OCDE - The potential of development finance to unlock investments

The potential of development finance to unlock investments in the critical minerals value chain 27 April 2026 Key messages e The relevance of the critical minerals value chain across the development finance ecosystem is growing. Official development finance for critical raw materials? amounted to USD 130 million in total between 2014 and 2024, peaking at USD 24 million in 2024. Development finance contributions to the critical minerals value chain aim to leverage 1) the sector’s opportunity to generate development benefits for official development assistance (ODA)-eligible countries; 2) its potential to contribute to local value addition and retention if development strategies are effectively designed; 3) the central role of critical minerals in industrial sectors, including the clean energy and digital transitions; and 4) the core role of development finance in supporting sustainable and responsible practices. « Development finance can help addressing investment risks and barriers that hold back private investments into critical minerals in EMDEs, while ensuring that partner countries benefit from these transactions (OECD, 2025(;). However, private finance mobilisation through official development finance interventions for critical raw materials has thus far remained limited. e Further work is needed to deepen the understanding of how development finance, including through blended finance mechanisms, can enhance development impact and additionality through the critical minerals value chain. The OECD’s Development Assistance Committee (DAC)’s work could focus on applying the OECD DAC Blended Finance Guidance 2025 to the sector; providing the space for policy dialogue and capacity building within the donor and private finance mobilisation community; undertaking further analysis of concrete project examples, including their ODA-eligibility, private finance mobilisation and their safeguards to ensure that development finance supports partner country development outcomes rather than primarily external strategic interests. Rationale for development finance to support the critical minerals value chain Critical minerals represent a significant opportunity to generate development benefits for ODAeligible countries, though these benefits are not automatic. Rising demand for critical minerals could

safeguards to ensure that development finance supports partner country development outcomes rather than primarily external strategic interests. Rationale for development finance to support the critical minerals value chain Critical minerals represent a significant opportunity to generate development benefits for ODAeligible countries, though these benefits are not automatic. Rising demand for critical minerals could increase sub-Saharan Africa’s gross domestic product by 12% or more by 2050 (IMF, 2024z). However, THE POTENTIAL OF DEVELOPMENT FINANCE TO UNLOCK INVESTMENTS IN THE CRITICAL MINERALS VALUE CHAIN © OECD 20262| while emerging markets and developing economies (EMDEs) hold substantial mineral resources, investment gaps and institutional constraints often prevent these resources from translating into inclusive and sustainable development outcomes. In this context, the sector offers an opportunity to foster genuinely mutually beneficial partnerships between Development Assistance Committee (DAC) members, as providers of development finance, and partner countries. This requires that development finance interventions are explicitly assessed against their contribution to domestic value retention, employment and skills development, fiscal revenues, and broader economic diversification. Without such a focus, there is a risk that investments primarily support external strategic interests while delivering limited development gains domestically. Development finance should therefore prioritise approaches that enable partner countries to capture greater economic and social value from their mineral resources and support long-term structural transformation.® The mining sector presents an opportunity to address structural challenges central to the development mandate, including high levels of informality — especially in artisanal and smallscale mining (ASM) (World Bank, 2022(3; Maconachie and Conteh, 2021p)). Development finance can strengthen contributions to local value addition and retention. Integrating EMDEs into the global trading system is critical to achieving the Sustainable Development Goals (Martin, 20255)). The African Green Minerals Strategy puts industrialisation through local beneficiation front and centre and Africa is increasingly taking a proactive stance towards its critical minerals, notably through regional integration opportunities created by the African Continental Free Trade Area (AfCTA) (Marlow

20255)). The African Green Minerals Strategy puts industrialisation through local beneficiation front and centre and Africa is increasingly taking a proactive stance towards its critical minerals, notably through regional integration opportunities created by the African Continental Free Trade Area (AfCTA) (Marlow Global, 2024; African Union, 2024(7; Murphy, 2026js)). This includes growing emphasis on regional industrial ecosystems and cross-border value chains that can help achieve economies of scale while increasing value retention within producing regions. Atthe same time, market assessment for sub-Saharan Africa implies that investments in processing and refining have limited local value addition, for example due to a systemic reliance on foreign labour (Marlow Global, 2024g). Beyond moving up the value chain and ensuring that job creation happens domestically, other factors should be taken into account for effective development strategies. Depending on the local context, this includes skills development, stronger local supplier ecosystems and smalland medium-sized enterprises participation, technology partnerships, opportunities for economic diversification, etc. This is a challenge that development finance could help address. Principle 3 of the OECD DAC Blended Finance Guidance 2025 provides guidance on how to tailor blended finance to the local context, ensuring that development finance is “deployed to ensure that blended finance supports local development needs, priorities and capacities in a way thatis consistent with, and where possible contributes to, local financial market development” (See Box 1). The European Union’s framework for ensuring a secure and sustainable supply of critical raw materials already includes considerations on both ESG factors and the potential to contribute to local value addition (European Union, 20249). Critical minerals are central to an increasing number of industrial sectors, including the clean energy and digital transitions. The more ambitious the climate targets become, the more minerals and metals will be needed for a low-carbon future (Arrobas et al., 201710, Eckert, 2025(11). Minerals of the clean energy transition represent close to 29% of the African continent's exports (Agence frangaise de développement, 202412). Development actors can contribute to innovation in critical minerals supply

clean energy transition represent close to 29% of the African continent's exports (Agence frangaise de développement, 202412). Development actors can contribute to innovation in critical minerals supply chains for the clean energy transition by funding research, for example to improve resource efficiency or advance recycling technologies. There is also important demand for knowledge and technology transfer. Itis crucial that investments in the critical minerals value chain also benefit partner countries’ own digital and clean transitions. Development finance actors can support sustainable and responsible practices, ensuring adoption of — and alignment with — relevant standards such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas or the Handbook on Environmental Due Diligence in Mineral Supply Chains to mitigate environmental impacts; in addition to the non-sector specific responsible business conduct guidance.“ They can also ensure political, economic, fragility and potential conflict risks are understood and analysed throughout the project lifecycle, and that THE POTENTIAL OF DEVELOPMENT FINANCE TO UNLOCK INVESTMENTS IN THE CRITICAL MINERALS VALUE CHAIN © OECD 2026|3 their accountability systems and performance standards keep pace with evolving risk profiles to ensure their investments support socially positive economic development.5 Ongoing work of the OECD’s Development Assistance Committee (DAC) to develop guidance on responsible business conduct and development co-operation, as well as the work of the International Network on Conflict and Fragility on private sector development, could complement this and provide an avenue to enhance donor support for responsible mining. Beyond fragility and governance, DAC members recognise that, whether intended or not, every development co-operation intervention will have an impact on gender equality, and that a dono-harm approach is required, at a minimum, to ensure they do not reinforce gender inequalities. Integrating a gender perspective across the critical minerals value chain can support translating resources into inclusive development (OECD, 202413)). On blended finance transactions, the OECD DAC Blended Finance Principles can also ensure high quality transactions, emphasising additionality, transparency and alignment with partner country priorities (see Box 1). At the same time, development finance actions should

into inclusive development (OECD, 202413)). On blended finance transactions, the OECD DAC Blended Finance Principles can also ensure high quality transactions, emphasising additionality, transparency and alignment with partner country priorities (see Box 1). At the same time, development finance actions should avoid long-standing development challenges associated with extractive sectors such as concentration risks and limited domestic spillovers. Box 1. Blended finance: OECD Development Assistance Committee (DAC) Principles and Guidance The OECD Development Assistance Committee (DAC) Blended Finance Principles aim to ensure high quality in blended finance transactions. The OECD DAC Blended Finance Guidance 2025 supports development practitioners effectively in implementing blended finance and provides recommendations on how to scale and maximise the impact of such transactions. It is centred on the five Principles: The OECD DAC Blended Finance Principles e Principle 1: Anchor blended finance to a development rationale e Principle 2: Design blended finance to increase the mobilisation of commercial finance e Principle 3: Tailor blended finance to the local context e Principle 4: Focus on effective partnering for blended finance e Principle 5: Monitor blended finance for transparency and results Guidance for effective implementation of blended finance (2025) The OECD DAC Blended Finance Guidance 2025 reflects on the challenges in the use of blended finance (including fragmentation, lack of co-ordination, limited transparency) and seeks to help address these challenges, while also incorporating innovative practices and approaches in the blended finance landscape. It dives into mobilisation through debt instruments (such as bonds, loans to companies or SPVs), equity instruments (to companies, SPVs or portfolios of projects, e.g. via funds), guarantees or grants.

Note: In the definition of blended finance, development finance refers to public and private finance deployed with a development mandate Additional finance refers to commercial finance that does not have an explicit development purpose and that has not primarily targeted development outcomes in developing countries. CIVs: collective investment vehicles; SPVs: special purpose vehicles; TA: technical assistance.

Additional finance refers to commercial finance that does not have an explicit development purpose and that has not primarily targeted development outcomes in developing countries. CIVs: collective investment vehicles; SPVs: special purpose vehicles; TA: technical assistance.

Source: OECD DAC Blended Finance Principles (OECD, 2018 https://www.oecd.org/en/publications/oecd-dac-blended-financeprinciples_dc66bd9c-en.html; OECD DAC Blended Finance Guidance 2025 ( (OECD, 2025y1)) https://www.oecd.org/en/publications/oecddac-blended-finance-quidance-2025_e4al3d2c-en html THE POTENTIAL OF DEVELOPMENT FINANCE TO UNLOCK INVESTMENTS IN THE CRITICAL MINERALS VALUE CHAIN © OECD 20264] Understanding financing needs and constraints throughout the critical minerals value chain While development finance’s core goal is to ensure that partner countries substantially benefit from critical minerals investments, effective and efficient engagement of development finance actors requires an understanding of financing needs throughout the value chain. To meet rising global demand driven by the clean energy and digital transitions, financing needs in critical minerals supply chains are significant. Estimates highlight a funding gap of USD 180 billion to USD 270 billion between 2022 and 2030 in critical minerals mining projects, with copper and nickel representing the most significant shortfalls, accounting for 36% and 16% of the total gap, respectively (UNCTAD, 20241s; OECD, 202316).

Financing needs are present and evolve along the entire critical minerals value chain (Global Investor Commission on Mining 2030, 2024(17). In practice, financing of the value chain can target the following steps: Enabling environment: Development finance can target critical minerals investments and increase their development impact by contributing to improving the enabling environment and in particular the institutional setting through capacity building and technical assistance that can help strengthen partner countries’ institutional and framework conditions, including but not limited to project

steps: Enabling environment: Development finance can target critical minerals investments and increase their development impact by contributing to improving the enabling environment and in particular the institutional setting through capacity building and technical assistance that can help strengthen partner countries’ institutional and framework conditions, including but not limited to project development and the regulatory enabling environment (e.g. with respect to resource rights, tax revenue from critical minerals (Bertrand-Hardy and Darrieutort, 2011(1e)), support to sustainable practices, scientific research, etc.). Enabling infrastructure refers to the infrastructure that enables the critical minerals supply chain to run smoothly, including, for example, clean and stable energy access, transportation, etc. The demand for infrastructure investment in EMDEs is high and varies by type of infrastructure. Supporting, for example, transport infrastructure, renewable energy value chains, including geothermal energy and solar mini-grids, could be a potential entry point for development finance (Marlow Global, 2024). e Exploration includes all activities to identify and establish the properties of mineral occurrences. Exploration of critical minerals mining projects is risky (due to unknown outcomes), uncertain (due to the unknown time schedule) and expenditure-focused (due to non-existing revenue streams). Beyond critical minerals investment, development actors, in particular donors, have a longstanding track record in catalysing private investment through feasibility and planning studies in infrastructure projects (OECD, 2025(1;; 2025(19)). e Extraction encompasses the extraction of ores, minerals and plant products from their original source as a main product or as a by-product. This step includes expenditure-heavy construction in the case of greenfield endeavours, or operations in the case of brownfields/expansion projects. In both cases, operational expenditures need to be covered, as do potential expansions. e Processing includes all physical, chemical and biological processes involved in the transformation of a raw material from ores, minerals, plant products or waste into pure metals, alloys or other economically usable forms, including beneficiation, separation, smelting and refining. Operations

both cases, operational expenditures need to be covered, as do potential expansions. e Processing includes all physical, chemical and biological processes involved in the transformation of a raw material from ores, minerals, plant products or waste into pure metals, alloys or other economically usable forms, including beneficiation, separation, smelting and refining. Operations of critical raw materials require stable and cost-effective energy supply resulting in high capital requirements. Pay-back periods can therefore be long, especially in contexts where local demand for processed critical raw materials is limited (Marlow Global, 2024g). e Manufacturing of intermediate or final products with respect to emerging clean technology such as battery assembly (also referred to as upstream) is less energy-intensive and requires lower upfront investments (Marlow Global, 2024)). Recycling refers to any recovery operation by which waste materials are reprocessed into products, materials or substances, whether for the original or for other purposes (European Union, 2024)).

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It adds a non-negligible secondary supply source of mineral, relieving some pressure on primary supply. It requires significant financing to build and operate dedicated facilities (IEA, 2021(20)). Investment risks and barriers in the critical minerals value chain Development finance can support development outcomes through critical minerals by addressing risks that undermine investments in the critical minerals value chain. These risks are a combination of inherent sectoral risks that differentiate investments into critical minerals from other sectors and country-, contextand transaction-specific risks more generally. Development finance can support addressing both types of risks, on the condition that the private sector cannot (fully) manage those risks. Investment risks change over time as well as across the value chain, so continuous assessment is needed to ensure that the role of development finance in unlocking private finance is only temporary (World Economic Forum, 2025(21); OECD, 20251). Specific sectoral risks are driving investment decisions in critical minerals supply chains. The following parameters are critical for investment decision making:

the role of development finance in unlocking private finance is only temporary (World Economic Forum, 2025(21); OECD, 20251). Specific sectoral risks are driving investment decisions in critical minerals supply chains. The following parameters are critical for investment decision making: o ESG-related risk: The mining sector in its essence carries significant environmental risks. There is also an important governance risk, especially when mining operations take place in high-risk jurisdictions but also due to an overall lack of implementation of standards on responsible mining practices. Global mining companies have so far received particularly low ESG ratings from Sustainalytics, the global leader in ESG data (Financial Times, 201922)). Building on knowledge gains of past experience, there is an opportunity for donors to promote responsible mining through policy dialogue and capacity building (Michaels, Maréchal and Katz, 2022123), and to manage downside risks, including social and conflict risks, effectively. Revenue stream size and predictability: Many critical minerals are subject to elevated price volatility, stemming from both demand volatility and supply volatility, i.e. for battery metals, (IEA, 2025245, World Economic Forum, 2025p1). Financial integrity risk: The mineral sector is particularly prone to trade-based illicit financial flows and corruption (OECD, 2023p2s), which the development sector is already working to address (International Conference on the Great Lakes Region, 2022(2)). Geopolitical and policy-related risk: Non-market practices and geopolitical tensions over critical minerals add to the perceived instability of the sector. Market dominance, price manipulation and export restrictions create supply chain vulnerabilities that private entities cannot address alone (SAFE, 2025p7). This has a direct impact on revenue stream size and predictability, as mentioned above. Exploration phase risk: Default risks are especially pronounced for investments in the exploration phase. Between 2011 and June 2022, the average value of the discoveries made as a result of worldwide mineral exploration was only USD 0.64 per dollar invested in mineral exploration, with

above. Exploration phase risk: Default risks are especially pronounced for investments in the exploration phase. Between 2011 and June 2022, the average value of the discoveries made as a result of worldwide mineral exploration was only USD 0.64 per dollar invested in mineral exploration, with important regional differences. For Africa, the value goes up to USD 0.97 per dollar invested (United Nations Environment Programme, 2025ps)). e Energy access: Extraction and processing as energy-heavy activities are strongly dependent on power generation, transmission and distribution (World Economic Forum, 20251)). Difficulties in securing stable, cost-effective and low-carbon compliant energy may hence undermine profitability. The current landscape of development finance flows and private finance mobilised for the critical minerals value chain Official development finance flows towards the critical minerals value chain Official development finance (see Box 2) for extractive industries/mineral resources and mining over the past 11 years (2014-2024) amounted to USD 6.56 billion. As can be seen in Figure 1, the bulk of the THE POTENTIAL OF DEVELOPMENT FINANCE TO UNLOCK INVESTMENTS IN THE CRITICAL MINERALS VALUE CHAIN © OECD 20266] financing was in the form of other official flows (OOF), which amounted to USD 4.1 billion. Of this, multilateral organisations accounted for USD 3.49 billion and bilateral providers for USD 0.6 billion. Total official development assistance (ODA) disbursements were USD 2.47 billion, of which bilateral providers provided USD 1.27 billion and multilateral organisations USD 1.2 billion. Activities for extractive industries/mineral resources and mining represented 0.03% of total ODA and 0.47% of total OOF. Using a keyword search® for critical raw materials specifically, official development finance for critical raw materials amounted to USD 130 million in total over the same 11-year period, peaking at USD 24 million in 2024. Out of the total, capacity-building activities’ represented USD 46.2 million. ODA flows were USD

materials amounted to USD 130 million in total over the same 11-year period, peaking at USD 24 million in 2024. Out of the total, capacity-building activities’ represented USD 46.2 million. ODA flows were USD 122 million, of which USD 93 million were from bilateral providers. Zooming in on critical raw materials, hence, increases the relative significance of bilateral ODA (at admittedly low levels). OOF flows, for both bilateral and multilateral providers, were USD 7.5 million. Figure 1 shows the annual flows. Figure 1. Official development finance for extractive industries (excluding oil, coal and gas) and for critical raw materials, 2014-2024 Offcalcevelopment fnance for extactive industries Offcia development inance for citcal raw materials (20142026, I USD milios) 2014-2024, in constant USD millons) Notes: ODA = official development assistance, OOF = other official flows. The data in the left panel were obtained through the selection of relevant CRS purpose codes (322 “Mineral resources and mining”, excluding the sub-codes “Coal” and “Oil and gas”) while the data in the right panel were obtained through a keyword search described in endnote 7.

Source: OECD Creditor Reporting System (CRS) data Private finance mobilised towards the critical minerals value chain through development finance interventions Box 2. Official development assistance-elig minerals ility of development finance directed to critical To qualify as official development assistance (ODA), a transaction must meet all the following conditions: ltis provided by official agencies. e |ts main purpose is to promote the economic development and welfare of developing countries. e The assistance is concessional in character (e.g. grants or soft loans) and meets with the minimum ODA concessionality thresholds. o The recipient country is listed on the DAC List of ODA-eligible countries®.

ODA can also reflect donor effort in private sector instruments (PSI), such as guarantees or equity investments. In these cases, supplementary eligibility criteria apply, in particular on additionality. For a

minimum ODA concessionality thresholds. o The recipient country is listed on the DAC List of ODA-eligible countries®. ODA can also reflect donor effort in private sector instruments (PSI), such as guarantees or equity investments. In these cases, supplementary eligibility criteria apply, in particular on additionality. For a THE POTENTIAL OF DEVELOPMENT FINANCE TO UNLOCK INVESTMENTS IN THE CRITICAL MINERALS VALUE CHAIN ©

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PSI activity to be ODA-eligible, it must be additional financially or in value — to avoid market distortions — together with its development additionality. Mineral resources and mining are included in the DAC sector classification and are not inherently ineligible for ODA. However, in the context of critical minerals — where financing may be motivated by the donor country’s interest in securing access to these resources — particular attention must be paid to ensuring that the primary objective remains the development of the recipient country. Other official flows (OOF) refer to transactions by the official sector that do not meet the conditions for eligibility as ODA, either because they are not primarily aimed at development or because they are not sufficiently concessional. Transactions related to critical minerals that do not qualify as ODA may still be reported in DAC statistics, either as: OOF, if extended by official entities; PSI, if provided to private companies; officially supported export credits if they fall under this category.9 These various flows are collectively referred to as official development finance.

Source: DAC Statistical Directives In addition to the direct provision of official development finance, development finance interventions can be instrumental in mobilising commercial investments into the critical minerals value chain. Blended finance, i.e. “the strategic use of development finance to mobilise additional finance towards sustainable development in developing countries” (OECD, 201 Sm)1D (see Box 1) can mobilise commercial finance through development finance interventions. Such development finance interventions include scarce and limited ODA, but also non-concessional development finance at market terms, e.g. provided by multilateral

development in developing countries” (OECD, 201 Sm)1D (see Box 1) can mobilise commercial finance through development finance interventions. Such development finance interventions include scarce and limited ODA, but also non-concessional development finance at market terms, e.g. provided by multilateral and bilateral development finance institutions (DFls), to address risks and retums of investments that would otherwise not take place. Private finance mobilised by official providers for extractive industries/mineral resources amounted to a total of USD 9.23 billion in total over the past 11 years (2014-2024), out of USD 564.76 billion in total mobilised during this period. USD 8.66 billion were mobilised by multilateral organisations — mostly using direct investment in companies and special purpose vehicles, guarantees and syndicated loans as leveraging mechanisms —and USD 0.57 billion by bilateral providers — mostly through guarantees (OECD, 20261307)."" Applying the same keyword search for critical raw materials as for development finance flows, private finance mobilised for critical raw materials amounted to USD 899.7 million in total over the past 11 years (2014-2024), of which multilateral organisations mobilised USD 713 million and bilateral providers USD 186.7 million. Future work could reflect on concrete project examples and the extent to which development finance instruments are addressing genuine market gaps; the distribution of risks and returns between development actors, commercial actors and partner countries; and the development outcomes associated with these investments. While development finance flows for critical minerals are increasing but overall small, a recent and significant uptake in mandates of both bilateral and multilateral providers can be observed (see Table 1). THE POTENTIAL OF DEVELOPMENT FINANCE TO UNLOCK INVESTMENTS IN THE CRITICAL MINERALS VALUE CHAIN © OECD 20268| Table 1. Strategies and mandates of selected development finance providers List non-exhaustive Development finance provider Mandate/strategy on financing of the critical minerals value chain Bilateral providers

OECD 20268| Table 1. Strategies and mandates of selected development finance providers List non-exhaustive Development finance provider Mandate/strategy on financing of the critical minerals value chain Bilateral providers Canada FinDev Canada, hosting the G7 DFI presidency in 2025, picked critical mineral development as one of the ffree topics of focus of the G7 DF sirategy. Canada is home to significant criical minerals resources, and ts strategy also aims to develop its own mining industry Franc