Strategic context

Policy fragmentation and climate action

In 2024, we continued to see strong government intervention in the market and an increasingly fragmented policy landscape as countries competed to strengthen their position in key sectors. In the 2 years since the US Inflation Reduction Act was signed, tax credits have been announced for a range of sectors, and hundreds of billions of dollars of additional investments have been announced by US and foreign companies. Other regions have continued to respond with legislation designed to accelerate decarbonisation, bolster local manufacturing and enhance supply security (such as the recently announced EU Net Zero Industry Act).

While these initiatives have helped support the energy transition in some ways, such as by increasing electric vehicle (EV) production capacity and renewable projects, the fragmented climate policy landscape and current economic uncertainty have hindered global momentum on decarbonisation. Global CO₂ emissions are expected to increase moderately in 2024, in line with the past 2 years. This is particularly apparent for sectors that require significant capital to switch to fossil-fuel alternatives. In 2024, we have also seen policy support, particularly in the US, continue to drift away from climate action and towards sectors deemed critical to national security, such as defence, communications and computing.

Western reindustrialisation

To date, Western reindustrialisation in processing (smelting and refining) and manufacturing has been limited due to strong low-cost international competition and the widening capital intensity gap with China, where participants continue to hone their project development and technological capabilities. To address these challenges, Western governments have adopted increasingly protectionist approaches to support regional competitiveness and reduce import dependencies for strategic sectors.  

In 2024, the US announced tariff increases on a range of Chinese goods, including semiconductors and solar cells (tariffs increased from 25% to 50%), EV batteries (from 7.5% to 25%) and EVs (from 25% to 100%). The EU also announced an increase in tariffs on imported EVs from a 10% base rate to up to 45.3% for some Chinese-built EVs. Importantly, both the US and EU have increased tariff and safeguard measures to ensure their remaining processing base in steel and aluminium smelting is preserved. This is vital in reducing raw material supply bottleneck risks. 

Access to materials

In 2024, we also saw continued heightened fears around raw material supply disruptions, triggered by escalating conflicts and retaliatory trade measures (ie increased tariffs or export quotas on critical minerals). In response, governments and downstream participants in key demand jurisdictions (the US, EU, China, Japan and South Korea) have shown an appetite to partner with metals and mining companies to secure new sources of supply. We have seen 3 key approaches:

• Reshoring of mining: Governments have increased subsidy availability and state support for domestic mining projects to limit trade exposure risks. However, attempts to reshore mining have been limited due to resource quality and capital constraints and prevailing permitting challenges, particularly in developed economies. 
• New projects in the “Global South”: Governments have increased efforts to forge new bilateral and multi-lateral partnerships, to help access high-quality resources in developing economies. This trend is driving strong competition for high-quality projects and fuelling demand for metals and mining partners that can deliver projects while maintaining regionally aligned ESG priorities.
• Recycling: For governments and original equipment manufacturers, recycling provides a potentially low capital, low risk, and more socially acceptable pathway to secure additional supply while continuing to support the global decarbonisation agenda. While China has continued to build scrap-processing capacity and capabilities (including through the recently established China Resources Recycling Group), deindustrialisation, smelter closures and inadequate collection schemes in the West have weighed on progress. To address this, several governments initiated policies and strategies in 2024, including Germany’s National Circular Economy Strategy and the US’s Battery and Critical Mineral Recycling Grant Program.