Understanding the Role of Metals in the Energy Transition

As the global push for clean and resilient energy systems accelerates, the demand for critical minerals like lithium, nickel, cobalt, and copper is soaring. Yet securing access to critical minerals is proving to be one of the greatest chokepoints in the transition. Price volatility, geopolitical tensions, and supply chain disruptions pose major risks to supply.
Summit Rosenberg, our Senior Associate, breaks down the key forces shaping the future role of metals in the energy transition.
From the Bronze Age to the Industrial Revolution, metals have driven human progress. Today, they are again at the forefront, not just as raw materials but as strategic assets shaping global energy dynamics. The transition from fossil fuels is not just about the willingness to adopt renewables; it is a high race to secure the minerals that make it possible. In other words, clean energy hinges on critical minerals’ availability and strategic integration into the global economy. Governments and industries are scrambling to secure supply chains, igniting an unprecedented surge in mineral demand that will define the next era of energy security.
According to the World Bank, mineral production must quadruple by 2040 to meet the Paris Agreement targets, requiring the deployment of roughly 3 billion tons of minerals. This leap in demand stems from renewable energy technologies requiring significantly more materials than fossil fuel-based energy production. The International Energy Association (IEA) reports that a wind farm needs nine times more material than a gas-fired power plant, while an electric vehicle requires six times more minerals than a gasoline-powered car. Since 2010, the amount of metal used per power generation unit has increased by 50%, a trend expected to continue. By 2040, clean energy technologies are projected to account for approximately 40% of copper demand, 50-60% of nickel and cobalt demand, and a staggering 90% of lithium demand.
While fossil fuels still dominate the global energy mix, investment in renewable energy infrastructure has outpaced fossil fuel investments since 2018, signalling a changing of the tides.However, the transition to metal-dependent renewable infrastructure is not justa shift but a complete rewiring of the global energy system. Rebalancing revenues, supply chains, and strategic interests will define the coming decades.
Despite the need to massively scale up metals’ deployment in the global economy, the gap between supply and demand is widening, exacerbated by geopolitical tensions, investment shortfalls, and the environmental toll of mining. The energy transition will falter if we fail to address these challenges head-on. This article will outline the threats facing the metals value chain and identify the technologies that will enable the development of clean and resilient energy systems.
This mineral-intensive future raises an urgent question: how will we mine, process, and trade these resources in a way that ensures both security and sustainability?
A Balancing Act
Despite soaring long-term demand for renewables, financial pressures on miners’ balance sheets and operational inefficiencies threaten to undercut supply. In 2023, the critical minerals market shrank 10% to $325 billion, with lithium and nickel prices crashing 80% and 45% respectively. This collapse, largely driven by a slowdown in the electric vehicle (EV) sector and a flood of cheap Chinese battery materials, exposed how fragile and reactive mineral markets truly are.
Meanwhile, mining companies are bleeding profits, with earnings plunging up to 40% in 2023. Rising operational costs and declining revenues make miners second-guess investing in new production capacity. This hesitation puts the energy transition in serious jeopardy. The IEA projects that by 2030, the industry will need to develop 50 new lithium mines, 60 nickel mines, and 17 cobalt mines to meet the EV targets – requiring an additional $360-450 billion in investment.
Increasing efficiency at existing mines is critical, given that permitting delays and high capital costs mean new projects will take a decade or more to come online. The problem? Many existing mines are already operating at their limits, hampered by outdated equipment and a lack of digital tools while extracting lower-grade ores, increasing operational costs, and growing environmental stressors. Copper ore grades, for example, have declined by roughly 30% in the last 15 years – yet global demand for the metal between now and 2050 will exceed all the copper ever mined in human history.
A Global Tug-of-War Over Minerals
The critical metals supply chain is caught in the crosshairs of geopolitical power struggles. Heavy reliance on a few dominant sources leaves global markets vulnerable to trade disputes, resource nationalism, and a never-shifting policy landscape.

In recent years, the U.S. and EU have launched aggressive efforts to bolster domestic mineral production and reduce dependence on China, which controls 70-90% of the lithium, cobalt, and nickel supply chain. Yet, China’s stranglehold on processing capabilities keeps the West at a severe disadvantage. While many mines are located outside China, Chinese firms hold controlling stakes in key operations, dictating where mineral processing occurs and global trade flows. In 2023 alone, China invested some $16bn in foreign mining projects, the highest amount in more than a decade, according to The Economist. Europe is particularly vulnerable, consuming nearly 30% of the world’s metals but producing only 3% domestically.
Governments are responding with a combination of aggressive tariffs, geopolitical gambits, and sweeping industrial policies, but whether these measures will deliver a secure mineral supply chain remains to be seen. In the summer of 2024, the Biden administration imposed a 100% tariff on Chinese EVs, a 25% tariff on lithium-ion batteries, and a 50% tariff on solar cells. China retaliated by weaponizing its mineral exports and tightening its grip on germanium, gallium, and rare earth metals.
Escalating trade tensions to an unprecedented level, the Trump administration, on what it termed 'Liberation Day,' implemented sweeping new tariffs across the board. Notably, there are substantial hikes in tariffs on steel and aluminium imports, impacting manufacturers and metals resale markets globally. While raw forms of many critical minerals, such as lithium, cobalt, manganese, and natural graphite, are currently exempt from these tariffs to ensure continued access for domestic industries, processed forms and other strategic metals are not. Additionally, products utilising these critical minerals, like batteries and electric vehicles, will face tariffs. Therefore, even with some raw mineral exemptions, the critical mineral market is experiencing significant disruption caused by the unfolding trade war. The global community's response remains uncertain, with the potential for retaliatory tariffs or export restrictions on critical minerals directed at the US. This remains to be seen as volatility stemming from Trump’s tit-for-tat actions is expected tocontinue, despite the current freeze.
While these protectionist measures aim to foster long-term domestic resilience, they create significant supply chain bottlenecks, raise consumer costs, and threaten to slow renewable energy adoption in the interim. Beyond tariffs, the Trump administration’s attempts to secure mineral access through contentious diplomatic manoeuvring in Ukraine and Greenland underscore the growing political recognition of critical minerals being vital to energy security and economic development.
The US and EU have also introduced several ‘alphabet soup’ programs to incentivise domestic production, processing, and recycling. The US Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) have poured billions into reshaping supply chains, but political uncertainty threatens to derail progress. While the election of Donald Trump has brought about concerns that his administration will cut funding allocated to the IRA and BIL, several factors, such as his cosy relationship with Elon Musk and the fact that most of the IRA funding goes to projects in Republican districts, are somewhat quelling those fears. Meanwhile, the EU’s Critical Raw Materials Act (CRMA) sets ambitious domestic mineral production targets to extract 10% of critical minerals, process 40%, and recycle 25% of the continent’s needs by 2030.
The Dirty Truth
Despite their role in clean energy infrastructure, the acts of mining and processing metals are anything but clean. The mining industry accounts for roughly 7% of global greenhouse gas emissions while causing severe land degradation, water contamination, and social unrest.
Resistance to domestic mining in the West has driven production to jurisdictions with looser environment and labour standards –outsourcing pollution and human rights abuses. The cobalt industry, particularly in the Democratic Republic of the Congo (DRC), has come under intense scrutiny for child labour and dangerous working conditions, leading some manufacturers to seek alternative sources of supply. A 2015 tailings dam collapse in Brumadinho, Brazil, killed 270 people and resulted in a $30 billion liability, amplifying global concerns about mining safety and regulatory breaches.

Despite growing awareness of these issues, fewer than 15% of procurement decision-makers are willing to pay a 10% premium for low-carbon metals, revealing an unfortunate yet unsurprising gap between recognition and action.
New Horizons
The metals value chain is at a crossroads, requiring breakthrough technologies to meet demand while mitigating the sector’s environmental impact. Fortunately, a wave of innovations is emerging to improve efficiency, reduce waste, enable more sustainable extraction and processing, and enhance the circularity of metals in the global supply chain. It should be noted that the companies below are derived from top down-market research and do not should not be construed as investment recommendations.
Digital tools: Revolutionising mining through data-driven insights and automation.
Advancements in exploration technology are unlocking new possibilities for mineral discovery. Companies like VerAI leverage artificial intelligence to analyse geological data and identify concealed mineral deposit sites. This approach minimises the need for invasive exploration while increasing the likelihood of successful discoveries.
Optimising operations with digital tools is crucial for improving mine efficiency. PlotLogic, for example, uses IoT data and AI-driven insights to allow miners to monitor activity in real time and optimise site workflows.
Mineral extraction and processing: Developing more efficient and sustainable metal extraction methods.
Companies like Eden are working to improve the efficiency and precision of drilling operations, which are essential for accessing mineral deposits. Innovations such as automated drilling rigs, millimetre wave drilling, and advanced sensors enable more accurate drilling and reduce mineral waste and energy consumption.
Helios,a KOMPAS portfolio company, is pioneering a method to sustainably extract iron from iron ore with sodium. By doing so, mines can use previously unusable low-grade ores, consume 30% less energy than existing methods, and emit only oxygen as a by-product. Unlike other green steel startups, Helios’ process does not rely on hydrogen.
Other startups, like Endolith, employ bacteria to do the dirty work of metal separation. Bio-leaching involves using microorganisms to produce acidic conditions that separate metals, like copper, from ores and mine waste. Bio-leaching is a more sustainable alternative to conventional mining as it avoids the need for harsh chemicals and significant energy inputs and makes it possible to treat low-grade ores that would otherwise be discarded. A complementary approach to enhancing copper recovery is chemical leaching.Companies like Ceibo are developing new chemical agents that are more selective, efficient, and environmentally benign than traditional solutions.
A growing number of companies, like LilacSolutions, are focused on direct lithium extraction (DLE), a significant shift from traditional lithium extraction methods. These technologies aim to extract lithium directly from brine solutions using advanced filtration, ion exchange, or solvent extraction techniques, by passing the need for inefficient and environmentally damaging evaporation ponds.
The growing demand for rare earth metals in renewables, advanced technology, and defence applications has brought sourcing them domestically to the forefront of conversations in the US and Europe. Phoenix Tailings has developed a process that recovers rareearth metals from mine waste without relying on hazardous chemicals or leaving behind toxic waste.
End of Life: Recovering valuable materials to create a circular economy.
As the demand for lithium-ion batteries surges, so does the need for efficient and sustainable recycling processes, such as hydrometallurgy, electro-hydrometallurgy, and direct cathode recycling. Companies like tozero focus on developing new pathways to recover valuable materials like lithium, cobalt, and nickel from spent batteries, reducing reliance on virgin resources and the associated environmental impact.
Chemfinity, meanwhile, specialises in reclaiming a growing list of precious metals from industrial waste streams using advanced chemical separation techniques. Other innovators, such as KOMPAS’ portfolio company Found Energy, are taking a novel approach to metal circularity, using aluminium scrap as a decarbonised fuel source and an input for carbon-negative alumina.
There is a clear need for scaling innovations across the value chain, from improving the exploration of new mineral deposits to boosting processing efficiency and those that close the loop to keep metals in the economy and minimise the need for future extraction of virgin resources. The rapid evolution and deployment of technologies likethese will play a defining role in shaping a cleaner and more resilient metal supply chain.
Discussion
The transition to clean energy is not just linked to the metals industry—it is shackled to it. Clean energy ambitions will fall short without a secure, diversified, and sustainable mineral supply. Protectionist policies may provide temporary relief, but long-term solutions require bold investment, regulatory reforms, and a relentless focus on innovation. More specifically, it will require a strong focus on mining efficiency, recycling at scale, and developing alternative materials. If we do not take a long-term approach, we risk replacing one unsustainable system with another. Policymakers must foster an environment that rewards innovation, efficiency, and cuts permitting bottlenecks. Investors need to look beyond short-term commodity price swings and fund solutions that will secure access to the broad range of metals that underpin the energy transition.
At KOMPAS VC, we do not see the energy transition as merely a challenge or a choice – it is an inevitable shift that presents one of the greatest industrial opportunities of our time. This transformation demands not just adaptation but aggressive innovation, strategic capital deployment, and an un compromising commitment to resilience and sustainability. We are eager to partner with companies across the mineral value chain that fortify supply chains and revolutionise an industry long plagued by inefficiencies and environmental harm.
- by Summit Rosenberg, Senior Associate