Demand for critical minerals is projected to more than double by 2030 and increase 3.5-fold by 2050
Duygu Alhan |11.07.2023
ANKARA
The market for critical minerals used for the energy transition reached $320 billion last year, according to a Critical Minerals Market Review report released by the International Energy Agency (IEA) on Tuesday.
Copper led the way with $200 million in investments, followed by lithium with $40 million and nickel with $60 million.
The market for minerals to help power electric vehicles, wind turbines, solar panels, and other technologies that are key to the clean energy transition has doubled in size over the past five years, according to the IEA.
The report, released with a new online data explorer, shows that record growth in clean energy technologies is propelling huge demand for minerals such as lithium, cobalt, nickel and copper.
From 2017 to 2022, overall demand for lithium tripled, while demand for cobalt jumped 70% and nickel by 40%.
Even though investments in critical mineral development rose 30% last year, surpassing $40 billion, the IEA found that more investments are needed to meet demand by 2030.
Among the numerous minerals, lithium saw the sharpest increase in investment, with a jump of 50%, followed by copper and nickel.
Critical minerals crucial to reaching climate goals
Critical minerals are important for the world to meet its energy and climate goals at a time when sustainable energy transitions are becoming increasingly important globally, according to IEA Executive Director Fatih Birol.
However, although demand and investment are increasing, supply diversification in critical minerals remains a cause for concern. Despite progress over the past three years, China still leads the way in supplying critical minerals.
According to the IEA's announced policy scenarios, in line with the scenario accounting for the projected pace of the clean energy transition, demand for critical minerals is projected to more than double by 2030 and rise 3.5-fold by 2050.
However, in line with the IEA's net zero emissions scenario, demand for critical minerals is projected to grow 3.5-fold by 2030.
The IEA estimates that if its planned projects are realized, the supply of critical minerals will be sufficient to meet demand. However, the risk of project delays and technology-specific shortfalls leaves little room for complacency about the adequacy of supply. Thus, more projects would, in any case, be needed by 2030 in a scenario that limits global warming to 1.5 °C.
Although there are major challenges, much more needs to be done to ensure supply chains for critical minerals are secure and sustainable, Birol said.
"The IEA will continue its early leadership in this space with cutting-edge research and analysis and by bringing together governments, companies, and other stakeholders to drive progress, notably at our Critical Minerals and Clean Energy Summit on 28 September," he concluded.
Critical minerals market doubled due to clean energy demand, report says
2023.07.11
Bangkok
Dela wa Monga, an artisanal miner, holds a cobalt stone at the Shabara artisanal mine near Kolwezi, DR Congo, Oct. 12, 2022.The critical minerals market essential for clean energy technologies has doubled over the past five years, with China leading worldwide investment spending, a new report by a global energy watchdog said Tuesday.
Between 2017 and 2022, the energy sector was the main factor behind a tripling in overall demand for lithium, with a 70% jump in demand for cobalt, and a 40% rise in demand for nickel, the International Energy Agency said in its first annual Critical Minerals Market Review.
The market for energy transition minerals reached U.S.$320 billion in 2022 and is set for continued rapid growth, moving it increasingly to center stage for the global mining industry, the report said.
Clean energy tech is propelling record deployments for critical minerals, including lithium, cobalt, nickel, copper and rare earth elements. They help power electric vehicles, wind turbines, solar panels and other technologies key to the clean energy transition.
The report said that investment in critical minerals development recorded a sharp uptick of 30% in 2022 – following a 20% increase in 2021 – with companies based in China nearly doubling their investment spending in 2022.
The global shift towards clean energy technologies is driving a rapid increase in demand for such minerals, with global consumption of these transition minerals projected to grow six-fold by 2040.
China has emerged as a significant player in recent years due to its dominance over the processing and refining of key minerals necessary for renewable energy.
Due to a blend of incentives and regulatory policies, China is also ahead in manufacturing clean energy technologies, such as solar panels, wind turbines and electric vehicle (EV) batteries. It hosts about 50% of the world’s operational wind and solar capacity.
Chinese companies have been acquiring overseas mines and investing in mineral-rich countries to secure the sourcing of transition minerals to meet their rising demand.
The report said Chinese companies invested $4.3 billion between 2018 and the first half of 2021 to acquire lithium assets, twice the amount invested by American, Australian and Canadian companies combined.
Despite growth, major issues remain
Though the critical or transition minerals industry is witnessing a rapid surge in demand, opening up new avenues for growth, the Paris-based energy agency said that more work is needed to ensure diversified and sustainable supplies to support the transition.
“At a pivotal moment for clean energy transitions worldwide, we are encouraged by the rapid growth in the market for critical minerals, which are crucial for the world to achieve its energy and climate goals,” said International Energy Agency Executive Director Fatih Birol.
“Even so, major challenges remain. Much more needs to be done to ensure supply chains for critical minerals are secure and sustainable.”
The agency’s analysis found that if all planned critical mineral projects worldwide are realized, supply could be sufficient to support the national climate action pledges announced by the governments.
However, a combination of challenges, including volatile price fluctuations, supply chain constraints, and geopolitical uncertainties, have created a complex set of obstacles to overcome, posing significant risks to secure and swift energy transitions, the group said.
Lack of industry-wide progress, especially in environmental sustainability, means greenhouse gas emissions remain at high levels, with roughly the same amount being emitted per metric ton of mineral output every year, the report said.
Similarly, water withdrawals almost doubled from 2018 to 2021, while waste generation oscillated around 5 gigatons, with 2021 intensities slightly above 2018 levels.
Diversity of raw supply also remains a concern, with many new project announcements coming from already dominant players.
The report said the share of the top three producers in 2022 either remains unchanged or has increased further, especially for nickel and cobalt, with China and Indonesia leading the way.
While the projects in the pipeline indicate “a somewhat improved picture for mining,” the geographical concentration for refining operations is greater, with China holding half of planned lithium chemical plants and Indonesia representing nearly 90% of planned nickel refining facilities, the report said.
China has established itself as the world’s largest metal refining hub in the past few decades. However, it heavily relies on imports for large volumes of raw materials, often from a few sources; for example, China depends almost entirely on the Democratic Republic of the Congo for mined cobalt.
Edited by Mike Firn.
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