Global Sustainability Agenda #48: Critical Metals Shortages Threaten Decarbonization Targets: Circularity and Advanced Manufacturing Offer Solutions

Achieving global decarbonization goals, particularly under the Paris Agreement and national net-zero targets, relies heavily on a secure and sustainable supply of critical metals. Metals like lithium, cobalt, nickel, copper, and rare earth elements are essential components for renewable energy technologies, electric vehicles (EVs), batteries, and energy storage systems. However, a combination of limited supply, geopolitical dependencies, and price volatility poses a significant challenge to achieving decarbonization targets. Here, we explore the issue of metal shortages and highlight how recycling and advanced manufacturing can enhance supply chain resilience while creating new economic opportunities.

Key Metals, Supply Constraints, and Price Volatility

The mining industry is grappling with a critical supply shortage of essential metals, despite supply growth over the past decade. BloombergNEF’s Transition Metals Outlook projects that meeting the demand for clean energy technologies will require $2.1 trillion in new mining investments by 2050.

BloombergNEF’s Economic Transition Scenario (ETS) further emphasizes that between 2024 and 2050, approximately 3 billion metric tons of metals will be needed to fuel the global energy transition. However, achieving net-zero emissions by 2050 could double that demand to 6 billion metric tons, which risks triggering price surges and slowing the deployment of green technologies.

Here are the key elements’ challenges

1. Lithium: A cornerstone of the EV revolution, lithium is essential for high-performance batteries. Australia, Chile, and China control the majority of global lithium production, with Australia accounting for about 47% of global output. Demand for lithium has surged, causing sharp price fluctuations. Between 2020 and 2022, lithium prices increased by nearly 500%, driven by supply bottlenecks and the rapid growth of EV markets.
2. Cobalt: Cobalt is critical for battery stability but is largely concentrated in the Democratic Republic of Congo (DRC), which produces nearly 70% of the world’s supply. Reliance on a single source raises concerns about geopolitical risks, price volatility, and human rights issues in mining. In 2018, cobalt prices spiked by over 300%, disrupting production for EV manufacturers.
3. Nickel and Copper: Nickel is vital for EV batteries and stainless steel, while copper is a conductor essential for renewable energy grids and electric systems. Indonesia and the Philippines are leading nickel producers, but supply gaps persist due to growing EV demand. Copper production is dominated by Chile and Peru, but political instability has caused periodic disruptions. In 2023, copper prices rose nearly 30% in response to rising demand and mining delays.
4. Rare Earth Elements (REEs): REEs such as neodymium and dysprosium are key to wind turbines and electric motors. China currently dominates over 60% of REE production, raising concerns about geopolitical tensions and supply security. In recent years, prices have surged due to export restrictions and increased global demand.

Recycling will play a vital role in alleviating supply pressures. Increasing the share of recycled materials in the supply chain not only mitigates resource shortages but also lowers emissions associated with primary production, helping to accelerate the global shift toward sustainable energy.

The Role of Recycling and Advanced Manufacturing

To meet decarbonization goals without risking supply chain breakdowns, industries and governments are increasingly turning to recycling of critical metals. The International Energy Agency (IEA) estimates that by 2040, secondary sources of metals could meet up to 10-20% of battery material demand, reducing the burden on virgin mining. Recycling also lowers environmental impacts and energy use compared to primary extraction.

Key Technologies in Metal Recycling

1. Advanced Manufacturing and Additive Manufacturing (3D Printing): Technologies like additive manufacturing allow for more precise metal recovery and can reuse rare materials in production processes. This not only reduces waste but also improves supply chain efficiency by localizing production and decreasing dependency on distant suppliers.
2. Urban Mining: Recycling metals from end-of-life electronics, such as smartphones and electric vehicle batteries, is gaining traction. With urban mining, critical metals can be extracted from discarded products, creating a circular economy model that minimizes waste and reduces environmental harm from mining.
3. Battery Recycling Initiatives: Companies such as Redwood Materials and Umicore are investing in battery recycling plants, extracting lithium, cobalt, and nickel from spent EV batteries. These recovered metals are then reintroduced into new battery production, ensuring a closed-loop system.

Global Adoption of Recycling and Sustainable Manufacturing

Several countries have begun investing in recycling infrastructure and advanced manufacturing to address metal shortages and ensure the resilience of their supply chains:

1. China: China, which has long dominated critical mineral markets, is now investing heavily in battery recycling technologies to maintain its leadership. The government supports local companies in building large-scale recycling plants to recover lithium, cobalt, and nickel, reinforcing its supply chains for renewable energy technologies and EVs.
2. European Union: The EU is promoting a Circular Economy Action Plan to reduce dependency on raw material imports by fostering recycling initiatives and sustainable manufacturing. Countries like Germany and Belgium are setting up advanced recycling plants and research centers focused on metal recovery from waste.
3. United States: In the U.S., recycling initiatives are receiving federal support through infrastructure investments and tax credits for sustainable manufacturing. The U.S. is also expanding partnerships with domestic and international companies to secure critical metals through recycling and urban mining programs. Programs such as the AM Forward, the CHIPS and Science Act, and others have been launched in the last two years to increase supply chain resilience and secure sustainable products and materials.
4. Japan and South Korea: Both nations are at the forefront of e-waste recycling and urban mining. Japan extracts metals from discarded electronics, while South Korea is building new infrastructure for lithium and cobalt recycling to meet growing EV production demands.

Economic and Social Impact: New Jobs and Supply Chain Resilience

Investing in recycling and advanced manufacturing not only helps overcome metal shortages but also creates new economic opportunities. Recycling industries are labor-intensive, generating jobs across collection, sorting, and processing. For example, the EU expects that by 2030, circular economy initiatives could generate 700,000 new jobs across member states. Similarly, the U.S. estimates that increased investments in sustainable manufacturing and recycling could create tens of thousands of jobs in both urban and rural areas.

Moreover, advanced manufacturing technologies enhance supply chain resilience by reducing dependencies on single suppliers and volatile mining regions. Diversifying sources through recycling and localizing production ensures supply chains remain more stable even during geopolitical disruptions or environmental crises.

Conclusion

As the global economy transitions to cleaner energy and decarbonized transportation systems, the availability of critical metals will become a key factor determining the success of these efforts. Current supply shortages, price volatility, and geopolitical risks highlight the urgent need for sustainable solutions. Investing in recycling and advanced manufacturing offers a viable path forward, not only by securing metal supplies but also by enhancing supply chain resilience, reducing environmental impacts, and creating new economic opportunities.

Countries such as China, the EU, the U.S., and Japan are leading the way by building recycling infrastructure and fostering innovation in sustainable manufacturing. Their efforts demonstrate that a circular economy model can complement decarbonization targets while ensuring long-term economic growth and social benefits. With continued investment in these areas, the world can accelerate toward a more sustainable and resilient future.