining system

Solar panels, wind turbines, electric vehicles and grid-scale batteries all require vast quantities of metals, yet the systems that govern how these minerals are financed, extracted and regulated have not kept pace with this rapid shift. 

Compiled by Nicolette Pombo-van Zyl, Editor-in-Chief, ESI Africa.  

A report from the International Resource Panel, hosted by the UN Environment Programme, argues that the world’s financial architecture must urgently evolve to support responsible mineral supply. Without this recalibration, the clean energy transition risks being slowed by bottlenecks, inequities, and environmental harm. 

A sector under pressure

Mineral extraction has surged fivefold since 1970, a trend driven by industrialisation, urbanisation and, increasingly, climate mitigation technologies. Today, it accounts for half of global raw material extraction, up from 31% five decades ago. 

Demand for critical minerals continues to climb sharply. In 2023, consumption of cobalt, nickel, graphite and rare earth elements grew by 8–15%. Lithium stands out as the most extreme case, as the report projects that by 2050, demand will reach 9 times global production in 2022. 

These trends are reshaping both markets and geopolitics. The International Resource Panel report maps the concentration of critical mineral resources across Africa, South America and China, highlighting the importance of investment frameworks that can deliver supply security and developmental benefits for host regions. 

Closing the financing gap

Mining is capital-intensive at every stage, from exploration and development to closure and rehabilitation. It also remains a high-risk sector, influenced by commodity price cycles, regulatory uncertainty and long project lead times. As a result, miners typically rely on a blend of public and private capital. 

According to the International Energy Agency, meeting global net-zero goals would require investment in energy-transition minerals of up to $450 billion by 2030, rising to $800 billion by 2040. The scale of this funding need gives the financial sector significant leverage to drive higher environmental, social and governance (ESG) performance. 

Industry surveys cited in the International Resource Panel report reveal an interesting duality. Major mining companies acknowledge that maintaining higher environmental standards raises operational costs, but most estimate the increase at less than 25%. More importantly, they recognise that strong ESG reporting is increasingly a prerequisite for attracting new investors. 

Circularity as a pressure valve

Even under the most ambitious recycling and efficiency scenarios, virgin mineral demand is expected to grow. Circularity measures could slow the rate of extraction and reduce associated environmental impacts. 

The report outlines a suite of policy tools to encourage the recovery and reuse of minerals. These tools range from government-backed financing for recycling infrastructure to targeted tax incentives, eco-design standards and green bonds for processing facilities. It also proposes greater transparency in mine-waste storage through a global tailings database, which would improve safety oversight and identify potential sources of companion and minor metals. 

Supporting the small-scale sector

Artisanal and small-scale mining (ASM) plays a significant economic role in many developing regions, yet often operates outside formal regulatory systems. The International Resource Panel calls for tailored licensing regimes, improved access to geological data, and capacity-building to support safer and more productive practices. 

A global sustainability framework for ASM, the report argues, could help mitigate environmental and social risks, while enabling miners to access formal finance, including microloans and development funds. 

Rewarding good practice

One of the Panel’s more pointed observations is that responsible mining frequently goes unrewarded in global markets. Companies that invest in higher standards (such as biodiversity protection or enhanced community engagement) often receive little financial recognition. 

To correct this, the International Resource Panel recommends government-backed certification schemes, favourable fiscal policies and improved market access for producers that can demonstrate high-performance ESG credentials. This extends to communities themselves, where benefit-sharing arrangements remain inconsistent. 

Policy shifts for a new minerals economy

Among the report’s more far-reaching proposals are: 

• Strengthening financial institutions’ ability to identify and support high-ESG mining projects. 

• Developing digital product passports that track ESG data across mineral value chains.  

• Requiring companies to report financial and ESG results at site level, incorporating gender indicators and indigenous rights. 

• Including high-ESG mining in sustainable finance taxonomies. 

• Linking investment eligibility to climate- and nature-positive requirements, with clear exclusions for protected areas. 

• Making companies with verified ESG transition plans eligible for climate finance. 

• Using fiscal and monetary policy to promote responsible mining and circular metals use. 

• Introducing a global ad valorem levy to fund a Mining Sustainable Development Fund. 

• Establishing an international database of mine tailings facilities. 

• Creating balanced partnerships between producing and importing countries. 

A critical moment 

The report lands at a time of heightened policy focus on mineral supply chains. It feeds into ongoing UN work on critical minerals, the International Council on Mining and Metals’ commitment to “nature-positive mining”, and forthcoming global discussions on mineral governance. 

Its underlying message is that the clean energy transition is about deploying renewables and electrifying economies. Then focus on fixing the upstream systems that make those transformations possible. 

Acknowledgement: United Nations Environment Programme (2025). Financing the Responsible Supply of Energy Transition Minerals for Sustainable Development. International Resource Panel. Nairobi.