https://www.adb.org/news/features/building-future-adbs-new-approach
Building the future: ADB’s new approach to supporting critical minerals-to-manufacturing value chains in Asia and the Pacific
Global demand for critical minerals is surging, driven by the rapid shift towards clean energy and advanced digital technologies. Meeting this demand is achievable, but requires diverse, responsible, and resilient value chains. With abundant natural resources, a strong manufacturing base and skilled labor force, Asia and the Pacific has the potential to become a powerhouse in transforming raw minerals into the technologies that power digitalization and the clean energy transition.
This Q&A explains how ADB’s new approach will help the region build sustainable critical minerals-to-manufacturing value chains to drive resilient economic growth that leaves no one behind.
Global demand for critical minerals is surging, driven by the rapid shift toward clean energy and advanced digital technologies. Meeting this demand is achievable, but requires diverse, responsible, and resilient value chains.
With abundant natural resources, a strong manufacturing base and skilled labor force, Asia and the Pacific has the potential to become a powerhouse in transforming raw minerals into the technologies that power digitalization and the clean energy transition.
In this Q&A, ADB Principal Energy Specialist Annika Seiler explains how ADB’s new approach will help the region build sustainable critical minerals-to-manufacturing value chains that will drive resilient economic growth that leaves no one behind.
1. Why do critical minerals matter?
Critical minerals like copper, nickel, manganese, cobalt, and rare earth elements are essential for modern life, from electric vehicles to artificial intelligence powered by data centers.
Hence demand is rising fast. The clean energy market is expected to triple to more than $2 trillion by 2035, creating almost 3 million jobs – mostly in Asia and the Pacific. Global data center capacity – which relies heavily on minerals like lithium for batteries to ensure uninterrupted power supply – is growing by 15% annually, with our region expected to contribute about a third of this growth.
Asia and the Pacific is well positioned to meet the rising demand by localizing manufacturing and diversifying its supply chains, given the region’s rich endowment of critical minerals, strong industrial base, and skilled workforce.
ADB is now actively considering projects in this space to help strengthen responsible and sustainable practices across the value chain – from critical minerals exploration, extraction, processing, and refining, to technologies manufacturing, all the way to disposal or recycling. This will create jobs, promote inclusive growth, and accelerate the global clean energy transition. But first, there are challenges that need to be addressed.
2. What are the challenges and how do they prevent Asia and the Pacific from benefiting fully from the sector?
Supply chains are highly concentrated geographically, especially in processing and manufacturing, while mineral extraction depends on where resources are found. Disruptions in transporting supplies—as seen during the COVID-19 pandemic, geopolitical tensions, and disasters—can lead to shortages and elevated costs. Rising trade protectionism is also causing uncertainty.
Many of ADB’s developing member countries (DMCs) are vulnerable to these disruptions, which affect their efforts to develop nascent industries. Developing mining, refining, and manufacturing supply chains requires a lot of investment capital and long lead times creating barriers to entry. Further, constrained supply chains can lead to volatile prices of minerals and technology components, which significantly affect the competitiveness of their exports, revenues, and therefore development progress.
At the same time, mining is often associated with environmental pollution, biodiversity loss, and adverse impacts on local communities. Environmental, social, and governance risks must be minimized through strong standards, appropriate risk mitigation and response measures, and meaningful engagement with key stakeholders.
3. How will ADB help to address these challenges?
Under the first phase of our approach, we will focus on carefully selected, private sector-led, land-based industrial mining projects, working closely with peer multilateral development banks and other financial institutions with significant experience in this sector.
We will provide governments with technical assistance, policy advice, and loans to strengthen their capacity to create the enabling environment for investments and innovation. We’ll help them strengthen their governance and tax systems, improve revenue collection from the sector and advise on establishing instruments such as sovereign wealth funds, which are important for fair benefit-sharing and for making long-term investments in the national interest. Our projects will be demand-driven and aligned with ADB’s country partnership strategies, which guide our work in DMCs.
We’ll help private companies seize opportunities through loans and de-risking solutions that will catalyze investments, syndications to help secure financing from commercial financial institutions, and transaction advisory services. Crucially, we’ll ensure strong environmental, social, and governance standards and support local value addition in our DMCs’ mineral supply chains.
For manufacturing, we’ll focus on six core clean energy technologies – solar, wind, hydrogen, batteries for grids, electricity networks, and electric vehicles – and the materials required to make them. And we’ll support digital technologies such as semiconductors and pacemakers which are vital in healthcare and other important industries.
Through open regionalism, ADB will encourage DMCs to reduce tariffs and align trade rules among themselves while staying open to global markets. Leveraging regional cooperation and integration platforms such as Association of Southeast Asian Nations (ASEAN), the Central Asia Regional Economic Cooperation (CAREC) Program, and the Pacific Islands Forum, we will facilitate cross-border infrastructure, joint industrial zones, and regional standards to promote efficient movement of goods, services, and capital.
4. Mining has a controversial track record. How will ADB promote sustainable practices?
All projects we finance will adhere to ADB’s strict environmental and social requirements, implement governance practices and undergo thorough due diligence, including anti-bribery and anti-corruption checks. All proposals considered by ADB will be subject to rigorous risk and impact assessments, and we will only work with reputable developers.
As the demand for critical minerals to manufacturing grows, so does the societal demand for responsible and sustainable practices across the value chain. More consumers are demanding transparency and traceability, so investors are also taking environmental, social, and governance risks into consideration.
We will promote best international practices on the environmental, social and governance management to be adopted by our DMCs and developers, and we’ll help strengthen government capacity to implement these practices. We’ll use technology and blended finance to help manage costs and improve the bankability of projects.
We’ll work with partners such as the Extractive Industries Transparency Initiative (EITI) to improve transparency, data systems and traceability in the value chains.
To reduce the impact on the environment, we’ll promote recycling and reusing of minerals and materials, building circularity into country-level value chains from day one. This includes regulatory support, financing for recycling infrastructure, and encouraging our DMCs to work together to cut waste.
We’ll align all projects with the nationally determined contributions of our DMCs, and support initiatives that cut emissions across the value chain. All projects will follow the multilateral development banks’ Common Principles for Climate Mitigation Finance Tracking.
5. What expertise does ADB bring to the critical minerals sector?
We have extensive experience in supporting the delivery of complex infrastructure projects such as modern power transmission and distribution systems and large hydropower plants with long lead time and high technical demands. We also have experience investing in manufacturing, including in clean energy technologies. Moreover, we bring strong, trusted relationships with our DMCs and a track-record of facilitating cross-border trade that expands markets and lowers costs.
With decades of experience in helping our DMCs design economic development strategies and implement large and complex projects, ADB is well-placed to begin supporting the responsible development of critical minerals across the entire value chain.
6. Have you engaged with civil society in preparing this approach?
Yes. ADB has met with civil society representatives and will continue to engage with civil society organizations (CSOs) as we implement the approach and as project concepts are formulated as part of our due diligence process.
Our message to CSOs is this: your contribution to policy and projects discussions is essential to ensuring long-term, positive impacts for our DMCs. We are committed to meaningful engagement with CSOs as well as affected communities, including at the regional, country and project levels.
In addition, we’ve consulted governments – both our borrowers and non-borrowers, the private sector, financial institutions including our peer multilateral development banks, and other development partners.
7. What are the next steps for ADB in this space?
We continue to engage some of our DMCs to determine their needs and how ADB can support them.
We’re developing a multi-donor financing facility to provide grants for analytical work and country diagnostics, and to pool blended financing from private investors.
In future phases, we plan to expand our financing volumes and support junior miners – smaller and often less-established companies looking at early-stage exploration and development. A mid-term review is planned for 2027 or early 2028 to assess whether ADB is ready for phase two.
