Energy transition and legal dynamics: From critical raw materials to competitive production

The global energy transition is bringing access to critical raw materials, supply chain resilience, and investment security to the forefront of strategic competition. A country’s competitive advantage increasingly depends not merely on its possession of natural resources, but also on its ability to transform those resources into technological capabilities, industrial capacity, and value-added production. Reliable energy infrastructure and a predictable legal framework are also becoming increasingly important to the success of this transformation.

Electric vehicles, energy storage systems, digital technologies, and advanced manufacturing are driving up demand for copper, lithium, nickel, cobalt, graphite, and rare earth elements. Meanwhile, extraction and processing capacity is concentrated in a limited number of countries; geopolitical tensions and export restrictions are increasing supply risks. Critical raw materials are thus evolving from mere cost factors into strategic assets that shape industrial policy, investment decisions, and long-term competitiveness.

Supply security

According to the International Energy Agency’s (IEA) Global Critical Minerals Outlook 2026, investment in critical minerals declined by 9% in 2025. Capital expenditure by battery metals companies fell by more than 20%, while lithium-focused companies recorded a decline of approximately 40%. By contrast, investment by copper-focused companies increased by 8%. These divergent trends demonstrate that critical raw material markets respond differently to price expectations, demand patterns, supply conditions, and policy uncertainty.

Price movements further highlight the importance of supply security. According to the IEA’s assessment, lithium prices more than doubled in 2025 and the early months of 2026, driven by demand for energy storage and prevailing supply conditions. Cobalt prices, meanwhile, rose about 130%, largely due to export restrictions imposed by the Democratic Republic of the Congo.

These developments demonstrate that the global availability of a resource does not necessarily guarantee uninterrupted access at predictable costs. The concentration of production and refining capacity in certain countries means a single change in trade policy can affect multiple industries at once.

Companies should therefore base their sourcing strategies on more than unit cost alone. Companies should consider supplier diversification, alternative logistics routes, strategic stockpiles, recycling capacity, and long-term purchase agreements as part of an integrated approach.

Resource nationalism and trade law

In the critical raw materials sector, the geographic distribution of refining capacity and intermediate-product manufacturing matters as much as extraction capacity. Resource-rich countries may introduce export licensing requirements, quotas, and prohibitions to capture greater added value from their natural resources and develop domestic industries. Although this approach, commonly referred to as resource nationalism, can support local processing capacity and technological development, it can also create uncertainty across global supply chains.

These policies are subject to legal constraints. Under the rules of the World Trade Organization (WTO), Article XI of the General Agreement on Tariffs and Trade (GATT) generally prohibits export prohibitions and quantitative restrictions, while allowing for certain exceptions.

China’s export restrictions on various raw materials, for example, have been the subject of disputes within the WTO framework. In 2014, dispute settlement proceedings found certain measures on rare earth elements, tungsten, and molybdenum inconsistent with WTO rules. Indonesia’s ban on nickel ore exports was also found to be inconsistent with GATT rules by a WTO panel in 2022. However, Indonesia’s appeal, combined with the WTO Appellate Body’s inability to function, prevented the dispute from being resolved through the ordinary appellate process.

Nevertheless, not every export restriction is automatically unlawful. Dispute settlement bodies must assess each restriction on a case-by-case basis, considering its rationale, scope, implementation, and any applicable exceptions under the relevant agreements. From an investor’s perspective, the export regime, domestic processing requirements, licensing conditions, and the possibility of regulatory changes have become as important as reserve data.

Türkiye’s legal framework

Türkiye is taking steps to establish critical and strategic minerals as an economic and legal priority. Law No. 7554 introduced provisions concerning these concepts into the Mining Law, while also seeking to accelerate certain permitting procedures and improve coordination among public authorities.

Investor confidence, however, depends not only on obtaining permits quickly, but also on clear rules, consistent implementation, environmental responsibility, and effective judicial review. These factors are also decisive in securing long-term financing and informing investment decisions.

The Beylikova example

The rare earth element deposit in Beylikova, Eskişehir, illustrates the distinction between possessing natural resources and developing industrial capacity. Statements from Türkiye’s Ministry of Energy and Natural Resources describe an ore resource of about 694 million tonnes containing rare earth elements, thorium, barite, and fluorite, as well as about 12.5 million tonnes of rare earth oxide.

It is important to distinguish between these figures. The 694 million tonnes refers to a complex ore resource containing various minerals, not to pure rare earth elements. Similarly, the reported 12.5 million tonnes of rare earth oxide does not, by itself, establish the size of economically recoverable reserves or the quantity that can be produced commercially. Reaching such conclusions requires a comprehensive assessment of ore composition, recovery rates, separation technologies, capital and operating costs, and environmental obligations.

The commissioning of a pilot plant in 2023 marked an important milestone. However, investment in an industrial-scale facility represents a separate stage of development. The scale and competitiveness of commercial production will become clear only once the facility is completed and the relevant technological processes are successfully implemented at the intended scale.

The separation of rare earth elements requires substantial technical expertise and capital investment. Environmental impact management and regulatory requirements for radioactive components such as thorium are also important considerations when assessing the project’s technical and economic feasibility.

Beylikova’s success therefore depends not only on resource size, but also on developing separation technologies, managing environmental risks, and producing materials competitively for international markets.

Energy costs and the legal security of investment

Another key consideration is that extracting and processing critical raw materials requires reliable energy at competitive prices. In this context, long-term power purchase agreements (PPAs) can help manage energy costs and support the financing of renewable energy investments. However, risks relating to grid connection, curtailment, imbalance costs, counterparty creditworthiness, and regulatory changes remain.

Therefore, carefully draft contractual provisions governing price adjustments, force majeure, security arrangements, early termination, and dispute resolution. Ordinary price volatility does not, by itself, constitute force majeure, just as a disruption to a contract’s economic balance does not automatically produce the same legal consequences.

Bilateral investment treaties and political risk insurance may also provide protection for cross-border energy and raw material investments. Nevertheless, not every legislative change violates international law, and not every regulatory intervention creates a right to compensation. The scope of protection depends on the applicable treaty, the nature of the investment, the commitments made by the state, and the circumstances of the specific case.

Legal due diligence before investing should therefore extend beyond licences and permits to encompass contractual arrangements, applicable law, potential dispute resolution mechanisms, and regulatory change risks.

Similarly, raw-material traceability, production impacts, and the verifiability of sustainability claims increasingly shape commercial relationships, access to finance, and contractual terms. Reliable emissions data, traceable production processes, and verification mechanisms can strengthen companies’ regulatory compliance and competitive position in international markets.

Conclusion: from resources to competitive production

The emerging economic order shaped by critical raw materials represents a transformation that extends far beyond the geographical distribution of natural resources. Concentrated processing capacity, export policies, energy costs, carbon regulations, and legal uncertainty have become interconnected strategic risks.

Türkiye’s opportunity lies not merely in exploiting its natural resources, but in establishing a lasting competitive advantage in processing, recycling, advanced materials technologies, and advanced manufacturing. Three priorities stand out.

First, domestic processing and recovery capacity should be developed to transform critical raw materials into higher-value products.

Second, investment procedures should combine administrative efficiency with legal predictability. Clear permitting requirements, consistent implementation, effective judicial review, and environmental responsibility should form the foundation of long-term investor confidence.

Third, competitively priced energy, emissions measurement, and verifiable supply chain data should be treated as integral components of industrial policy.

COP31, scheduled to take place in Antalya in November 2026, will provide Türkiye with an important international platform for discussions on climate policy and the economic dimensions of the global energy transition. However, the lasting value of this opportunity will depend on supporting climate diplomacy with concrete industrial, energy, and investment policies.

The fundamental question of the new era is not which country possesses the greatest natural resources, but which country can transform resources into reliable supplies, supplies into competitive production, and production into sustainable economic value.

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