As a changing climate intensifies its grip on our world with more unpredictable and extreme weather patterns, there is growing demand for the minerals critical for clean energy technologies. This pressing issue will be front and centre at the twenty-ninth United Nations Climate Change Conference in Baku, Azerbaijan (COP 29), towards ensuring that critical energy transition minerals are leveraged to update our trade regime, promote structural diversification and turn the tide of commodity dependence.
Developing countries rich in critical minerals have a unique opportunity to benefit from two significant trends that can drive their sustainable development: the energy transition and the digital economy.
The digital shift comes with environmental challenges, however, that must be addressed. While digitalization can drive global economic growth and provide valuable opportunities for developing countries, it also poses risks, such as the depletion of finite raw materials and rising water and energy consumption. Thus, it is essential for these nations to harness the digital transformation to advance development while actively mitigating its negative environmental impacts.
A balanced approach is crucial, advocating for a transition towards a circular digital economy that emphasizes responsible consumption and production, the use of renewable energy and effective management of e-waste. As digitalization progresses rapidly, understanding its relationship with environmental sustainability becomes increasingly vital.
Global demand for minerals—such as lithium for electric vehicles, or selenium for solar cells—is expected to triple by 2030 and quadruple by 2040, .
The boom is a double-edged sword, posing shared global opportunities and challenges that demand collective efforts for strategic and equitable engagement within and across this growing market.
On one hand, there are renewed calls to reduce commodity dependence, defined as a situation where over 60 per cent of a country's merchandise export revenue comes from raw materials. This issue currently affects , nearly half of the membership of the United Nations. On the other hand, mineral-rich developing countries have the opportunity to transform their economies by adding more value locally and diversifying into mid- and downstream activities.
Local and regional value addition can promote a more equitable distribution of benefits and create opportunities for diversification, broader energy access and sustainable growth.
To fully leverage their natural endowment and avoid the pitfalls of past commodity dependence, developing countries rich in critical energy transition minerals must urgently move up global value chains.
Economic diversification—supported by infrastructure and industrial policies that encourage the use of minerals for green industrialization—can help mitigate the risks of overreliance on raw commodity exports, while fostering increased productive capacities, improved skills and the creation of quality jobs.
It is vital for the global community and multilateral systems to create enabling conditions through fairer trade rules, enhanced support for technology transfer, and increased investment in sustainable and resilient infrastructure across the developing world.
The need to break out of the commodity trap
Developing countries play a crucial role in the global supply chain for transition minerals and metals, but they face the challenge of lacking the financing and quality investment capabilities needed to add value.
For example, that are essential for the global shift to a low-carbon future and a fair, environmentally responsible digital economy. The continent holds over a fifth of the world's reserves for a dozen metals essential to the energy transition and the production of electric vehicles, solar panels and batteries.
The growing global demand for these resources presents a development opportunity for resource-rich developing countries if they can add value to the extracted minerals, effectively utilize the proceeds, and diversify within the value chain and other sectors.
As the continent is yet to fully seize the opportunities presented by its natural resources, most of the value-added activities of green value chains are still captured elsewhere.
Currently, African countries only possess and are estimated to generate only .
Moreover, no African or Latin American country is a major player in manufacturing or trading cathodes or battery materials for electric vehicles.
This is yet again evoking the paradox of commodities—the fact that they are a great source of wealth, but oftentimes come with a trap of development, a cycle of vulnerability and a source of inequality for the world’s most vulnerable economies.
It’s an issue of broader concern as virtually all countries of South America, the Pacific, the Middle East, and sub-Saharan Africa are commodity dependent. This includes .
More alarmingly, . The problem, therefore, is getting worse, not better.
To change course, here’s what we collectively need to do in earnest.
Addressing investment shortages in critical mineral mining projects
Global investments in critical energy transition minerals are not keeping up with rising demand. This is partly why current production levels are inadequate to meet the needs required to limit global warming to 1.5°C, in line with the Paris Agreement.
UN Trade and Development (UNCTAD) , valued at $39 billion, with $22 billion already invested in 60 projects in developing countries.
However, to meet net-zero emission targets by 2030, the industry will likely need significant new investments in critical minerals: around 80 copper mines, 70 each for lithium and nickel, and 30 for cobalt.
The total investment required for these projects .
The largest shortfalls are in copper and nickel, which make up 36 per cent and 16 per cent of this gap, respectively.
Strengthening the multilateral trading system
Some developing countries are working to add value to their critical minerals.
For example, the Democratic Republic of the Congo increased the value of its cobalt almost threefold by processing it locally.
As a result, the country’s processed cobalt exports
On a broader level, developing countries, particularly those dependent on commodities, need a fair, rules-based system that helps local firms participate more effectively in the global value chain of critical minerals.
In this regard, the current trade regime is increasingly being contested from within, amid growing protectionism and subsidy-based industrial policies to which only countries with ample fiscal space have access.
But a trade regime based on power games and geopolitics would be the worst of all worlds.
To turn the tide, it’s time to update the international trading system—something that we ought to do in a multilateral way, through the World Trade Organization and United Nations as a key actor to establish the link from trade to development.
Ensuring equity and justice
Harnessing critical energy transition minerals for inclusive development requires new approaches with people and the planet at their core.
These recommendations come from the United Nations Secretary-General’s Panel on Critical Energy Transition Minerals, comprising actors from governments, industry, civil society worldwide and international organizations.
The panel received key support from a secretariat co-led by UNCTAD, the United Nations Environment Programme and the climate action team of Secretary-General António Guterres. Another 17 United Nations agencies contributed technical advice.
To get there, we need to promote justice, equity and sustainability throughout the value chain of critical minerals—from mining, refining and manufacturing to transport and end-of-use recycling.
There’s also a need for multi-stakeholder dialogue to further the action-oriented policy recommendations, tapping into the full development potential of critical energy transition minerals.
This can relate to greater benefit-sharing, value addition, economic diversification, trade and investment, and fiscal policy. Such discussions will also enable much-needed peer learning and information exchange, especially among mineral-rich developing countries.
As recommended by the panel, the establishment of a high-level expert advisory group would be helpful in this direction.
What UN Trade and Development is doing to help
UNCTAD has long supported mineral-rich developing countries in adding more local value, creating better jobs and reducing reliance on raw material exports and exposure to volatility in .
Looking ahead, the organization is committed to helping ensure that equity and justice shape the growing market for critical minerals, and that mineral wealth catalyses sustainable development rather than exacerbates inequalities.
UNCTAD continues to advocate for a global traceability, transparency and accountability framework along the entire mineral value chain—from mining to recycling—to strengthen due diligence, facilitate corporate accountability and build a global market for critical energy transition minerals.
With its convening power and consensus-building platforms, UNCTAD can help foster international cooperation on key aspects such as access to technology, know-how and financial support.
Through , it can assist countries to enhance their domestic capabilities in the processing and manufacturing of critical minerals-related products.
Additionally, the organization will continue advocating for reduced barriers to market access and helping countries navigate complex international trade rules.
It will also support Member States to establish transparent and fair governance frameworks to attract responsible foreign investment, ensuring that revenues from critical minerals are reinvested in national economic development.
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