Foreign direct investments and energy transition critical minerals

The aim of this paper is to investigate the links between energy transition critical minerals - which are crucial to the deployment of low-carbon technologies - and foreign direct investments. To this end, we consider the production of 8 energy transition critical minerals over the 1997–2020 period as an explanatory variable for FDI inflows, by using an original, complete, and precise database. Implementing a battery of panel data estimations to ensure the robustness of our results, we find that there is no FDI- resource curse for the energy transition critical minerals production. Unlike oil, energy transition critical minerals do generally attract foreign capital inflows, the positive attraction effect on resource seeker FDI likely dominates the negative eviction effect on non-resource seeker FDI; the minerals with the strongest FDI attraction effect being cobalt, lithium, and rare earth elements. These results confirm the important economic and strategic motivations of investing countries and companies, but also represent risks and opportunities for the host mining countries. • Energy transition critical minerals appear as a specific but crucial energy raw material. • The traditional foreign direct investment resource curse does not apply, mining activities have a strong attraction effect on general foreign capital inflows. • Cobalt, lithium and rare-earth elements have the strongest and most constant force of attraction on foreign investments. • There are strong economic and strategic interests that drive these investments, the latter are an important component of demanding countries' and transnational mining companies' strategies. • Such capital inflows represent both risks and opportunities for host mining countries, to ensure sustainable supplies of foreign capital, diversified economic development, and mitigations of mining externalities.