The combined market value of energy transition minerals is projected to reach US$770 billion by 2040, yet most will be captured outside the producing countries.
The International Energy Agency (IEA) projects that the value of copper, lithium, nickel, cobalt, graphite, and rare earths will more than double under its net zero scenario, climbing from about US$325 billion today to US$770 billion in 2040. That growth, however, is unevenly distributed across the value chain.
The IEA’s latest outlook shows the average market share of the top three refining nations rose from about 82 percent in 2020 to 86 percent in 2024. China accounted for almost all supply growth in cobalt, graphite, and rare earths, while Indonesia absorbed 91 percent of nickel refining growth, much of it through Chinese owned operators.
The pattern reveals a structural challenge for resource rich host countries. Mining fiscal regimes typically tax at the mine gate, an architecture suited to bulk commodities like iron ore but poorly aligned with critical minerals whose economic value is realised three or four steps downstream. Refining, cathode production, battery cells, and finished electric vehicles each multiply the value of the original ore, often in jurisdictions far from where it was extracted.
Producing countries have responded with different fiscal models. Chile’s 2023 Mining Royalty Act, applicable from January 2024, introduced a two component structure for copper. A 1 percent ad valorem charge applies to annual sales for mines producing more than 50,000 metric tons of fine copper, alongside a progressive rate of 8 to 26 percent on operating margins. The combined tax burden is capped at 46.5 percent of pre tax earnings. Lithium, however, is explicitly exempt from the new royalty, a notable gap for the country holding the world’s largest lithium reserves.
Bolivia has structured its lithium regime around state ownership through Yacimientos de Litio Bolivianos (YLB), which partners with foreign firms while retaining a majority profit share. The model maximises state revenue on paper, but has been associated with slower foreign investment and limited technology transfer.
Kazakhstan applies a third approach to uranium, using a graduated Mineral Extraction Tax that scales with both production volume and price. Mongolia attempted a windfall profits tax on copper and gold in 2006 but repealed it as commodity prices fell, illustrating the durability problem that price linked instruments can face.
What the three frameworks share is a common constraint. Each taxes what it can directly control, while the largest share of value created downstream accrues to other jurisdictions and entities. Designs that follow value rather than volume, including progressive royalties tied to downstream product prices, mandatory in country processing, and stronger transfer pricing oversight, are increasingly cited in the fiscal design literature as the next frontier.
The institutional gap is the harder problem. Transfer pricing risks, where multinationals structure transactions between related entities to shift taxable income offshore, are documented in detail in a 2017 World Bank reference work on transfer pricing in African mining. Closing the value capture gap will require not only new instruments, but stronger capacity within host country tax administrations to design, negotiate, and enforce them.
Africa, which holds roughly 30 percent of the world’s critical mineral reserves and a far smaller share of its refining capacity, remains among the regions most exposed to the gap.
