The critical metals gap on the road to net-zero

The transition to net zero will require extensive electrification, with batteries, electric motors, and smart grids all playing a key role, each powered by renewable energy. Each of these vital pieces of hardware need specific metals to work, making these indispensable to the transition to net-zero.

“To reach net-zero by 2050, the world needs 2x the amount of copper produced over the course of human history”

- Energyminute: Science Direct, The US Geological Studies, IEA

The types of raw materials needed vary by technology. Lithium, nickel, cobalt, manganese and graphite are critical to produce high-performing batteries with the required energy density and longevity. Rare earth elements are key for permanent magnets needed in wind turbines and EVs. Whereas, energy transmission and the build-out of energy infrastructure networks requires a large amount of copper and aluminium.

The supply and sovereignty challenge

Demand for these critical metals is skyrocketing. Meanwhile supply is geographically concentrated in a handful of countries which creates vulnerability in supply chains. Disruptions caused by political instability or trade disputes can have cascading effects on industries essential to the transition to net zero. For instance, Russia produces c. 10% of the world's nickel, while China controls over 60% of the world's lithium production and 60% of the world's Rare Earth Elements (REE) production. This introduces a new challenge: securing supply while safeguarding national sovereignty. 

Recent geopolitical tensions have ignited the race among nations to increase self-sufficiency on critical metals resulting in substantial national incentives. In the US, the Inflation Reduction Act (IRA) offers incentives aimed at revitalising domestic production of critical minerals, while the UK has unveiled its own Critical Minerals Strategy, which set out the plan to secure the nation's supply chains by boosting domestic capabilities. Meanwhile in Europe, the EU’s Critical Raw Materials Act was adopted earlier this year and seeks to curtail dependencies on supply chains for critical metals in the EU and ensure alliances with major producers outside of Russia and China. The sovereignty supply issue shows no signs of abating.

In a move to secure supply chains, Tesla - so often the pioneer - is building its own lithium refinery in Texas while Ford and General Motors have all invested directly in new metal supply. Moreover, Exxon Mobil’s recent agreement to develop lithium-rich acres in Arkansas, shows oil and gas companies increasing interest in the opportunity.

The critical metals for net-zero are not without challenges

Getting more critical metals

The outlook is clear: We will need more of these key materials. From sourcing to processing and recycling, the value chain is opaque and complex and in need of innovation to bridge the gap. There will be huge opportunities for startups to disrupt the status quo in what is an old and well-established industry.

Discovery of new deposits on land 

The discovery process for new deposits is long and manual. These projects carry significant costs and typically take years to pay back. Traditionally, geologists examine spatial data to make a qualified guess as to where metals are most likely located, and then mining companies will manually explore the areas searching for targets. AI can analyse a vast amount of geological and geophysical data to identify patterns to predict potential locations much faster. KoBold Metals, which raised $195M in June 2023, is using AI to accelerate discovery and extraction of new deposits of Lithium, Cobalt, Copper and Nickel and already has partnerships with the likes of BHP and Rio Tinto. Incumbents are also boosting their own internal AI capabilities.

Alternative methods of mining

A range of startups are working on extracting metals from new or previously uneconomical sources. Metal-rich brines are today too energy-intensive and expensive to extract metals such as lithium and magnesium from. Some companies are using different electrolysis and membrane technologies, while others are exploring the use of biology or chemistry, as new extraction methods. Lilac Solutions raised a $150M Series B in 2021 and was awarded a $50M grant by the US Department of Energy to advance domestic lithium production.   

Others are working on novel methods of bioleaching, the process of extracting metals from ores using microbes. Maverick Biometals is developing enzymes to chemically break down the crystal structure of ores at near-ambient temperatures, saving significant energy and water in the process. In France, Genomines are using synthetic biology to engineer plants to efficiently and economically extract metals from metal-rich fields and mine tailings.

We believe winners will be those who find the strongest business model and fully integrate to control and capture the value creation. 

Deepsea mining 

Critical metals are not only found on land, there are healthy resources under the sea which are getting increasing attention. While studies on deepsea mining are underway, our knowledge of the deepsea remains limited and regulatory frameworks are in their infancy. We need to take care not to inflict irreparable damage on the marine ecosystem and ocean chemistry. The ocean is, after all, the world’s number one carbon sink, soaking up 30-40% of CO2 produced through human activities.

Ensuring circularity 

Reuse and recycling have taken a backseat in the race to electrify but are receiving increasing attention. Policymakers are launching extensive frameworks to regulate the entire lifecycle of batteries, including mandatory minimum levels of recycled content for EV batteries, to ensure domestic supply. This has catalysed a rush to establish domestic supply chains, many for the first time. Redwood Materials recently raised $1B Series D to enable battery materials “made in the USA”. 

Recycling is not only a logistical challenge but a technical one where the separation process of for example magnets require hazardous chemicals and extreme heat. It will take time for secondary feedstock to reach critical mass and make it an economically viable process. Batteries from EVs can retain significant capacity at the end of life and could be used for energy storage applications for another 10 years. While intentions are noble, we should be mindful not to incentivise recycling over reuse but to prioritise the efficiency of resources.

Reducing dependency on critical metals

In the quest for more materials, advances in AI offer the potential to accelerate material discovery and lessen the dependence on critical metals. Traditional ways of discovering and exploring new materials are limited to the complexity of chemical compositions, structures and targeted properties. Today, the design of new materials is done using physics-based simulation and experiments, a lengthy and time consuming process.

Similar to how we saw the emergence of AI for biology, which reduced time and cost of drug discovery and development, AI applied to chemistry and more specifically critical metals could be next. 

At Giant, we are excited about AI’s potential to accelerate material design, optimise current materials and discover new properties that could reduce reliance on supply chains and cost for novel applications.

Accelerated materials design 

AI models can predict material properties, such as electrical conductivity, thermal stability, and mechanical strength, based on their atomic and molecular structures. This predictive capability enables us to screen vast databases of potential materials and identify those with the desired properties for specific applications in electrification. We can understand the underlying mechanisms and structure-property relationships, guiding further materials design and optimization with remarkable speed and accuracy. For example, in battery technology, AI could help optimise electrode materials to enhance energy storage capacity, charge-discharge rates, and cycle life.

Discovery of new or alternative material 

AI has the potential to identify and suggest novel compositions or combinations of elements at a speed and scale not previously possible. Compositions that exhibit the same desirable properties required for applications in electrification could reduce or replace reliance on critical metals in a range of applications. AI can identify materials with unconventional properties, such as improved catalytic activity, enhanced thermal conductivity, or greater stability. These new materials could drive innovation across multiple areas, from enhanced performance of batteries, and advanced semiconductors to energy storage, and pave the way for breakthroughs in new electrification technologies. Novel materials could also reduce the weight and energy needed for transportation, such as EVs and aircraft, as well as reduce supply chain risk through reduced usage of the most constrained materials.

Data and collaboration 

Lack of available data has been one of the bottlenecks for AI applied to chemistry. For AI to achieve its potential in materials discovery we need more experimental and simulated data which will require collaboration among researchers, institutions, and industries. Platforms and databases that store and analyse materials data will become valuable resources to enhance the efficiency and effectiveness of materials research, fostering innovation and enabling rapid advancements.

Heightened emphasis on domestic self sufficiency in critical metals combined with remarkable advances in biology and AI makes now a fascinating time for breakthrough innovation in the metals and materials space. From unearthing new deposits, to revolutionary approaches to mining to the optimisation and discovery of unprecedented materials compositions, the opportunity for groundbreaking innovation is exciting. At Giant, we believe the fusion of AI and materials science holds immense potential and will play a pivotal role in supporting electrification on the journey to net zero.

Are you a founder working in the space? Get in touch at madelene@giant.vc.