Last night I went to see a talk delivered by Tim Marshall, a British journalist, author, and broadcaster, specialising in foreign affairs…
Last night I went to see a talk delivered by Tim Marshall, a British journalist, author, and broadcaster, specialising in foreign affairs and international diplomacy.
Just like all our personal journeys in life, we never know what good or challenging event, is around the corner, but invariably what we do know is that change is guaranteed.
We are seeing change in a new world that Trump is trying his best to accelerate (and to some degree winning), one where Europe can no longer be the remora fish under the fin of the U.S – where we are seeing tariffs, new geopolitics such as Trump trying to buy Greenland (a position that seems ludicrous but actually makes sense from a self-preservation perspective considering their abundance of natural resources), and where Tech/AI are all changing the way in which we do business and the politics that drive it.
So, what do critical minerals have to do with anything and how is their geography impacting the PE, restructuring and insolvency landscape? Well thanks to my newfound admiration for Mr Marshall, I have a rough idea:
1. The resource map is changing — and with it, investment risk
The new era of critical minerals, that is to say, the elements that make up components of technology (and therefore economies) and national security as well as Electric Vehicles (“EVs”), rechargeable batteries and AI data centres – all contain lithium, copper, cobalt, nickel and other rare earth minerals — and this has shifted global supply chains into geopolitically exposed regions:
Why does this matter? This concentration introduces sovereign, ESG, and trade policy risk at the foundation of entire industries: EVs, batteries, AI data centres, and renewable power infrastructure.
Moreover, it overleverages specific relationships, both commercially and politically. This further adds to a risk profile that makes investment (and failure) more binary.
The below illustrates a resource map and the key risk factors associated with the area:
Resource | Top sources | Risk hotspot |
Lithium | Australia, Chile, Argentina | Resource nationalism |
Cobalt | DRC | ESG, human rights |
Rare Earths | China | Export controls |
Copper | Chile, Peru | Strikes, politics |
With this backdrop we can start to look at how the geographical elements influence financial risk.
2. Volatile prices + leverage = new restructuring triggers.
Many ‘new economy’ businesses like battery start-ups, junior miners, and cathode refiners (impure metals being purified), were financed on the back of bullish pricing terms when the cost of money was cheap. These terms were at a time when demand for resources like lithium was on the rise.
A note on covenant breaches – Most debt financing agreements would have been completed at a time when money cost less, with new interest rates, and higher cost of borrowing – amend and extend or debt restructuring may also be the straw that breaks the camel’s back for some small mining and tech companies unable to service debt and interest repayments.
For PE – commodity price volatility is now an operational risk that can trigger sudden distress, even in growth companies with strong demand. In turn, this will likely see an already increasing demand for restructuring and insolvency professionals’ knowledge and experience.
Metaphorically speaking, there are multiple rocks being dashed in the water, with the ripple effects being felt far beyond the naked eye.
Recent examples of this between 2023–25 include:
3. Friend-shoring creates new winners and stranded assets
Governments (US, EU, Canada, Japan) now push to “onshore” critical mineral processing and battery production. This has been supercharged by Trump. This means:
So, the world of Tech and AI is driving business towards new shores and driving new behaviours creating bigger voids and threats to previously very stable investments. This in turn creates opportunities for some and risk for others:
What about other, historically less obvious and tangible factors?
4. Environmental, Social and Governance – compliance shift from marketing to real risk
A note on carbon footprint – we are seeing live issues with declining demand for carbon capture, with start-ups backed by private credit and PE having to hedge risk and wind-down/liquidate operations.
This all means that restructuring plans increasingly need to be embedded with ESG remediation and stakeholder engagement to preserve asset value. In other words – eyes open, ears listening, and mind open to adapting to what is going on to the evolution unfolding around us.
Points 2, 3 and 4 can be summarised in simple terms:
So, as I discovered last night – there is more to geography than I learnt in school! But the effects don’t end there.
5. New buyers & exits: strategics chasing security
Automakers and tech giants (Tesla, VW, Apple, Microsoft) have become direct investors or distressed business buyers. What gives them the edge over other special situation debt funds is that their motive is not based on Initial Rate of Return, but supply security.
This is likely going to change valuation dynamics and exit strategies for PE in times to come (if not already) and certainly will for the large cross-boarder players.
6. Practical implications for PE & restructuring teams
The reality is because of the simple geography, and the lottery of where resources reside across the world, there are immediate and direct impacts on PE and restructuring teams generally.
The critical minerals transition is more than an energy story — it is rewriting the landscape of private equity, distressed investing, and restructuring:
And all because someone, at some point, put a wooden stake in the ground and claimed that land as theirs. Thousands of years, and multiple iterations of sovereignty and treaties later, and we find the same foundations forming and shaping our whole business landscape once again.
It will be our job as professionals to stay on top of the risks, be able to give the best clear-cut advice to stakeholders, and boards as well as resolve issues to make the best of the challenges that lay ahead.
The critical minerals transition is more than an energy story — it is rewriting the landscape of private equity, distressed investing, and restructuring: