Metals are indispensable to the energy transition, serving as critical inputs across electric vehicles (EVs), renewable energy generation, and energy storage. As demand in these sectors surges, the metals supply chain faces mounting pressures to adapt.
Historically, metals and mining have been inextricable; mining has been the primary method of sourcing metals for thousands of years. While mining will continue to play a central role in the global economy and the energy transition, this relationship is shifting - and, in some cases, beginning to decouple.
Geopolitical Forces, Demand, and Import Dependencies
Geopolitics is a major force driving this evolution. As deglobalization accelerates and global trade and general alliances continue to shift in response to conflict, securing critical mineral supply has become paramount to national agendas across borders and political lines. The onshoring of supply, general reimagination of supply chains, and advancement of metal and mining technologies has become central to questions of national security and independence.
Metal imports shed light on this issue. The WTO reports that imports of critical metals surged from $53 billion in 2002 to $378.1 billion in 2022 - a sevenfold increase:
This growth reflects a sharp increase in metals demand and also underscores the geopolitically charged nature of the metals supply chain. As we observe this shift, we see a similar trend in the rising value of other strategic metals, like gold, which has recently surged to record highs as shifting global alliances and trade concerns inspire a focus on alternatives to national currencies.
The energy transition lies at the cross-hairs of metal supply and demand. The energy transition is powering a significant rise in demand for critical metals. According to the IEA, a typical electric car requires six times the mineral inputs of a conventional car, and an offshore wind plant requires 13 times more mineral resources than a similarly sized gas-fired plant.
Meanwhile, since 2010, the average mineral resources needed per unit of new power generation capacity have risen by 50% as renewable investments expand, driving home the scale of demand disruption.
The chart below highlights the stark contrast in metal inputs required for fossil fuel-based versus renewable energy systems.
The need to address supply constraints - and even rethink supply - is evident.
Pathways of Supply Innovation
Responses to the ‘Supply question’ can be broadly categorized into three buckets: 1) Increase the efficiency of traditional supply, 2) Make better use of existing supply (reduce or circumventing pressure to generate new supply), or 3) Seek new sources of supply.
Naturally, there are innovations which cross-cut these categories. We will highlight an example pathway within each approach below:
- Increase the efficiency and output of natural supply
Pathway example: Exploration Technologies - KoBold Metal and Earth AI
This includes advanced tools for locating and assessing mineral deposits, including satellite imaging, geophysical surveys, and geochemical analysis. Increasingly, AI and ML are beginning to revolutionize how companies discover new deposits of critical minerals by allowing a deeper view into the Earth’s subsurface to identify new ore bodies that were previously undetectable.
Key examples include KoBold Metals, whose discovery platform identified one of the largest copper deposits in over a century, as well as Earth AI. Earth AI similarly discovered the first nickel, PGE, and copper deposits in Australia (including the first identified igneous PGE-nickel-copper mineralization in the region).
- Make better use of existing supply
Pathway example: EOL Critical Mineral Recovery - Nth Cycle
This includes technologies focused on recovering high-value critical metals from end-of-life products to reduce reliance on new mining.
Recent progress in metal recycling has demonstrated the economic potential of metal circularity, drawing substantial investment. Techniques include hydrometallurgy (aqueous extraction), pyrometallurgy (high-temperature processes), electro-extraction, biometallurgy (microorganism-driven), and tailings repurposing (i.e. BHP’s tailing challenge).
VoLo Earth portfolio company Nth Cycle is a key player, with electro-extraction technology demonstrated to recover up to 95% of critical minerals from discarded batteries. Nth Cycle’s Ohio facility, whose ‘groundbreaking’ ribbon-cutting was highlighted in last month’s newsletter, showcases that recycling operations can scale to provide a reliable stream of the high-quality nickel and cobalt essential for next-gen batteries. These kind of advances in end-of-life mineral recovery can dislocate the emphasis on traditional raw material extraction and redirect focus toward enabling circular supply models.
- Establish new sources of supply
Pathway example: Metals without Mining - Magrathea Metals
As highlighted in the introduction, the concept of “metals without mining” represents an emerging frontier in the effort to onshore critical metal supply.
Magnesium is a key example, with a supply chain heavily reliant on China, which produces over 90% of the world’s magnesium, followed by Russia as the second-largest supplier. In addition to geopolitical implications, current extraction methods are also highly carbon-intensive. This combination occasions a leapfrog of traditional processes to novel and more resilient sourcing solutions. The opportunity is large, as magnesium embeds an ability to displace various applications of both steel and aluminum - at 75% lighter than steel and 33% lighter than aluminum, increased strength to weight ratios, higher thermal conductivity and corrosion resistance.
Magrathea Metals is addressing this gap by pioneering a new approach: extracting magnesium from brine (rather than mined ore) to provide the first domestically sourced magnesium in the United States in over 40 years. By tapping into a previously underutilized resource, Magrathea’s process enhances U.S. supply resilience and creates a reliable stream of lightweight magnesium essential for the energy transition.
Implications on Capital Flows
The evolving metals supply landscape is beginning to transform capital flows, with critical metals like lithium, nickel, cobalt, and magnesium shifting from commodities to strategic assets on the global balance sheet. Batteries, for example, are increasingly seen as assets with trade potential and resale value rather than one-time expenses. In Europe, export restrictions on used batteries and black mass underscore the shift, as these resources gain strategic importance for energy security and resilience.
This revaluation has drawn hedge funds and trading firms into metals markets, responding to the marrying of heightened demand with supply volatility and geopolitical risks. Meanwhile, national policies prioritizing supply resilience are further incentivizing investment into onshoring and resource innovations, redirecting VC capital toward startups focused on advanced recycling, circular supply models, and alternative sourcing.
As a result, defense funding has emerged as a new capital source, with national security and climate goals aligning around metals as critical to energy independence and resilience.
Meanwhile, products and services are emerging around new metal supply. For example, Minespider is a traceability and metal sustainability platform creating digital Product Passports to enable visibility across the metal supply chain.
Conclusion
Metals are not only critical resources but foundational assets reshaping supply chains, capital markets, and the energy transition. The future of critical metals supply depends on an integrated approach: expanding domestic production, advancing recycling technologies, and reimagining new sources, while balancing imports with geopolitical resilience. Each of these pathways reflects the broader dynamics driving the energy transition—a nexus for national security, defense, manufacturing, and economic development.
As demand for metals accelerates, supply landscapes are transforming rapidly. Breakthroughs in AI, battery chemistry, and even subsurface intelligence for applications like geothermal and hydrogen are steepening the innovation curve, building a resilient, adaptable supply chain capable of fueling the energy transition and supporting a shifting global economy.