Powering the future: The case for critical minerals

By James Yardley on 5 November 2026 in Specialist investing

Artificial intelligence, clean energy, electric vehicles and the world’s growing appetite for power all have something in common: they need vast quantities of critical minerals. From copper and lithium to graphite, nickel and cobalt, demand for these resources is expected to rise significantly in the decades ahead.

That creates a potentially compelling long-term investment story. Supply is highly concentrated, however, geopolitics can quickly disrupt markets and mining comes with environmental and ethical concerns. So, do critical minerals deserve a place in your portfolio?

Reasons to consider critical minerals

The world is changing. Rapid developments in artificial intelligence and data centres are fuelling a dramatic rise in energy consumption. This requires various so-called critical minerals to function, including lithium, cobalt, nickel and copper, as well as rare earth elements (REE). Such resources are used to produce batteries, electrical wiring, energy storage systems, electric motors, wind turbines, aircraft engines and military electronics.

According to a JPMorgan report, critical minerals are now at the heart of economic and national security. This makes them a potentially lucrative investment, citing: “With demand surging for resources like lithium, cobalt and rare earth elements, global leaders are rethinking how they source, secure and invest in these vital materials.”

Potential negatives of exposure

The supply chains for critical minerals are very concentrated. This lack of diversification means the sector is vulnerable to disruption from geopolitical conflicts. China is the top refiner of every key energy mineral except nickel, where Indonesia leads, according to the FII Institute.

There is also a moral issue. While supportive of the renewable energy shift, Amnesty International is concerned about how minerals are obtained and who bears the costs, saying “extracting minerals often damages land, water, health and livelihoods, especially where regulatory safeguards are weak or poorly enforced.”

Four funds to consider

BlackRock World Mining Trust

This is a specialist portfolio offering exposure to mining and metals companies around the world. It invests in quoted securities and royalties derived from metal and mineral production. As well as global tailwinds, another major attraction is the fact that it’s managed by one of the most experienced teams in the market, in the form of Evy Hambro and Olivia Markham.

We like the trust’s flexible mandate that enables it to invest across various metals and mining companies. This conviction-led approach provides investors with an alternative income source. The fund’s latest update noted that supply remains constrained due to years of underinvestment, permitting challenges, operational disruptions and long lead times for new projects. The managers recently said, “a more fragmented geopolitical world order increases the need for diversification and reinforces the strategic importance of mined commodities.”

WS Amati Strategic Metals

We believe this fund is a strong portfolio diversifier that taps into unique investment opportunities such as the transition to a lower-carbon world and AI developments. A significant benefit is the industry experience of its co-managers, Georges Lequime and Mark Smith. The managers only invest in internationally listed metals and mining companies whose revenues are sourced from the sale of strategic metals. Alongside precious metals such as gold and silver, the fund has exposure to lithium, nickel, copper, rutile, graphite and REE*.

According to their latest quarterly update, the longer-term outlook for the sector remains encouraging, even though the near-term picture is uncertain. They said: “Geopolitical tensions, deglobalisation, constrained capital investment and years of underinvestment in new supply are contributing to prospective structural deficits across many metals from 2028-2029 onwards.”

Two more generalist approaches

As its name suggests, Jupiter Gold and Silver focuses on precious metals but also holds companies involved in critical minerals. A truly unique fund, manager Ned Naylor-Leyland is a passionate advocate for his asset class and believes investors should strongly consider some gold and silver exposure for their portfolios. We particularly like the manager’s willingness to alter the fund’spositioning to best suit current market conditions.

This currently includes exposure to Collective Mining, a Canadian exploration company focused on copper, tungsten, gold, and silver, with projects in Caldas, Colombia*. This fund’s low correlation to other asset classes makes it a popular addition to a diversified overall portfolio.

There are other portfolios that offer exposure to critical minerals alongside other sectors. A prime example is the City of London Investment Trust, which has holdings in Rio Tinto, which is well known for copper, as well as iron ore, aluminium and lithium*. This trust is one of the longest-running and aims to provide income and capital growth from large UK companies with international exposure. It’s an excellent core option for UK equity income investors, as maintaining dividend income is very important to its board.

*Source: fund factsheet, September 2026