Overview

As momentum increases toward achieving net zero, one aspect of the commitment to fight climate change and reduce carbon emissions that has attracted 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.
Structuring the financing of debt and raising of capital, 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 IRA regulations and other legislative developments around the world.

See our interactive PDF on Critical Minerals and its role in the Energy Transition

Experience

Representative critical minerals experience involving Lithium, Nickel and Cobalt.

Eramet and a leading European multinational chemicals producer on their planned investment in a US$2.5 billion high pressure acid leach (HPAL) nickel processing plant to be built by Tsingshan of China in the Weda Bay Industrial Park, Indonesia.
Cornish Lithium plc on a landmark £53.6 million (US$67 million) initial investment made by a group of leading institutional investors, including the UK Infrastructure Bank (in its first direct equity investment), the US-based Energy & Minerals Group (EMG) and TechMet (Cornish Lithium's largest institutional investor). The funding package is intended to accelerate the company’s efforts to generate a supply of battery grade lithium compounds in the UK.
General Motors Co. in an investment with Lithium Americas to develop the Thacker Pass mine in Nevada, which is the largest known source of lithium in the US and the third largest in the world.
LSC Lithium B.V. in connection with the sale of all of the outstanding shares of Lithea Inc., the owner of the Pozuelos-Pastos Grandes lithium mining properties located in the Province of Salta, Argentina, to GFL International Co., Ltd., a subsidiary of Ganfeng Lithium Co. Ltd., for a total consideration of US$962 million.
A major Japanese general trading conglomerate in its potential investment in the Sal de Vida Lithium Project (Catamarca/Argentina), and its potential investment in the Rincon Lithium Project (Salta/Argentina) prior to Rio Tinto’s acquisition of Rincon Mining in December 2021.
One of the largest Japanese trading companies in its minority investment in a US based industry leader in the recycle and reuse of scrap and end-of-life lithium-ion batteries and certain related agreements.
An African Development Financial Institution on its role as mandated lead arranger, and various other lenders, on a syndicated US$600 million copper and cobalt development financing facility for Trafigura. The facility will assist the development of cobalt and copper mines in the Democratic Republic of Congo (DRC), a region which contains some of the largest reserves of minerals that are required to catalyse the global energy transition towards a net-zero world.
Lenders in the refinancing and upsizing of Anglo Pacific Group PLC's existing revolving credit facility. Anglo Pacific Group PLC will use the facility to acquire a holding company that owns a 70 per cent net interest in a cobalt stream from Vale SA's Voisey's Bay nickel-cobalt-copper mine in Newfoundland.
The Bank of Nova Scotia as administrative agent in the financing and construction of Lundin’s Eagle Mine (nickel and copper) in the Upper Peninsula in Michigan and acted as local US counsel in connection with several follow on financings.
Lenders, including Finnvera, on the financing of the Kevitsa nickel mine in Finland.
Lenders on a senior debt facility for the development, construction costs and working capital for the Munali nickel mine in Zambia.
African Eagle Resources in the negotiation of project documentation for the Dutwa nickel project in Tanzania.
Lenders on the project financing of Baja Mining Corp for the construction and development of the Boleo copper-cobalt-zinc-manganese project located in Baja California Sur, Mexico. We also advised the lenders on the complex successful restructuring of the project financing arrangements.