Electrification is creating a mineral scarcity problem that supply alone cannot solve quickly

Demand is structural, not cyclical

Janus Henderson describes a structural supply-demand imbalance for critical minerals, driven by accelerating electrification. Demand for key critical minerals has risen by close to 10 percent a year in recent years, and energy sector applications accounted for 75 percent of critical mineral demand growth in 2025. Copper consumption has increased faster than real global GDP since 2011, and global battery demand grew by more than 35 percent in 2025 to exceed 1.5 terawatt-hours. Batteries account for 88 percent of global lithium use, a concentration that ties lithium demand directly to the pace of electrification. m:…3680

Power demand is the link back to the AI and electrification story in other research notes. UBS says structural demand for power and resources remains in place due to AI and electrification needs, and Bank of America expects total data center spending to reach 2.1 trillion dollars by 2028. Janus Henderson adds that global copper demand is projected to rise by around seven million tonnes by 2040 under the International Energy Agency Stated Policies Scenario. The point is not a single commodity spike, but a broad increase in the physical inputs needed for power, transport and computing, arriving at the same time. m:…4371 m:…6485 m:…3680

Supply cannot keep pace on current projects

The supply side is where the scarcity argument hardens. Janus Henderson says mine permitting timelines have lengthened and project costs have risen, and that supply from existing and announced mining projects could fall around 25 percent short of primary copper requirements in 2035. SX-EW copper production accounts for around one-fifth of global copper production and is plateauing, which removes one easy source of incremental supply. A concrete delay illustrates the point: Kazatomprom delayed its sulphuric acid project commissioning from early 2027 to 2028, a small shift that matters when supply chains are already tight. m:…3680

Geography concentrates the risk further. China accounted for 70 percent of critical mineral processing and refining in 2025, while Australia, Chile and the Democratic Republic of Congo provided over 75 percent of refined supply growth between 2023 and 2025. Kazakhstan, Canada and Namibia represented over 72 percent of global uranium mine production in 2024, with 417 nuclear reactors in operation and 78 under construction as of September 20, 2026. Lithium prices doubled in 2026 from previous cyclical lows, according to Janus Henderson, a reminder that scarcity reprices quickly when demand growth meets constrained supply. m:…3680

Insurance is soft, but not indiscriminate

Willis Towers Watson describes a mining insurance market that is currently in a soft cycle, creating opportunities for buyers, with insurers reporting profitability ratios in the high-70s to low-80s. Mining companies in North America are achieving double-digit rate reductions for well-performing risks, and the first of January treaty reinsurance renewal season is expected to be favorable. That softness does not mean insurers have stopped discriminating. Willis Towers Watson says insurers remain focused on risk quality, engineering standards, tailings governance and business interruption assumptions, and that buyers should balance insurer panels with long-term partners and selective new capacity. m:…1007

The selectivity is visible in energy-linked risks. Willis Towers Watson says coal risks in North America face constrained insurance capacity, even as the broader mining market stays soft, and that geopolitical uncertainty in Asia is intensifying scrutiny of energy costs and supply chains. Bank of America adds a price signal from Europe: high energy prices are making coal the cheapest fuel again, with natural gas at 90 euros per megawatt hour versus 25 euros for coal. A professional reading these notes together sees two markets moving in opposite directions for related reasons: physical mineral scarcity is rising, while insurance capacity for well-run mining risks remains plentiful, except where energy transition and geopolitical scrutiny narrow it. m:…1007 m:…6485

What to watch

The question for the next year is whether new supply, recycling or substitution closes the gap Janus Henderson identifies, or whether permitting delays and rising project costs keep the 2035 copper shortfall in place. The insurance market offers a parallel signal: if underwriting stays disciplined on tailings, engineering and business interruption, capacity will remain available to good risks even in a soft cycle. If those standards slip to chase premium, the next hard market will arrive faster. For now, the evidence points to a market where demand is structural, supply is slow, processing is concentrated, and risk transfer is available to those who can demonstrate quality. m:…3680 m:…1007