The global market for critical minerals—including copper, lithium, aluminium and rare earth elements—is entering what Aberdeen describes as a multi-decade structural bull market. These resources underpin the energy transition, electrification and the digital economy, creating a powerful long-term demand story.

Structural drivers of demand

Demand is underpinned by a significant transition toward renewable energy, electrification and grid infrastructure designed “to improve energy security and resilience,” said Rosa Leo, equity investment specialist at Aberdeen. To achieve global net-zero targets by 2050, mineral demand is projected to increase by 600%.

All green technologies are highly mineral-dependent; for instance, solar power, wind turbines, and electric vehicles (EVs) require vast quantities of copper and lithium. In China, EV sales reached over 60% of total car sales in March 2026, illustrating the speed of this transition. “Nothing drives sales of electric vehicles more than high petrol prices,” according to Iain Pyle, senior investment director at Aberdeen.

Beyond the green transition, the rise of AI and robotics is a potent new driver. The build-out of AI infrastructure is particularly metal-intensive because it requires not only data centres but also extensive transmission, distribution and cooling infrastructure.

Their rapid expansion is also increasing pressure on electricity grids. Global growth in energy demand in 2025 was largely met from renewable sources (see Chart 1). “And electricity is mineral intensive,” Leo added.

In Europe, data centres currently represent roughly 2% of total energy consumption, a figure expected to quadruple over the next decade. Consequently, by 2050, the demand for copper is forecast to rise by 140%, while the demand for lithium could grow fourfold (see Chart 2). Demand for these minerals is broad-based, with only the darker bars attributable to clean-energy demand.

The structural supply shortfall

While demand continues to accelerate, supply growth remains far less responsive, creating the imbalance at the centre of Aberdeen's investment case. Despite increased exploration spending (see Chart 3, grey line), the industry has struggled to discover large-scale, economically viable copper deposits (see Chart 3, orange bars).

Furthermore, the lead time from initial discovery to first production for a new mine is approximately 17 to 19 years. Leo suggested that new supply being found today will not reach the market until the 2040s.

The marginal cost of production is also rising. This is driven by persistent cost inflation, declining ore grades as mines age, and the necessity of digging deeper mines. As a result, even if demand is met, it will be at a significantly higher price point (see Chart 4). Supply has historically tracked demand in the copper market, but Leo stressed that the two are now diverging into a long-term structural deficit.

Geopolitics and security of supply

The geographical concentration of these resources has made “security of supply” a primary concern for Western nations. Leo noted that China currently dominates the market, accounting for approximately 60% of all rare earth element mining and an even higher percentage of refining and permanent magnet production. This reliance on external sources has prompted industrial policy responses such as the EU Critical Raw Materials Act to incentivise reshoring and the diversification of supply chains.

Geopolitical tensions, such as the conflict in the Middle East, have immediate impacts on the metals market. Approximately 20% of the world’s aluminium supply originates in the Middle East. The region's importance becomes even clearer when Chinese production is excluded, as the Middle East then accounts for more than half of global aluminium supply.

Pyle also highlighted emerging secondary supply-chain risks. He noted that many copper miners rely on sulfuric acid for processing, much of which is sourced from the Middle East, creating a contagion effect that limits copper production in regions as far away as Australia.

Technological shifts and alternative metals

While technology moves fast, the market has not yet seen effective large-scale substitution for major industrial metals, observed Pyle. In data centres, copper remains the preferred material for wiring due to its reliability and cost-effectiveness compared to fibre optics.

In the battery sector, while sodium-based battery technologies are emerging as viable alternatives for certain vehicle categories, market leaders continue to invest heavily in R&D to maintain dominance. “We're not tied to investing in lithium,” said Pyle.

Other metals are gaining traction due to energy security needs. Nuclear power is seeing a resurgence as a localized, reliable, low-carbon energy source, supporting a high-conviction investment case for uranium (see Chart 5). Additionally, silver is viewed as having significant potential due to its industrial applications, though finding high-quality, liquid producers remains a challenge.

Market consolidation

Mining management teams are increasingly focused on sensible value creation rather than overpaying for assets, explained Pyle. This has led to sector consolidation, such as the potential merger between Anglo American and Teck, which aims to create a global-scale copper miner with more efficient operations in South America. Such deals are illustrative of a market where it is often more efficient to buy existing assets than to face the 19-year challenge of building new ones.

Pyle: “High-conviction active stock pickers”

On the abrdn SICAV I - Future Minerals fund, the focus is on “strong balance sheet companies in a cyclical sector enabling them to invest counter-cyclically, protect returns and avoid dilution in down periods,” said Pyle. He explained that they invest across the metals value chain, from mining suppliers to metal-intensive manufacturers.

With basic materials accounting for only 3.7% of the MSCI ACWI, Leo argued that the fund can enhance portfolio diversification, reflected in its relatively low correlation of around 0.60 with traditional equity indices. She noted, however, that standard deviation (a volatility indicator) ran at 26 for the fund against 15 for the MSCI ACWI.

The fund has returned 59.29% cumulatively since inception (16 May 2024), compared with 40.79% for the MSCI ACWI, “far from being a perfect comparator given the fund's specialist focus,” he said. While the fund has outperformed since launch, its short track record makes it difficult to distinguish manager skill from favourable market conditions.

For Aberdeen, the investment case ultimately rests on a simple premise: demand for critical minerals is accelerating across multiple sectors, while supply remains constrained by geology, permitting timelines and geopolitics.