🌱 What is causing the demand and prices to increase so rapidly?
The growing scale and rate of the energy transition is causing the demand and prices for transition minerals and critical raw materials to increase swiftly. The exploration for minerals has increased to try to accommodate for this. Yet, there is currently strong competition over the control of the extraction and processing of the minerals – particularly following the Russian invasion of Ukraine.
🌱 What changes are expected for 2023 and 2024?
The demand for transition minerals and critical raw materials is expected to continue to grow in 2023 and 2024, despite the anticipated global recession. The sale of electric vehicles and the use of renewable energy technologies is expected to continue to grow. Yet, according to a market prognosis from S&P Global, the growth of the battery metals market may stall in early 2023, due to a weaker demand for electric vehicles (particularly as consumers may shy away from purchasing more expensive vehicles) and due to issues on the production-side (incl. potential production disruptions due to China's COVID policy). Overall, S&P Global anticipates “that the increasing consumption [of transition minerals and critical raw materials] will outstrip the mining industry's ability to ramp up supply, resulting in commodity deficits as early as 2024.” One reason for this is that the number of new mining projects is likely to be limited through the increased scrutiny, which has arisen with the growth of ESG.
🌱 What is expected by 2030, 2040 and 2050?
According to infographics from the Visual Capitalist, the collective market for transition minerals and critical raw materials is expected to exceed $800 billion annually by 2030. The International Energy Agency has created two models for how they anticipate the demand for transition minerals and critical raw materials to grow by 2040. The “conservative model […] assumes demand for material will double by 2040 relative to 2020 levels”. The second model – built on the premise that largescale actions are taken to meet international climate goals – assumes that the 2040 demand “could rise as high as 300% relative to 2020 levels”. Amongst the transition minerals, “lithium is expected to see the most explosive surge in demand”. The IEA anticipates that the 2040 demand for lithium could reach a range between 13 to 42 times the level of the 2020 demand. Similarly, according to a report from the World Bank Group, “the production of minerals, such as graphite, lithium and cobalt, could increase by nearly 500% by 2050”. The World Bank Group “estimates that over 3 billion tons of minerals and metals will be needed to deploy [the] wind, solar and geothermal power, as well as energy storage, required for achieving a below 2°C future”.
Read more about the increased demand and price of critical raw materials here:
- https://www.protocol.com/climate/critical-minerals-prices-spike-renewables
- https://www.powermag.com/the-big-picture-critical-mineral-concerns/
See infographics from the Visual Capitalist here:
- https://elements.visualcapitalist.com/all-the-metals-mined-in-2021/