Why green metals matter: Lithium, EV supply chains & investment opportunities

What's the environmental impact of mining?

The environmental impact of mining has come under increased scrutiny as demand for green metals rises. While these materials are essential for low-carbon technologies, their extraction and processing carry significant ecological costs, particularly when conducted using conventional methods.

Mining for lithium, cobalt, and other transition metals often involves open-pit operations, chemical leaching, and water-intensive processes. These activities can result in land degradation, biodiversity loss, and contamination of water sources with heavy metals. For instance, in parts of Latin America, lithium extraction from brine deposits has raised concerns about freshwater depletion in arid regions. Also, in parts of Africa and Southeast Asia, poor waste management and unsafe tailings disposal have led to toxic runoff and long-term soil contamination.

Efforts to reduce the environmental impact of mining are growing, but progress remains uneven. Some companies are trialing innovations such as water recycling systems, dry tailings storage, and site rehabilitation. At the same time, external pressure is intensifying. Regulators, investors, and local communities are demanding higher standards for sustainability and accountability. In response, many countries have introduced stricter rules for environmental assessments, permitting, and post-mining restoration, signaling a shift toward more rigorous oversight across the sector.

These developments indicate a shift in how sustainability is measured in resource extraction. It is no longer just a technical question of output but a broader evaluation of a mine's impact on ecosystems, water usage, and community wellbeing.

How mining operations are cutting emissions

Mining companies are under increasing pressure to decarbonise, not just for compliance or sustainability, but to remain investable under evolving ESG mandates and global regulatory standards. Reducing emissions is now a crucial factor in valuation, access to capital, and long-term competitiveness.

In response, many miners are adopting technologies and methods aimed at lowering emissions across the value chain:

Digital innovation in resource exploration

Advanced technologies such as artificial intelligence, geospatial mapping, and sensor-based remote sensing are improving the precision of mineral exploration. By reducing unnecessary drilling and shortening development timelines, these tools help cut emissions linked to land use, transport, and site preparation.

Lower-emission smelting and processing

Traditional refining relies heavily on fossil fuels. Some operators are shifting to electric arc furnaces powered by renewables and adopting hydrometallurgical processes that require less heat and reduce carbon intensity, particularly in aluminium and nickel refining.

Electrified equipment and autonomous fleets

Diesel-powered trucks and loaders are significant contributors to mine-site emissions. Battery-electric vehicles, hybrid machinery, and autonomous haulage systems are now being piloted or deployed at scale to reduce fuel consumption and improve operational efficiency, especially in remote or underground sites.

Renewable-powered mining sites

Wind, solar, and hydropower are being integrated into the energy mix at select mine sites. In regions with strong renewable potential or supportive infrastructure, these sources can meet a significant share of operational demand, reducing dependence on carbon-intensive grids or diesel generators.

Decarbonising the value chain

Beyond on-site operations, leading mining firms are tackling Scope 3 emissions, which are those linked to suppliers, logistics, and customers. Supply chain electrification, green procurement standards, and low-carbon product certifications are gaining momentum as part of investors' due diligence.

Standardised emissions reporting

Frameworks such as the TCFD and new ISSB-aligned climate disclosure standards are accelerating transparency and comparability in emissions data. These are becoming prerequisites for capital access from ESG-aligned funds and sovereign wealth investors.

Investment opportunities in green metals

As global demand rises, market participants are exploring various ways to gain exposure to green metals. Here are the main ones:

Public equity markets

Exposure to green metals can be accessed through listed companies involved in mining, refining, or processing. These firms range from regionally focused developers to globally diversified operators active across multiple parts of the value chain.

Thematic ETFs and sector funds

Energy transition-focused ETFs and mutual funds provide bundled exposure to companies linked to critical minerals and related technologies. These products offer a diversified entry point to the theme without requiring detailed company-level analysis.

Private capital and early-stage infrastructure

Institutional and long-duration investors are increasingly active in private markets, backing innovation in areas such as battery recycling, low-impact extraction, and supply chain digitisation. These opportunities often feature longer time horizons and a higher degree of operational or regulatory complexity.

Strategic agreements and industrial partnerships

Some corporates and public-sector entities are entering into long-term supply contracts, joint ventures, or co-investments with raw material providers. These arrangements often shape project development and influence market dynamics, particularly in constrained supply environments.

Derivatives and structured products

Financial instruments such as futures, options, and structured notes linked to metal prices or indices offer another route to engage with market movements. These tools are generally suited to experienced investors with experience in commodity-linked risk management.

Green bonds and project-level financing

Fixed-income instruments linked to mining or processing projects with environmental performance criteria are also emerging. These include green bonds, infrastructure debt, and sustainability-linked loans, offering a different risk-return profile aligned with long-term capital deployment.

Factors to consider before you invest

How someone approaches green metal investments depends on a few key factors:

• How long they plan to stay invested,
• How much risk they're willing to take, and
• What part of the sector they're most interested in.

Some focus on the mining side, where the most significant challenges are supply bottlenecks, regulation, and geopolitical exposure. Others are more drawn to companies developing new ways to process materials or building technologies that use them, such as batteries, motors, and renewable energy systems. Decisions also depend on how comfortable someone is with price swings, policy shifts, and fast-moving changes in areas like battery design or recycling.

Green metals are reshaping global supply chains

Clean energy systems rely on a few critical metals, and demand for them is rising fast. However, supply remains uneven, and the pressure on producers, governments, and buyers is increasing. Also, scrutiny now extends beyond extraction to processing, logistics, and how long these materials stay in use.

This shift is already changing where capital goes and how projects are evaluated. The way green metals are sourced and managed will shape how the transition unfolds, and who's positioned to benefit from it.