3 questions to... Christophe Roux


The EU Commission released the Critical Raw Materials Act, which includes set of actions to ensure the EU's access to a secure and sustainable supply of critical raw materials. Our expert, Christophe Roux, Regional Head of Mining, Metals and Industries Finance, EMEA, answers some of the questions raised by the growing importance of “Critical Minerals” in this article.

What is critical about certain minerals and why is their availability a widespread concern? 

Our ability to achieve the carbon reduction targets announced by governments or companies depends on the availability of minerals that are needed to make the equipment and infrastructure supporting the energy transition. They include lithium, nickel, cobalt, manganese or graphite for EV batteries, or “rare earth” metals for magnets used in electric motors or wind turbines. But the energy transition also depends on more commonplace commodities such as base metals or iron. For example, aluminium is the main material in solar photovoltaic panels, steel is for wind turbines and copper for electrical grids.

The global supply of many of these minerals is already tight – yet without significant investment it could rapidly become insufficient. More importantly, production and processing is often concentrated in a small number of countries, some of which are perceived to have high political risk. Following the COVID-19 crisis and its supply chain disruptions, companies and governments have become more aware of the importance of critical minerals. With war raging in Ukraine, they’re even more concerned. The EU and countries including the UK, Canada, Australia and the US have announced strategies to secure supplies of these minerals. Notably, the recent US Inflation Reduction Act offers an impressive range of tax and financing incentives to encourage both mineral production in the US and supply from outside the country to US industry.

Is building new mines in Western Europe the magic solution for securing supply? 

Maybe. In places where the geology is adequate and sufficiently understood, it can be part of the solution. However, I see two obstacles to rapidly expanding Western Europe’s mining industry. Firstly, time. Western Europe may be rich in potential resources, but it has to catch up with decades of low mining exploration investment in comparison with countries like Canada, Australia, the US or China. Moreover, it normally takes from seven to ten years to start mining production after a discovery has been made, with the possible delay in obtaining mining permits being an imponderable risk. The second obstacle is Europe’s high population density and residents’ intolerance of how a neighbouring mining operation might affect their quality of life.

What’s more, the problem of critical mineral supply goes beyond the promotion of a domestic mining industry: once a mineral ore has been extracted, it needs to be processed in different successive stages before being used by manufacturing industries. For example, a typical Australian lithium mine produces spodumene that must be processed into lithium hydroxide, then into precursor cathode active material and, finally, into cathode active material. Only then can a gigafactory use it to produce batteries. In economic terms, downstream processing often represents a higher value creation than actually mining the mineral ore. Western Europe’s dependence on East Asia, and especially China, for processing critical minerals is as much of a concern as the quantity of ore accessible in mines globally. 

Of course, metals have the unique advantage that you can recycle them forever. It takes less time to build a recycling plant than to explore and appraise a deposit before building a mine. Also, importantly, recycling a ton of metal tends to emit much less CO2 than mining, processing and refining a ton of the same metal.

Will the need to secure the supply of critical minerals compromise ESG standards?

I don’t think so. Scaling up mining and industrial production rapidly across the globe will not be possible without wider public support. It’s not only directly affected neighbouring communities who voice concerns but also increasingly the end-consumers. They’re anxious about the sustainability of extraction, the CO2 footprint and the recyclability of the minerals that are, for instance, contained in the battery of a cell-phone or an electric car. 

When we advise or finance projects, they must comply with the Equator Principles and specific industry norms that reflect the highest ESG standards. Moreover, it’s a fact that as much capital is being channelled towards building incremental production capacity as towards transforming production processes in order to reduce their carbon footprints. We believe that this trend will accelerate for good reason: green minerals and industrial products increasingly attract a market premium, which incentivises more research and development, as well as investment in optimising production. This premium is already visible for commodities such as steel. While steel production remains a material emitter of “hard-to-abate” CO2 emissions, there are now several new projects backed by very large capital commitments that aim either to capture CO2 emissions, or even to avoid them altogether by using green hydrogen rather than carbon to reduce iron oxides. Indeed, we are supporting the steel industry’s decarbonisation, as co-leaders of the Sustainable Steel Principles, designed as a practical framework for reaching our Net Zero Banking Alliance objectives. We are also advising H2 Green Steel, which aims to make 5 million tonnes annually by 2030.


Christophe Roux Regional Head of Mining, Metals and Industries Finance, EMEA Societe Generale