lev-os Evaluating Critical Minerals Supply Chains
When To Use
- Evaluating an investment in a lithium, cobalt, nickel, rare earth, graphite, manganese, or other critical mineral asset
- Assessing supply chain concentration risk for a mineral or battery-metals portfolio
- Analyzing midstream processing capacity (refining, chemical conversion, cathode/anode production) as part of a capital allocation decision
- Benchmarking a project's positioning against geopolitical sourcing mandates (e.g., IRA domestic content, EU Critical Raw Materials Act) [VERIFY current regulatory thresholds]
- Due diligence on offtake agreements, streaming deals, or royalty interests tied to critical minerals
Inputs To Gather
- Target mineral(s): Specific commodity (lithium carbonate vs. spodumene, Class 1 nickel vs. laterite, separated rare earth oxides vs. concentrate, etc.)
- Asset stage: Exploration, PFS/DFS, permitted/construction, producing, or brownfield expansion
- Geographic jurisdiction: Mine location, processing location, end-market destination
- Project economics: Capex, opex/cash-cost curve position, NPV/IRR at sponsor assumptions and at spot/forward pricing
- Offtake structure: Binding vs. non-binding, floor/ceiling pricing, volume commitments, counterparty creditworthiness
- Technical reports: NI 43-101, JORC, or S-K 1300 compliant resource/reserve estimates; metallurgical recovery data
- Ownership and permitting: Tenure security, beneficial ownership chain, environmental and social permits, Indigenous consultation status [VERIFY jurisdiction-specific permitting frameworks]
Workflow
Map the supply chain node. Determine where the asset sits in the value chain — upstream extraction, midstream processing/refining, or downstream component manufacturing. Identify which segment(s) the investment thesis depends on.
Assess resource quality and scalability.
- Review grade, tonnage, and strip ratio against peer deposits
- Evaluate metallurgical complexity (e.g., hard-rock vs. brine lithium, sulfide vs. laterite nickel) and its impact on processing route and capex intensity
- Check resource-to-reserve conversion ratio and remaining exploration upside
Analyze cost-curve positioning.
- Place the asset on the global cash-cost curve for the target mineral (C1 cash cost, AISC)
- Stress-test economics against 10-year price scenarios: bear-case (oversupply/substitution), base-case (consensus demand), bull-case (accelerated EV/storage adoption)
- Flag sensitivity to energy inputs, reagent costs, and water availability
Evaluate geopolitical and concentration risk.
- Quantify country-level supply concentration (e.g., DRC cobalt ~70%, China rare earth processing ~60%) [VERIFY current share data]
- Assess sanctions exposure, resource nationalism risk (royalty changes, export bans, beneficiation mandates), and political stability indicators
- Determine eligibility for incentive regimes: IRA Section 45X advanced manufacturing credits, EU CRMA strategic project status, or allied-nation FTA sourcing requirements [VERIFY current eligibility thresholds and phase-in dates]
Review processing infrastructure and bottlenecks.
- Map the downstream pathway from mine-gate to battery cell or end-use product
- Identify processing chokepoints (e.g., conversion capacity for lithium hydroxide, cobalt sulfate refining, rare earth separation)
- Assess whether the project has or can secure processing capacity — owned, tolling, or third-party offtake
Evaluate offtake and market access.
- Analyze binding offtake terms: pricing mechanism (spot-linked, fixed, hybrid), volume ramp, take-or-pay provisions, force majeure carve-outs
- Assess counterparty concentration — single OEM vs. diversified buyer base
- Flag any exclusivity or change-of-control provisions that constrain exit options
Score ESG and permitting risk.
- Review environmental liabilities: tailings management, water usage, carbon intensity per tonne of product
- Assess social license: community agreements, Indigenous rights, artisanal mining overlap (especially cobalt, tantalum)
- Confirm permitting timeline and remaining regulatory approvals [VERIFY jurisdiction-specific environmental review process]
Synthesize investment recommendation.
- Summarize risk-adjusted return profile with key upside/downside scenarios
- Rank top three risks and top three catalysts
- Provide a clear go/no-go/conditional recommendation with stated conditions
Output
Produce a structured Critical Minerals Investment Evaluation Report containing:
- Executive Summary: Mineral, asset stage, jurisdiction, and recommendation in 3–5 sentences
- Supply Chain Map: Visual or tabular depiction of the mine-to-market pathway with identified chokepoints
- Resource and Cost Analysis: Grade/tonnage benchmarking and cost-curve position
- Geopolitical Risk Matrix: Country risk score, regulatory incentive eligibility, concentration exposure
- Offtake and Market Assessment: Contract terms summary, counterparty analysis, demand outlook
- ESG and Permitting Summary: Key environmental/social risks with permit status timeline
- Risk-Return Summary: Scenario-based NPV/IRR table, top risks, top catalysts, and final recommendation
Quality Checks
- All resource estimates reference a compliant technical standard (NI 43-101, JORC, S-K 1300) — flag any non-compliant figures
- Cost-curve data is sourced and dated; do not present stale benchmarks as current
- Geopolitical supply-share percentages are cited to a specific source and year [VERIFY]
- Regulatory incentive eligibility reflects current enacted law, not proposed legislation, unless clearly labeled
- Offtake analysis distinguishes binding from non-binding commitments
- Stress-test scenarios include at least one case where the primary commodity price drops below the asset's AISC
- Mark any forward-looking demand projections with their source model and vintage year