The ever-growing role of critical minerals within the global economy is increasing government demand for secure, reliable, and sustainable supply. As a result, critical minerals policy is now a decisive factor in determining which mining, metals, and minerals projects get financed and permitted, and the basis and terms on which they are insured.
Engaging intelligently within the framework of governmental and other strategies can create strategic advantage and help access state support – but only if the inherent risks are understood and mitigated against.
The race for critical minerals
Recent years have seen an acceleration in demand for what have become known as ‘critical minerals’, driven by a series of overlapping state objectives. Minerals and metals such as lithium, cobalt, nickel, copper, and rare earth elements are now crucial for the energy transition, and provide the foundation for new technologies including electric vehicles, solar panels, AI and battery storage. In parallel, heightened geopolitical tension is fuelling investment in defence and security; critical minerals and metals are essential components in the development of modern defence technology.
Demand is already high, but is forecast to increase substantially in the decades ahead. According to the International Energy Agency’s Global Critical Minerals Outlook 2025 (opens a new window), demand for lithium will grow fivefold by 2040, double for graphite and nickel, increase by more than 50% for cobalt and rare earths, and by more than 30% for copper (which is the critical mineral with the largest established market as of today.)
In response to the growing role of critical minerals, and with extraction and processing concentrated in just a few countries (China is the leading refiner for 19 out of 20 important strategic minerals), governments are moving to create their own secure and sustainable supplies. In practice, this involves moving from a ‘hands-off’ approach to an active industrial strategy, including the EU’s European Critical Raw Materials Act (CRMA) (opens a new window), the UK’s Vision 2035: Critical Minerals Strategy (opens a new window), and Australia’s Critical Minerals Strategy 2023-2030 (opens a new window).
While these strategies are adapted for local contexts (take, for instance, the Australian Government’s emphasis on First Nation involvement), they coalesce around common objectives. These include developing local critical mineral processing capabilities by investing in the prerequisite infrastructure, reducing dependency for imports on single-country suppliers, while securing international partnerships, and accelerating growth and job creation across core industries.
Why more policy brings greater risk
In practice, the strategies above reflect government efforts to de-risk their energy transition and defence supply chains by ‘onshoring’ a portion of upstream and midstream mineral exposure. This is welcome news for companies operating within the critical mining, metals, and minerals sector – indicative of greater investment, subsidies, and incentives for business.
The UK’s Critical Goods Export Development Guarantee (opens a new window), announced in November 2025, is one such example. The Guarantee (which covers beryllium, chromium, copper and uranium) enables UK-based suppliers of critical mineral products to access high-value finance, for the purposes of securing long-term contracts, or to invest in domestic capability.
But increasing government intervention in the critical minerals sector also introduces new risks that must be managed with careful planning, if companies are to avoid potential financial, legal, and reputational consequences.
These risks can be broken down into five broad categories:
Construction and operational challenges – As development timelines accelerate, companies are deploying new or rapidly scaled technologies that often prototypical, in that they lack operational precedents. This inherently brings greater uncertainty around performance, delivery and reliability, driving elevated exposures that threaten to interrupt project execution. This is further complicated by the fully integrated nature of many strategic projects, resulting in complex engineering interfaces, demanding commissioning sequences, and heightened waste management obligations.
ESG, community and human rights – Projects are expected to meet a growing number of stringent environmental, social, and governance standards – albeit with less time to design meaningful mitigation measures or demonstrate compliance. This increases the likelihood of permitting delays, stoppages, or cost escalation driven by environmental or social litigation, especially where the impacts on biodiversity, water use, land rights, or community consultation processes are contested. Poor management and lack of foresight often lead to protest activity, threaten social licence to operate, and limit access to capital – all of which can undermine project viability and financing.
Regulatory requirements and permitting – Evolving permitting regimes for critical minerals projects are becoming more structured and prescriptive, with sharper expectations on the quality, completeness and defensibility of environmental, technical and social assessments. Developers face increasingly detailed disclosure obligations, formalised consultation requirements and closer coordination between multiple agencies. Any gaps or inconsistencies in supporting information can trigger requests for additional studies, expose approvals to legal challenge, or delay permitting. Specific local regulation may also introduce unexpected obstacles.
Political, trade, and supply-chain risks – Global competition for critical minerals is driving more assertive use of export controls, tariffs, strategic stockpiling, and other policy tools. These interventions can rapidly alter market access, pricing structures, and the viability of cross border supply chains. Abrupt changes in trade policy, reshoring of processing capacity, or restrictions on foreign investment can also create heightened geopolitical exposure. Together, these dynamics create volatility across procurement, logistics, and offtake arrangements, with potential contractual, financial and operational consequences.
People and talent – Critical minerals projects are inherently high-risk environments, but accelerated timelines can intensify pressures on workforce planning and safety performance. Developers also face persistent shortages of specialised skills, which can constrain delivery and elevate operational risk. In many jurisdictions, developers may struggle with limited availability of on‑site medical facilities, emergency response capability, or broader welfare infrastructure, deepening the need for enhanced medical cover and more robust social support measures.
As these exposures show, the operating environment for critical minerals projects is becoming more complex even as policy support expands. This makes it essential for companies to understand where their most material vulnerabilities lie.
How risk management and insurance protect against loss
Effective risk management associated with critical minerals projects requires a co-ordinated approach, aligning technical, legal, operational, and financial controls. This must begin well before construction begins– embedding risk mitigation into design, contracts, stakeholder engagement, programme structuring, choice of contractors and OEM’s, and financing – and continue throughout the lifetime of the project into the operational phase.
Insurance, or risk transfer, complements risk mitigation activities by safeguarding projects against the impact of losses where they occur. Ultimately, this ensures projects are better positioned to secure approvals, attract capital, and maintain resilience as the market evolves. Insurance buyers can also take advantage of additional services to further support their risk mitigation efforts, helping to strengthen their overall risk management framework:
Early-stage advice – Engaging risk and insurance advisers before making final investment decisions can materially improve project outcomes. Early alignment of design, contracting strategy, and schedule with insurability helps avoid costly redesigns and supports smoother permitting and financing. This includes ensuring tailings storage facilities meet international best practice, addressing flood, water management and other environmental exposures, and building sufficient redundancy for critical equipment and spare parts (girth gears for example). Early intervention also enables a clear contractual allocation of risk between owners, contractors and sub-contractors, and suppliers, reducing the likelihood of disputes later in the project lifecycle. It is also important to conduct an insurance gap analysis to agree which parties are responsible for procuring the various classes of insurance and agreeing the requirements of Lenders and their Insurance Advisers (LIA).
ESG and stakeholder risk management – As policy expectations solidify, it is becoming crucial to integrate ESG risk assessments into project frameworks. A structured approach to risk will help to demonstrate compliance to regulators, financiers and communities, and reduces the likelihood of litigation or project delays. Coordinating with local communities can also help to lower the likelihood of protest, associated liabilities, or reputational loss, while preserving social licence to operate. Insurances covering sudden or gradual environmental impairment can assist with permitting.
Data analytics and risk engineering – Various advanced modelling tools can help to optimise risk selection, design, and loss prevention, including natural hazard analysis, equipment-failure modelling, and supply chain stress testing. These tools can help to quantify exposures, validate design assumptions, and improve underwriting confidence. Local risks can be benchmarked against global data to establish appropriate limit and retention strategies.
Integrated programme design – Critical mineral developers face a breadth of exposures, including delays, liability to employees, third party, product and environmental liabilities, property and business interruption/delay in start-up, transport risks, political violence, cyber threats, directors’ and officers’ risks, political risk, and trade credit. A multiline and long-term insurance strategy helps reduce coverage gaps and creates greater certainty over cost and capacity available in the insurance market. By placing these programmes through global markets and specialty facilities already active in large mining metals and energy transition risks, developers can access deeper capacity and innovative insurance programme structures, such as parametric natural hazard covers or ESG-linked wording enhancements.
Financing support – Robust risk management and insurance arrangements are increasingly important, helping developers to secure access to capital and demonstrate alignment with policy aims around resilient, sustainable, and diversified critical mineral supply chains. Advisers can help developers articulate their risk mitigation strategy to lenders, export credit agencies, and public authorities. Clear evidence of strong governance and comprehensive coverage can strengthen creditworthiness and accelerate financing decisions.
Talk to us
Lockton’s Mining, Metals, and Minerals Practice (opens a new window) works with clients across the globe to help them navigate a complex risk environment.
For more information about mining, metals, and minerals risk and insurance solutions supporting an evolving and greener future, please contact a member of our team.