The growing importance of critical raw materials recovery: a deep-dive on phosphorus

Phosphorus and other critical minerals: environmental and geopolitical challenges

Mining activities account for around 11% of global greenhouse gas emissions

Minerals underpin virtually every aspect of the modern economy, from lithium powering electric vehicle batteries to silicon at the core of modern semiconductors. Driven by long-term structural trends including population growth, the electrification of energy systems and the digitalisation of the economy, demand for these materials is expected to rise significantly over the coming decades. Less visible, but equally indispensable, is phosphorus: a key ingredient in fertilisers, it is essential to agricultural productivity and, by extension, global food security.

Figure 1. Examples of long-term trends driving demand for minerals

Meeting this growing demand, however, comes at a considerable environmental cost. Mining activities account for around 11% of global greenhouse gas emissions and are associated with significant land transformation, water consumption, waste generation, and chemical pollution of soil and water bodies. Phosphate mining exemplifies many of these challenges. Extracting phosphate rock requires deep excavation that disrupts ecosystems, consumes substantial volumes of water, often in water-stressed regions, and generates significant quantities of chemical and mineral waste. The environmental impacts extend well beyond mine sites. For example, waste from Morocco's phosphate industry, the world's largest producer, has contributed to heavy-metal contamination of the Atlantic Ocean, adversely affecting surrounding marine ecosystems.

Beyond environmental concerns, critical minerals present a pressing strategic challenge. Production and processing are concentrated in a handful of countries, exposing downstream industries to supply disruption risks. China, for example, dominates both the extraction and processing of several critical minerals and has demonstrated its willingness to leverage this position through export controls, including restrictions introduced in 2023 on certain rare earth separation technologies. Phosphate rock production is similarly concentrated with Morocco, China and Russia, accounting for the majority of global supply. As recent years have shown, such concentration exposes global markets to significant price volatility whenever geopolitical events, trade restrictions, or supply chain disruptions occur.

Governments are therefore increasingly treating such minerals as a matter of strategic resilience. In Europe, this shift was formalised with the Critical Raw Materials Act in 2024. The regulation identifies 34 Critical Raw Materials, selected based on their economic importance and supply risk, and defines a subset of 17 Strategic Raw Materials, considered particularly essential for the green and digital transition, as well as for defence and aerospace applications. The Act sets 2030 targets, focusing on supporting domestic extraction and production, and on expanding recycling rates. Phosphorus and phosphate rock are both classified as critical raw materials because they are non-substitutable, largely imported and sourced from geographically concentrated regions

Figure 2. 2023 EU Raw Materials Criticality Assessment: Phosphorus and Phosphate Rock defined as critical raw materials

Environmental solutions are strategic solutions

Recovering phosphorus from manure, wastewater and other secondary sources could potentially meet more than 60% of global demand

Since most of the environmental impacts and supply risks associated with critical raw materials stem from primary mining, efforts are increasingly directed towards solutions that either improve the sustainability of extraction or reduce the need for virgin mineral production altogether. Recovering valuable minerals from waste streams is one of the clearest examples of the latter, simultaneously lowering environmental impact while reducing dependence on imported resources.

The opportunity is substantial. Across Europe, industrial wastewater alone is estimated to lose more than 15,000 tonnes of strategic metals every year, including quantities equivalent to around 5% of the continent's annual demand for nickel, platinum and rare earth elements. Phosphorus provides one of the clearest examples of this untapped potential. While recycled phosphorus currently represents only around 10% of global supply, recovering it from manure, wastewater and other secondary sources could potentially meet more than 60% of global demand, significantly reducing both mining dependency and environmental impacts.

Figure 3. Phosphorus market share in urban sludges by volume and value

This combination of environmental value and strategic importance is increasingly reflected in European regulation. Alongside the recognition of phosphorus as a Critical Raw Material, the revised Urban Wastewater Treatment Directive requires the European Commission to define phosphorus recovery targets, while the ongoing revision of the Sewage Sludge Directive is expected to introduce stricter limits on pollutants. These developments are likely to make direct land application and landfilling progressively less attractive options. Several countries are already moving ahead of European legislation: Germany, for example, will require phosphorus recovery from large wastewater treatment plants from 2029 and from medium-sized plants from 2032.

Today, two main recovery pathways are available. The first extracts phosphorus directly during the wastewater treatment process through the formation of struvite, a phosphorus-rich mineral that precipitates naturally under controlled chemical conditions. This approach improves plant operations and produces a usable fertiliser, but it recovers only a limited share of the phosphorus contained in wastewater.

The second pathway recovers phosphorus after sludge has been mono-incinerated. During mono-incineration, sewage sludge is burned separately from other waste streams, concentrating phosphorus in the resulting ash, from which it can subsequently be extracted through dedicated recovery processes. Although more capital-intensive, this approach can recover more than 80% of the phosphorus content, produces a cleaner and more marketable product, and aligns closely with the direction of European regulation.

Investment opportunities

From an investment perspective, the transition towards phosphorus circularity is already creating attractive opportunities across the wastewater value chain. Tightening regulations are expected to accelerate investments in sludge treatment infrastructure - including dewatering, drying, mono-incineration and related equipment - creating opportunities for infrastructure operators, engineering companies and specialized equipment manufacturers. At the same time, phosphorus recovery technologies themselves are entering an important scaling phase. While commercial deployment is still at an early stage, supportive regulation and increasing resource-security concerns are expected to drive broader adoption over the coming years, making the sector an attractive space to monitor.

More broadly, phosphorus recovery illustrates a much wider investment theme. While this case study focuses on recovering a critical raw material from urban wastewater, many other industrial wastewater streams contain valuable critical minerals that are still largely lost today. As resource security and circularity become increasingly intertwined, recovering critical raw materials from waste is likely to become one of the most compelling investment opportunities within the circular economy transition.

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