Working Groups | Financing Responsible Transition Minerals

This article is a summary of the discussions held during the first meeting of the Special Advisors Working Group on Financing Responsible Transition Minerals, on 20 March 2025.

The meeting was convened under the Global Council for Responsible Transition Minerals’ Special Advisors group, which played a pivotal role in shaping the Council’s Interim Report issued in November 2024. The session marks the first of a series focused on the fourth recommendation, wherein the Global Council “recommends exploring diverse strategies to reduce risks and accelerate financing for responsible mining and refining projects, including considering the creation of a global public-private investment mechanism”.

1.     Connecting the Dots: Presentation and Updates of Relevant Initiatives and Organizations

Special Advisor meetings aim to connect experts, share information and provide the latest updates relevant to global mineral governance. Two recent events shaped the mineral global landscape. First, the Paris Peace Forum and a few Special Advisors attended the Finance in Common Summit (FiCS), held in Cape Town on 26-28 February. Energy transition minerals were, for the first time, on the agenda of this important meeting convening Multilateral Development Banks (MDBs) and Public Development Banks (PDBs), and addressed in a Plenary Session driven by South Africa’s G20 Presidency. A Special Advisor noted that while MDBs and PDBs have traditionally been hesitant to invest in mining, discussions at the summit highlighted their key role in de-risking mining and attracting investment. Discussions at the FiCS revolved around the critical barriers to investments, such as long lead times for exploration, infrastructure needs, increasing environmental concerns and community-level risks, and the need for further cross-border cooperation. Additional information on the Paris Peace Forum participation can be found in the recently released Policy Brief.

A few Special Advisors also reflected on discussions at PDAC (Prospectors & Developers Association of Canada), held in Toronto, on 2-5 March. Participants’ takeaways emphasized the volatility in demand signals for minerals: while demand is indicated to be rising, market behavior does not reflect this rise, and investors remain hesitant. There is a continued lack of financing, compounded by the challenge of debt structuring in developing countries and market volatility.

2.     Open discussion based on Recommendation 4 of the Global Council for Responsible Transition Minerals

Structuring a Public-Private Financing Mechanism

While the Global Council’s Recommendation 4 suggests a broad “global public-private mechanism”, the initial draft referred to a more ambitious “public-private international vehicle dedicated to investing in transition mineral supply chains, [which would] crowd-in private finance by de-risking projects, centralizing fragmented efforts and facilitating access to finance by streamlining project requirements, covering the whole supply chain”.

A Special Advisor outlined the rationale for such a global financing vehicle, re-emphasizing the challenges in attracting investments. Even when mineral prices were high, securing financing remained difficult due to the capital-intensive nature and long lead times of mining projects. Since the 2008 financial crisis, there has been a persistent lack of appetite for capital-intensive and high-risk projects. Investment has also been increasingly diverted toward sectors like AI and tech, which offer more predictable and higher returns. A Special Advisor emphasized that the financial landscape has also been shaped by regulatory constraints: some mining activities are classified as hazardous under EU regulations, further limiting access to sustainable finance classification (e.g., Cobalt exposure via inhalation). The financial sector often prioritizes established, high-yield markets, making it difficult for mining projects to compete. Additionally, reputational risks associated with mining further deter investors. The Democratic Republic of the Congo (DRC), a major cobalt-producing country, has long expressed frustration that while Western countries advocate for responsible sourcing and value addition, they fail to provide the necessary investment. As a result, resource-rich nations often face a choice between low-standard investments or no investments at all.

At the same time, national financing initiatives remain fragmented. Countries like Germany, France, Canada, the UK, Australia, and most recently the Netherlands have launched national funds, but these operate in isolation. A Special Advisor emphasized that European countries’ funding mechanisms for mining projects are too often research and innovation-driven, with time-consuming bureaucratic processes, for which many SMEs do not have the capacity to apply. In addition, the available funding is deemed limited and insufficient for large-scale mining operations.

Consolidating these efforts into a coordinated global mechanism could enhance investment. A Special Advisor suggested that, ironically, the current withdrawal of the US’s multilateral engagement might make the geopolitical context suitable for a global agreement on a financing mechanism among other allied nations.

The idea of a similar global blended finance fund had already been raised in past discussions within the UN Secretary-General Panel on Critical Energy Transition Minerals. The initial proposal included metrics to make projects viable and investable, focusing on ESG factors and including long-term equity and sustainable development elements. However, the final UN Panel recommendation was significantly watered down to the wording “mobilizing resources”. A Special Advisor mentioned that although the UN Panel's mandate was closed, the UN High-Level Expert Advisory Group will have a longer mandate and could constitute a potential platform for shaping an equitable and coordinated minerals financing system.

Another Special Advisor raised that blending different financing instruments in public-private vehicles presents considerable challenges due to variations in governmental guidelines, timelines, investment cultures, and attitudes toward the mining sector. They noted that DFIs may be best suited to provide grants and technical assistance to advance projects toward bankable stages, with guarantees serving as a cost-effective tool in times of limited public resources.

Rethinking Public Incentives and Profitability

Special Advisors underscored the importance of public policy incentives to attract long-term investments while encouraging companies to prioritize sustainability. The dependence of many countries, especially in Europe, on a single supplier, poses significant risks, further fueling the need for strategic public policies incentivizing investments. In many cases, companies lack the capacity or willingness to pay a premium for responsible and diverse supply. Given the inherent long-term, volatile and high-risk nature of the mining sector, innovative financing solutions—such as public guarantees—are needed to unlock private finance. These guarantees could provide a more cost-effective approach than direct subsidies or grants while still de-risking energy transition minerals investments.

Another Special Advisor highlighted that even with the creation of a public-private investment mechanism, the financial challenges plaguing the mining sector might persist due to the critical issue of insufficient profitability. Mining is widely regarded as a high-risk investment, with a comparatively low estimated return of just 7%—a mere 2% above U.S. government bonds—making it significantly less attractive compared to higher-yield growing sectors like AI and technology. Special Advisors emphasized that addressing the profitability of the sector is essential to attract meaningful investments. They suggested that the public sector’s role might be more about signaling political support and building trust to reduce perceived risks and thus enhance profitability. Another Special Advisor reinforced this point by citing a recent case where a mining company had to issue a bond at a 14% interest rate, illustrating the high cost of borrowing capital in a high-risk sector and the financial hurdles that mining companies can face.

Tapping into Alternative Sources of Capital

Political and geopolitical shifts have been mentioned as further complicating investment decisions. Special Advisors suggested that the growing demand driven by AI and defense needs could potentially attract more capital. While minerals have primarily been associated with energy transition minerals, framing them in the context of defense or AI might appeal to those involved in other markets. Another Special Advisor urged to make the distinction between minerals essentials for defense, those supporting the energy transition, and those of dual use, raising the need for further understanding of the contribution of minerals to the green transition. Additionally, skepticism toward the energy transition in some regions was noted as further deterring investments in transition minerals value chains.

Special Advisors called for creativity in identifying untapped capital sources, including through ESG funds, infrastructure investors, and emerging investor groups. Diversifying the types of investors– rather than trying to extract more from the existing crowd of investors–could mobilize fresh capital and overcome some of the long-standing financing challenges.

Although investment in the responsible extraction and refining of transition minerals remains critical, investments in activities key to supporting the industry should not be overlooked. A critical barrier to investment lies in infrastructure deficiencies. The lack of essential infrastructure in resource-rich countries—such as power generation facilities, roads, and rail networks—drives up operational costs and deters potential investors. Targeted investments in infrastructure could significantly reduce these costs and enhance project profitability. Initiatives like the Lobito Corridor, exemplify this goal by aiming to improve transport and logistics to boost mining viability and profitability.

Some organizations are already pursuing infrastructure-centered strategies. For example, the Climate-Smart Mining (CSM) initiative, launched by the IFC and the World Bank in 2019, focuses on scaling up technical assistance and sustainable investments in mineral-rich countries. Similarly, the G7 Partnership for Global Infrastructure and Investment aims to mobilize $600 billion by 2027 to deliver high-quality infrastructure, some of which is expected to directly support mining activities.

Second, mining still struggles to attract ESG-focused investors, many of whom prefer funding renewables while avoiding extractives due to sustainability concerns. Yet, transition minerals projects need to be understood as fundamental to renewable energy industries and must be positioned as integral to the broader sustainability ecosystem. ESG capital represents nearly one-third of global assets under management (AUM), yet only 2-3% is allocated to mining investments. While capital allocation toward extractives and energy sectors increases, mining companies still often struggle to access ESG funding due to a lack of awareness, skepticism, and limited support structures that bridge the gap between funds and companies. There is an opportunity for ESG funds to recognize viable mining projects, and for mining companies to align with ESG standards. Establishing a central support body could help facilitate this connection.

A Special Advisor brought the example of the European Commission’s Innovation Fund, which currently focuses on downstream clean manufacturing, and described how funding could be expanded to recognize that responsible mineral extraction and processing are essential foundations for clean manufacturing investments. By incorporating upstream activities, the fund could strengthen the entire supply chain and bridge the gap between sustainable finance and mining investments, thereby unlocking additional sources of capital.

Finally, Special Advisors noted the growing pool of women investors, including feminist collectives, who are increasingly focused on promoting female participation in the mining sector. This demographic shift presents another valuable opportunity to diversify capital inflows while enhancing equity and inclusion within the industry.  

Grounding Investments into Local Realities

Understanding the practical aspects and context of mining operations was emphasized as critical to structuring investments and effectively mobilizing both private and public funding. Key challenges such as infrastructure, water supply, and (clean) power generation must be factored into investment decisions. A Special Advisor shared an example of a successful collaboration between mining companies and USAID in South Africa, where both public and private sectors joined forces to address social challenges. This partnership allowed experts from outside the strict mining operations to step in and provide support.

Special Advisors also highlighted the importance of understanding the broader vertical integration across the supply chains – mining, processing, manufacturing and recycling – to grasp the broader investment landscape. It is important to consider the jurisdiction and risk of the mine as well as the full supply chain, especially with materials like battery minerals, which can be opaque and complicated to navigate. While some stages, like processing, may not be immediately profitable, stepping back and looking at the whole value chain might present a different picture. Understanding that some countries have specific competitive advantages – whether in extraction, refining, or manufacturing – can help governments design integrated supply chain policies that enhance efficiency and competitiveness.

Understanding value creation dynamics within the mining sector is critical. Export bans or some contract provisions can significantly impact governments’ ability to create value. For example, the Ghanaian government signed a lithium agreement with a company that took 50% of the mine’s output, limiting Ghana’s ability to add value. Addressing the nature of contracts, political economy and security issues is also crucial for the stability of investments. Additionally, not all minerals in any country are suitable for the pursuit of refining and processing activities, and resource-rich countries should realistically assess whether value will be created. A Special Advisor stressed the need for governments to create organizations that can analyze and understand these complex issues.

Looking Ahead

Looking ahead, Special Advisors emphasized that our first priority should be addressing knowledge gaps and conducting the necessary mapping to lay the groundwork for progress. Suggestions for next steps included: 

• Mapping the financing needs to the risk profile of each stage in the minerals value chain, including mining, refining, and recycling. Financing strategies should align with the distinct risk-return profiles of different minerals and supply chain stages, as strategies effective for renewable energy assets may not be suitable for mining investments. This mapping would clarify the risks and thus provide a better understanding of what types of financial instruments would be best suited to address particular needs. 

• A "gap analysis" to identify the disconnect between the need for investment and the (un)ability to invest, and clarify how to bridge these differences. Based on risk profiles, needs and availability of funds, this could also include mapping out specific projects for attention.

• Identifying and mapping alternative pockets of financing and investors, including emerging investor groups such as women-led investments, funds from non-traditional mining investors (ESG-focused, impact investment and sustainable finance, development and infrastructure finance institutions).