Overview

As momentum increases toward achieving net zero, one aspect of the commitment to fight climate change and reduce carbon emissions that has attracted less attention is the extent of the dependence on critical minerals in the energy transition. For example, the International Energy Agency ("IEA") notes that producing an electric vehicle ("EV") requires seven times more kilograms of critical minerals—lithium, cobalt, nickel, copper, manganese, and graphite—than producing a conventional car.

Critical minerals production is concentrated in a small number of countries, primarily emerging and frontier markets. And regardless of where the minerals are sourced, China dominates the processing of most critical minerals relevant to the energy transition.

The electrification process’s reliance on importing critical minerals from regimes whose values are perceived not to align with those of developed economies has spurred the latter to reshape their supply chains. For example, the US Inflation Reduction Act ("IRA"), enacted in August 2022, includes extensive provisions relating to green energy tax incentives to promote the development and adoption of renewable energy and to strengthen the US supply chain for critical minerals and other components of renewable energy projects. Other countries and regions including the UK, the EU, and Japan are also developing initiatives to support the domestic production and processing of critical minerals.

How we can help?

Mayer Brown is at the forefront of the energy transition in the critical minerals sphere. We have dedicated lawyers with deep knowledge of and experience in this field who can help clients navigate the regulatory complexities in this important area of the energy transition.

We advise on areas such as:

  • Joint Ventures, acquisitions and stake purchase and sale agreements between mineral producers and suppliers, including navigating the tax implications and IPOs for start-ups and smaller firms, helping them to expand and achieve scale.
  • Financing and capital raising, including pursuing alternative sources of financing to meet the ever increasing demand for critical minerals .
  • Contingency planning and possible restructuring given the cyclical nature and volatility in pricing and potential supply chain failures.
  • Helping the mining sector adopt a holistic approach to mitigating new and emerging risks in the areas of anti-bribery and corruption (ABC), sustainability, the environment and human rights.
  • Arbitration involving state, commercial, investment treaties and construction involving multiple parties—lenders, sponsors, developers, the state and social parties.
  • Providing updates on and discussing the implications of US IRA regulations and other legislative developments around the world.
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