Allianz Explores Supply Chain Diversity in Mining

As global supply chains face unprecedented pressure from the energy transition and AI expansion, Allianz examines how mineral extraction bottlenecks could threaten industrial resilience and what strategies could help mitigate supply chain vulnerabilities.

The mining industry is undergoing a fundamental transformation as supply chains across multiple sectors compete for critical minerals.

The convergence of electrification, renewable energy deployment and AI infrastructure development is creating complex supply chain dependencies that could reshape global trade flows for decades to come.

Supply chain strain from competing demands

Supply chains for energy infrastructure and digital technologies are converging on the same raw materials, creating potential conflict points in procurement strategies. The energy sector's shift towards electrified end-use, renewables, storage and expanded grids is placing new demands on mineral supply chains. Simultaneously, AI expansion is driving requirements for data centres and high-performance computing infrastructure.

According to the IEA, lithium demand is expected to increase fivefold by 2040, graphite and nickel will double, cobalt and rare earth elements will increase by approximately 60% and copper will see a 30% increase. Meeting these projections requires coordinated expansion of processing capacity, transport infrastructure and skilled labour pools across the entire supply chain.

The IEA shows demand for global data centre electricity will rise from approximately 415 TWh in 2024 to about 945 TWh in 2030. This infrastructure buildout creates direct competition with EV supply chains for the same materials, increasing the risk of supply chain bottlenecks, project delays and price volatility.

"The green and digital transition won't fail for lack of ambition – but it could stall for lack of materials," says Ludovic Subran, Group Chief Investment Officer at Allianz.

"Our latest report, Mining for the future: Addressing liabilities and unlocking sustainable transition opportunities, looks at mining as both a critical enabler and a potential bottleneck."

All supply chain, sustainability, Scope 3 and net zero leaders should attend:

• Procurement and Supply Chain LIVE: The Net Zero Summit - QEII Centre, London, March 4-5
• Procurement and Supply Chain LIVE: The US Summit - Navy Pier, Chicago, April 21-22

Co-located with Sustainability LIVE, these events brings together CSCOs, CSOs and senior decision-makers at a moment when sustainability, supply chains and commercial performance are increasingly interconnected.

Tickets can be booked online today for The Net Zero Summit and The US Summit. Group discounts available.

Geographic concentration threatens supply security

Supply chain responsiveness is constrained by lengthy timelines required to finance and permit new projects, compounded by increasing environmental and social regulations. The pace at which extraction capacity can expand does not match demand growth, creating risks including prolonged fossil-fuel dependence.

Mineral supply chains are highly concentrated in specific geographies. In resource-rich countries such as the Democratic Republic of Congo, Zambia and Mali, extraction dominates their economies but depletion levels are high.

Supply chains for high-dependence materials rely heavily on high-resource but lower-income nations, creating vulnerability if extraction cannot be sustained responsibly.

These concentration points also face high domestic environmental costs, including land degradation, air pollution and acidification. Though mining contributes from 2% to 4% of global GDP and supports millions of livelihoods, it also accounts for from 4% to 7% of global greenhouse gas emissions and is a significant driver of forest loss.

Gold mining accounts for 41.7% of total mining-driven deforestation, followed by coal mining at 26.3%. Though the shift towards renewable energy has reduced coal-related deforestation, it has shifted the problem to regions extracting minerals for renewable energy supply chains.

Diversifying sourcing strategies

Building supply resilience requires understanding how political and sustainability risks coincide with geological endowment. The Geological Service for Europe has developed a map of hard-rock deposits for the EU's 2023 critical raw materials list, demonstrating that potential critical raw material supply is diverse across Europe.

The EU has an expanding network of strategic raw materials partnerships aiming to diversify supply and implement sustainable mining principles. However, supply chain diversification needs care to prevent shifting reliance to other vulnerable regions or unsustainable operations.

Supply chains that rely on mining operations with poor sustainability performance face liability risks. Businesses need to consider tailings stewardship, community impact, land rehabilitation, water treatment and post-closure monitoring as supply chain risk factors. Though these can be expensive, they are vital to protecting operational continuity and safeguarding local communities.

As these are now expectations from supply chain partners, businesses can plan for this before projects begin, meaning costs can be integrated into procurement strategies more efficiently.

Through engaging communities, stakeholders and workers, mining projects can be built with sustainability, responsibility and longevity embedded, helping supply chains meet demand faster, safer and more sustainably.