Guest article by Phesheya Nxumalo and Patrick Schroeder l Chatham House
The energy transition is bringing heightened demand for critical minerals and with it new developments in where and how minerals will be sourced. New trends in mineral exploration and production will have implications for water resources and water use. In this piece, we remark on three trends in the industry– first, efforts to onshore in western countries for greater supply chain control, second, fossil-fuel export dependent countries diversifying into mining, and third, the current controversies around deep sea mining.
The West turning inward
In March 2025, the European Commission announced 47 domestic strategic projects (and another 13 outside the EU in June 2025) under the Critical Raw Materials Act (CRMA). The Commission aims to build up domestic supply of critical raw materials like lithium, cobalt, nickel, manganese, and graphite. These projects are located across 13 EU member states and will focus on extraction, processing, and recycling. Strategic projects will receive fast-tracked and streamlined permitting benefits and financing. As a result, permitting processes that might have taken up to ten years, now cannot exceed 27 months for projects involving extraction and 15 months for projects involving processing or recycling.
Given stricter environmental regulation and enforcement within EU jurisdictions, new European mining and processing could have a lower water footprint than in many of the current centres of production. Under the CRMA, strategic projects must comply with required environmental assessments under EU environmental law and therefore the EIA Directive, the Water Framework Directive, and others need to be carried out before a project can be executed.
The EU strategic projects, however, were announced against the backdrop of new deregulation measures. The European Commission published the Omnibus Package in February 2025 that aims to streamline and simplify the laws meant to hold companies accountable for human rights and environmental standards, in their own operations and throughout their global supply chains. This proposal would weaken European sustainability legislation including the Corporate Sustainability Due Diligence Directive (CSDDD), which would have provided for legal cases – including those involving negative impacts on water quality or access. Critics of the Omnibus package assert that the simplified reporting standards will affect the rigor of environmental reporting by companies.
In a similar arc, the United States is seeking to restore its “mineral dominance” and has framed its ambitions through the logic of energy security. To establish the United States as a leading producer and processor of non-fuel metals, President Trump issued an executive order citing key priorities including job creation, “fuel prosperity”, defence capabilities, and reduced reliance on hostile foreign powers’ mineral production. Trump’s March executive order also sets a directive for federal agencies to fast track domestic mining and minerals projects.
Trump is simultaneously committed to lowering the barriers to entry for new actors and increasing investment for existing ones, through weakened due diligence for the financing of mining projects and a pause on anti-bribery protections. A February 2025 Executive Order paused the Foreign Corrupt Practices Act (FCPA) and Executive Order 14154 ordered the Council on Environmental Quality to rescind all National Environmental Policy Act (NEPA) regulations to prioritise permitting speed and removal of permitting obstacles. There is an obvious push to maximise mineral production at the expense of good governance and environmental safety and protection.
In both cases, mining and processing industries in the EU and US would likely only add to global production and not replace it elsewhere. Demand reduction and sufficiency measures are largely absent from the CRMA and from the American executive orders and will put added pressure on water resources.
Fossil fuel wealth to minerals dominance
Several countries in the Gulf region have been the oil and gas suppliers essential to the current energy system but in a changing global economy built around energy systems which increasingly seek to avoid combustion and emissions, Middle East producers are looking to diversify. Saudi Arabia is taking the lead in these efforts to supply critical minerals through its reserves of precious and critical metals, in the Western Arabian Shield, and through heavy investment in overseas mining operation across several African countries. In its Vision 2030 Economic Diversification Plan, mining is a key priority for which the Kingdom is seeking investment to explore. The government estimates that its mineral wealth sits at approximately $2.5 trillion and hopes to increase mining’s contribution to overall GDP by $58 million by 2030. There has been significant traction so far; Ma’aden, Saudi Arabia’s National Mining Company, entered into a 50/50 joint venture with US Ivanhoe Electric to explore the Precambrian Shield for copper, nickel, cobalt, and lithium. In January, Saudi and the UK signed an agreement to collaborate on mineral resource development. Currently, Ma’aden is considering partnering with one of four firms from either the US, Canada, Australia, or China to form a rare earths processing partnership with facilities to be developed inside the Kingdom.
Saudi Arabia is a water scarce country, it is 90 percent desert, average rainfall is about 59 mm per year, temperatures can reach 55 degrees Celsius and evaporation rates are high. Water scarcity is made worse by overexploitation fuelled by demand from agriculture, population growth, and urbanization. Domestic mining only puts further pressure on limited water resources and even though industrial water use is only 10 percent of total water demand (in 2020) that figure is set to grow. The Saudi National Water Strategy 2030 predicts that demand for water from the mining and industrial sector will grow from 1.4 billion cubic meters in 2016 to nearly 2 billion cubic meters by 2030. The Kingdom, however, is pursuing key sustainability efforts including water recycling, desalination, and tailings and waste management to manage risks to scarce water resources. Coordinated policy initiatives will be the deciding factor in how well water is managed and Saudi Arabia recently approved the National Water Strategy, Water Law, and Mining Investment Law, a series of policies that collaborate to build sustainable water and mining sectors.
Mineral potential of the Deep Sea
Deep sea mining aims to secure mineral deposits found in the ocean floor where significant reserves of copper, cobalt, nickel, zinc, silver, gold, and rare earths can be found in polymetallic nodules. Recent developments in technology have made it feasible to mine the seafloor and some countries, like Japan, Cook Islands, Papua New Guinea, and Norway (although Norway has since suspended their plans) have approved permits and begun exploring deep sea deposits in their Exclusive Economic Zones extending 200 miles from the coast. The ‘real’ potential for deep sea mining is in international waters. The UN’s International Seabed Authority (ISA) regulates international waters and at the time of writing the Draft Exploitation Regulations are under negotiation. Even with these legal and regulatory developments, these instruments do not have the institutional capacity to deal with the world’s fast-growing appetite for deep sea minerals.
Deep sea mining remains highly controversial. Proponents argue that to meet the rising global demand for minerals, exploiting deep sea resources will be necessary. Some suggest there are fewer environmental hazards including deforestation and freshwater pollution. Those in opposition to deep sea mining argue that the environmental impacts are significant. Marine ecosystems are altered when the nodules are physically removed causing changes to the “geochemistry” of the sediment. Deep sea mining also causes noise and light pollution, and in the long term, food disruptions and chemical poisoning. The ocean is already an overburdened ecosystem and deep sea mining threatens the ocean’s carbon cycle, reducing its ability to mitigate global temperature rise. The deep sea is still quite poorly understood, and so are the water risks of deep-sea mineral extraction.
Meeting the global demand for critical minerals has become an economic, political, and geostrategic imperative, however meeting these demand requirements cannot come at the expense of environmental and water resource protection. The three trends presented show that new mining has the potential to exacerbate and create new water risks. Minimising these risks begins with stronger international cooperation on environmental standards, particularly for the mining sector but even across the supply chains of these mineral inputs. Promoting disclosure and transparency at every stage of the supply chain through reporting standards can close the information gap. Closer coordination between the mining sector and water strategies at the national level will create more coherent and responsive policy. Lastly, deploying sustainable strategies to meet demand including circularity and recycling can drive down the need for primary extraction.
Phesheya Nxumalo
Research Associate, Sustainability Accelerator, Environment and Society Centre - Chatham House
Patrick Schroeder
Senior Research Fellow, Environment and Society Centre - Chatham House