The latest IEA report (Interactional Energy Agency) on critical minerals, that broad category of raw materials that are at the basis of the ecological transition, shows a very clear trend: prices have collapsed, with spot lithium even dropping by 75% in December 2023 compared to December 2022. Also cobalt, nickel and graphite, all fundamental materials for the production of electric batteries, have seen drops of between 30 and 45%.
These drops are largely justified by the large increase in prices observed in the two years preceding 2023, when the index developed by the IEA to measure this market, the IEA Energy Transition Mineral Price Index, which brings together copper, rare earths and critical minerals, tripled in value, only to deflate late last year. Only copper maintained some upward price tension.
For the other minerals, the collapse followed a notable increase in supply, which occurred precisely at the time when prices were skyrocketing, in the most classic of economic catch-up mechanisms in which markets frequently perform. Prices rise, more is produced, prices fall.
Nothing particularly worrying, then. Also because, despite the swing in prices, the demand for the goods for which these materials are used, electric batteries for one, continues to grow. And this can also be seen from the sales of electric cars which, in 2023, reached 14 million units sold, with an increase of 35% compared to the previous year. The forecasts are even more optimistic.
All this also has repercussions on the demand for critical minerals. Beyond prices, now falling due to increased supply, the demand for these raw materials is expected to grow significantly.
Lithium, according to one of the scenarios developed by the IEA, should have, by 2040, a demand nine times higher than the current level, graphite four times higher and copper will experience the highest increase. It is estimated that the critical minerals market will reach a value of 770 billion dollars by 2040, double what it is now.
Prices are critical, in short. But they won’t be for long.
Maurizio Sgroi
socioeconomic journalist
author of the book “The history of wealth”
Twitter @maitre_a_panZer
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