IEA reports mixed outlook on critical minerals for energy transitions

Falling prices, increased demand and concentration of supply characterise the critical minerals panorama as energy transitions advance, the IEA has reported.

In an updated ‘outlook’ on critical minerals that are key for the energy transition, including lithium, copper, cobalt and graphite among others that go into batteries, electric vehicles, solar panels and other clean technologies, the IEA finds that the prices have dropped sharply to levels last seen pre-pandemic.

Mostly driven by a strong increase in global supply, outpacing the growing demand, this has resulted in a lowering of prices, for example by around 14% for batteries.

Conversely, it also has led to a slowing in investment, which nevertheless has continued to increase but at a slower level than the previous year.

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But with demand set to continue to rise – for example, under the IEA’s net zero scenario minerals demand almost triples by 2030 and quadruples by 2040 – today’s well supplied market may not be a good guide for the future.

The IEA’s analysis indicates that the announced projects are sufficient to meet less than three-quarters of the copper and only half of the lithium requirements in 2035 in a scenario in which countries worldwide meet their national climate goals.

Moreover, a high concentration of supply is set to remain high or even rise further. Between now and 2030, around there-quarters of projected supply growth for refined lithium, nickel, cobalt and rare earth elements comes from today’s top three producers.

For battery grade graphite, almost all the growth comes from China.

“Secure and sustainable access to critical minerals is essential for smooth and affordable clean energy transitions,” says IEA Executive Director Fatih Birol on the release of the new Global Critical Minerals Outlook 2024.

“The world’s appetite for technologies such as solar panels, electric cars and batteries is growing fast – but we cannot satisfy it without reliable and expanding supplies of critical minerals. This new IEA analysis highlights that there is still much to do to ensure resilient and diversified supply.”

Key critical minerals

Copper, the only critical mineral present in all of the most important clean energy technologies, i.e. EVs, solar PV, wind, and electricity networks, has demand growing rapidly in all scenarios, driven by the rapid deployment of these technologies.

Chile remains the leading miner with the DRC the new second, while China continues to dominate refining. But while a lack of large-scale projects in the pipeline poses challenges for future supply, recycling and direct use of scrap is set to increase substantially to become a major source.

Lithium, used in a variety of applications such as ceramics or lubricants but for which batteries have become the dominant driver of growth, is the mineral facing the fastest demand growth, 10-fold, in clean energy transitions.

Australia is the largest supplier and China the largest refiner and while short-term supply is expected to keep up with demand, further projects with new players emerging need to come through to serve the longer term demand growth.

Nickel, likewise used in a wide variety of clean energy and other applications, sees demand almost doubling to 2050 driven by the rapid deployment of EV batteries.

Indonesia remains the largest producer of mined ore and refined products to 2040 but the current project pipeline indicates that battery-grade nickel may see potential supply gaps in climate-driven scenarios by 2030, even with secondary supply.

Cobalt, for which EV batteries are the largest segment of its clean energy demand – about one-third of the total production – sees demand growth continuing but slowing as low or cobalt-free technologies scale up.

Both mining and refining is highly concentrated, respectively primarily in DRC and China, is expected to further intensify and environmental and logistical bottlenecks mean that reliable cobalt supplies are far from assured.

Graphite, similarly with demand driven by batteries with its use for anodes, is set for rapid demand growth of around three times to the 2040s.

Options to synthesise graphite allow for sufficient supply volumes but natural deposits are better able to support cheaper supplies. While new projects emerge, notably in Africa, the production of battery-grade graphite remains highly concentrated in China.

Rare earth elements, including neodymium, praseodymium, dysprosium and terbium and widely used in technological applications, sees demand doubling by 2050 driven by EV motors and wind turbines.

Magnet rare earths have the highest geographical concentration for refining of all energy transition minerals, primarily in China. While the expected supply is nearly in line with requirements to 2030, limited announcements of new projects with long lead times pose risks.

Originally published on enlit.world