In the first article in this series, I divided natural resources into four categories:
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- Subsurface energy resources – oil, natural gas, coal, radioactive energy minerals and geothermal heat
- Other subsurface resources – minerals (critical and non-critical)
- Water and land resources – oceans, lakes, and land
- Resources above ground – solar and wind energy
Having examined the first group to start the week (Part 1 – subsurface energy resources), my focus shifts to #2: other subsurface natural resources. As done previously, I will consider resources that are generally buried deep underground – hundreds or thousands of metres – not near-surface resources such as groundwater, building materials, and soils.
Other subsurface natural resources
What is there in the deep subsurface that humanity values and needs, other than energy resources?
Primarily minerals, which are defined as “naturally occurring inorganic elements or compounds having characteristic chemical composition, crystal form, and physical properties.” There are many different types of minerals, dominated volumetrically by the building blocks of common rocks, such as quartz (silica), clay minerals, calcite, dolomite, and feldspars.
But resource value lies in those minerals that contain specific elements and compounds we need to make things – primarily metallic ores, which contain important metals including iron, copper, nickel, and aluminum. Salts are important as well – minerals that have precipitated out of solution in the distant past to form subsurface salt beds up to hundreds of metres thick. Halite (sodium chloride, aka table salt) and potash (a group of salts containing potassium, a key component of fertilizers) are important examples.
We generally find minerals in solid form, but they can also be dissolved in brines occurring naturally in the pore spaces of sedimentary rocks. Iodine and bromine have been extracted from brines for a long time, and lithium-bearing brines have attracted a lot of attention lately, as I will discuss below.
Speaking of water – there is actually a huge amount of water in the deep subsurface, but it contains so many dissolved minerals that it cannot be used for domestic or agricultural applications. Potable (fresh) water is an incredibly valuable natural resource that exists only at the surface or in the shallow subsurface, so I will address it in the next article.
Critical minerals
Every mineral we mine is critical to some (or many) applications. The big ones, such as ores of iron, copper, and aluminum are foundational to almost everything we make and consume. As we develop new high-technology industries demanding more and more different materials, however, policy-makers have identified critical minerals focused on relatively new applications.
The Government of Canada has designated 34 critical minerals, shown in Figure 1. Their official definition:
A critical mineral must meet both of the following criteria:
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- the supply chain is threatened
- there is a reasonable chance of the mineral being produced by Canada
It must also meet one of the following criteria:
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- be essential to Canada’s economic or national security
- be required for the national transition to a sustainable low-carbon and digital economy
- position Canada as a sustainable and strategic partner within global supply chains
A couple of things to note – first, the “critical minerals” list is primarily a list of critical elements. Copper is on the list, not copper-bearing minerals such as malachite, bornite, or chalcopyrite. There are a few minerals – fluorspar, graphite, “high-purity” iron ore, and a couple of groups of elements – platinum metals, and rare earth elements.
Second, government policy (“national transition to a sustainable low-carbon and digital economy”) is a driver of the critical mineral designation, not just actual demand for the product.
Several countries publish critical minerals lists, and most are pretty similar. Designation as a critical mineral generally comes with tax breaks and incentives to encourage domestic development, with the goal of reducing dependence on other countries.
Figure 1 – Canada’s critical minerals list.
All these minerals/elements were produced before policy-makers thought of critical minerals, but emerging energy technologies are driving massive demand increases for some. For example:
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- Copper – widespread electrification, particularly electric vehicles
- Lithium, cobalt, nickel, graphite – battery applications
- Rare earth elements – permanent magnets used in electronics, electric vehicles (EVs), and wind turbines
Natural resources have limits
As we saw for energy resources, there are limits to the amount of mineral resources we can extract from the subsurface. The absolute amounts present may be enormous compared to foreseeable demand – for example, lithium is the 25th most abundant element in the earth’s crust, meaning there are billions of tons of it beneath our feet. But only a tiny fraction of those in-place lithium resources can be counted as economically accessible reserves – found in minerals such as spodumene and lepidolite associated with specific igneous rocks, or dissolved in highly saline brines beneath salt flats in the high Andes.
As we saw with subsurface energy resources, reserves volumes increase with price and advancing extraction technologies that make a larger percentage of the in-place resource economically accessible. But very specific geological conditions are required to concentrate minerals sufficiently to justify building a mine.
Geologists have been scouring the earth for hundreds of years – observing, measuring, and applying increasingly sophisticated tools to map and characterize accumulations of specific minerals they hope can be big and concentrated enough to develop into a mine. It is painstaking work – I spent one summer as a junior field geologist on the Canadian Shield in northern Ontario hunting for copper/lead/zinc mineralization. One of my main jobs was to peel the moss and undergrowth off rock outcrops so that we could observe the rock types and enter information on the maps we spent the whole summer building. I doubt that any of that work ever led to a discovery – most exploration programs do not.
The point is, all subsurface natural resources – energy, minerals, salts, and brines – are found only where conditions are right. Japan will never produce oil and gas onshore, because it does not have the appropriate geology. Ireland will never produce potash because thick salts have not accumulated there. Texas will never be a big metals producer because the right types of rocks are not close to the surface. It does not matter how many new ideas or how much new tech you bring to the table; you cannot produce what is not there.
And when someone claims to have found a new technology that will save humanity, save the climate, or save the earth (take your choice) – the promises fall flat if we cannot supply the resources required.
Turning resources into reserves
Even after discovering an exciting new mineral deposit, it takes a lot of time and money to get to production. Usually the property has to be appraised with intensive drilling programs to identify the deposit size, concentrations, and potential reserves. The mine has to be designed, engineered, approved and actually built before the resources become producing reserves – a process than can take 15 years or longer.
For those critical minerals that require us to double or triple production to meet technology demands, developing new reserves in a hurry is incredibly challenging. In the case of lithium, for example, there are not enough conventional hard-rock mineral prospects out there to support rapid production acceleration. Meanwhile, people are pushing back against the environmental damage caused by the other major lithium source – building big evaporation ponds on massive salt flats to precipitate lithium out of solution.
So entrepreneurial miners are developing a new method – pumping lithium-rich brines from deep oilfield reservoirs to the surface, quickly extracting the lithium using adsorption chemistry, and re-injecting brine into the deep reservoir from which it came. It is a brilliant concept being worked on by expert teams backed by big dollars. They have been at it for a decade now, and hope to see commercial production in the next couple of years.
Will more in-place lithium resources be converted to economic reserves? That depends not only on technological success, but on markets and pricing.
Markets and pricing
If we want to rapidly accelerate critical mineral production, whether by expanding existing mines and methods or developing new techniques such as the lithium brine miners, lots of money needs to be invested. Investors will invest only if they see a good chance of profiting and relatively little chance of losing their money.
How do potential investors assess the risks in order to calculate the chances of profit or loss? Lots of factors, led by the experience and credibility of the team wanting to build the new mine or extraction facility. But markets and pricing are also key – you cannot make money if you cannot sell your product at a good price. So investors look at current prices, market history, and, most importantly, market forecasts – because they will not actually be in the market until their new project is built and on stream.
Let’s look at an example based on lithium markets. Figure 2 shows lithium pricing (measured as industry standard lithium carbonate equivalent, or LCE) from 2017 through 2030, as of end 2024. Investors putting money into new projects such as lithium brine extraction in the late 20-teens were excited by the early stages of growing battery markets. They were probably disappointed for a few years, but ecstatic with skyrocketing prices in 2020 through 2022 as EVs came on the scene in a big way. Lots of new investors jumped in at this point, seeing nothing but upside as government policy and market demand showed years of EV (and battery) sales growth ahead. Many new lithium explorers entered the game, and huge tracts of mineral rights were leased up for lithium in sedimentary basins across North America.
In 2023, however, the bottom fell out of the market as lithium demand faltered, people started thinking about alternative battery chemistries, and doubts about EV market growth began to surface. Lithium prices at the end of 2024 were only about $10,000 per metric ton, at a time when many proposed lithium projects were facing production costs
Figure 2 – Lithium market pricing as of end 2024, in U.S. dollars per tonne lithium carbonate equivalent (LCE). Prices for 2025 through 2030 range from optimistic (P10) through conservative (P90) cases. GLJ’s Lithium Price Forecast: Insights for a Dynamic Market
two or three times that. Many junior lithium explorers went out of business, or are lying dormant hoping for a price rebound. Even established producers are having trouble finding new investors, and are pointing at the optimistic (P10) price forecast case in Figure 2 instead of the slow and steady (P90) case – which is a range between less than $15,000 and $60,000 per tonne.
What is the moral of this story? Even when almost everyone agrees that humanity will demand much more lithium in the future to support electrification and battery growth, it is challenging to actually grow production rapidly, particularly when investors perceive (correctly) a lot of risk in new technologies and market pricing.
There is another (big) step
When we talked about subsurface energy resources, accessing the resource was most of the story. Oil, coal, and natural gas can be shipped almost anywhere, and the limited amount of processing required to create final products can be done in refineries around the globe.
For (critical) minerals, however, there is much more work to do once the resource has been extracted. Specialized processing, often very energy- and chemistry-intensive, is required to transform an ore containing only a small percentage of copper or lithium to the final product. And that processing is in many cases concentrated in places that may or may not be the places where the resource is found.
Figure 3 – Mining and processing control of major EV battery components. Lithium resources are concentrated in Australia, nickel in Indonesia, cobalt in the Democratic Republic of the Congo, and graphite in China. But China has an outsized role in processing resources to finished products for all components. Global Critical Minerals Outlook 2024
Figure 3 shows that key materials for battery manufacture come from different countries, but China controls processing – and therefore markets. There are similar stories for other critical minerals, making today’s global supply chains increasingly fraught.
I concluded my first article on subsurface energy resources by saying they are humanity’s most critical/geopolitical issue. Other subsurface resources are not far behind.
