Critical Mineral Markets Face Seasonal Lull Amid Strong Investment and Growing Protectionism

Lithium and cobalt prices remained rangebound in late 2024, caught between a seasonal demand slowdown and uncertainty over international trade policies. Despite this short-term market stagnation, investment in critical minerals continues to accelerate as nations race to secure resources essential for the global energy transition.

In a significant move bolstering Australia’s position in the critical minerals supply chain, the Clean Energy Finance Corporation (CEFC) has committed $75 million to Resource Capital Funds. This investment aims to decarbonize mining operations while strengthening Australia’s role in supplying minerals crucial for clean energy technologies.

“The world urgently needs a strong supply of critical minerals to power the clean energy transition,” said Jacqueline Lane, CEFC Director for Western Australia and Resources. “By investing in decarbonization in mining, we are not only supporting global net-zero goals but also securing Australia’s position as a leader in sustainable resource management.”

The investment comes amid forecasts of continued price volatility in key battery metals. Lithium demand is projected to rise 29% to 1.2 million metric tons LCE in 2025, according to S&P Global Commodity Insights. However, analysts predict the market will still face a 34,000-ton oversupply, with surplus conditions potentially persisting through 2027 as production outpaces demand growth.

Despite near-term price challenges, major mining companies continue to position themselves strategically in the sector. Rio Tinto has allocated its largest exploration budget to lithium and is investing heavily in projects like Argentina’s Salar del Rincon, signaling long-term confidence in lithium demand growth.

For nickel, another critical battery metal, the outlook is more bullish. Mark Selby, CEO of Canada Nickel, predicts prices will jump to $20,000 per ton by February 2025, citing Indonesia’s growing control over global supply, constrained production elsewhere, and robust demand from electric vehicle manufacturers.

Resource Nationalism Intensifies

The scramble for critical minerals has triggered a wave of resource nationalism, with Verisk Maplecroft’s Resource Nationalism Index highlighting interventionist policies across 72 nations. This trend represents the most significant protectionist shift in Western democracies since the early 20th century.

Western governments are implementing aggressive policies to secure critical mineral access while restricting rivals, particularly China, which dominates many aspects of the supply chain. The European Union has launched the European Raw Materials Alliance and the Critical Raw Materials Act, while the United States has enacted the CHIPS and Science Act and the Inflation Reduction Act, all designed to reduce dependence on foreign sources and promote domestic production.

“The world is undergoing a paradigm shift in demand for metals and minerals,” noted Jacqui Murray, Resource Capital Funds Partner. “Our collaboration with CEFC allows us to advance decarbonization in mining, ensuring these materials are produced sustainably.”

Companies Position for Market Growth

Several North American and Australian companies are advancing projects to meet projected demand growth. Nano One Materials expanded its patent portfolio in 2024 with 11 strategic patents, bringing its total to 48 patents with over 56 pending. The company’s growing intellectual property strengthens its position in sustainable battery materials manufacturing, with partnerships with major players including Sumitomo Metal Mining and Rio Tinto.

Canada Nickel is rapidly advancing its Crawford nickel sulfide project, potentially the world’s largest nickel sulfide resource in a tier-1 jurisdiction. The company has secured investments from industry giants Anglo American and Agnico Eagle, along with Samsung and a landmark $20 million from the Taykwa Tagamou Nation—the largest such investment by a First Nations group in Canadian history.

“If governments want critical minerals projects to start being built, they’re going to have to find ways to provide funding, because private markets just aren’t stepping up for many commodities given current prices,” said Mark Selby of Canada Nickel.

Power Nickel has delivered a significant high-grade nickel-copper-PGM discovery at the NISK project in Quebec, attracting C$20 million from prominent investors Robert Friedland and Rob McEwen. With three drilling rigs operating, the company aims to delineate 15-20 million tonnes of high-grade resources.

International Projects Gain Momentum

Internationally, Lifezone Metals has boosted the high-grade nickel resource at its Kabanga project in Tanzania by 20%, reaching 46.8 million tonnes at 2.09% nickel. With BHP as a strategic partner and support from the U.S. Development Finance Corporation, Lifezone is positioned to become a significant player in the battery metals supply chain.

In the Democratic Republic of Congo, Rome Resources raised £4.2 million from investor Stanvic Mining to accelerate tin exploration at the Kalayi and Mont Agoma prospects. The company is nearing completion of drilling at Kalayi with a maiden resource expected soon. Tin’s critical role in electronics and clean energy technologies makes it a vital metal for the green revolution.

Meanwhile, Ionic Rare Earths is pioneering sustainable magnet recycling in the UK with government backing. The company expects a substantial UK government grant in early 2025 to fund its Belfast plant, providing the UK with sovereign capability for magnet rare earths to secure its automotive sector, which supports over one million jobs.

Investment Considerations

For investors looking to capitalize on the critical minerals boom, industry experts recommend focusing on companies with exposure to lithium, nickel, and other minerals essential for the clean energy transition. Companies with strong ESG credentials and sustainable practices are likely to face fewer regulatory and reputational risks.

Geographic diversification remains crucial to reduce exposure to resource nationalism and geopolitical tensions. Investors should also monitor government policies and initiatives that could impact the sector, such as subsidies, trade barriers, and strategic partnerships.

As the world transitions to a low-carbon future, demand for these strategic metals is projected to soar despite short-term price volatility. Companies that successfully navigate the complex landscape of sustainability standards and geopolitical challenges are positioned to benefit from the unprecedented growth in critical minerals demand over the coming decades.