The growth of clean energy sector involves a constant increased demand for critical minerals. However, to effectively implement the global ecological transition path, it is necessary to further strengthen investments in these raw materials, in order to guarantee a resilient and diversified offer and achieve energy and climate targets set on a global basis. The question is central if we consider that the market for these minerals is destined to double, reaching 770 billion dollars by 2040 as part of the path towards net-zero emissions by 2050.
A recent study says so (Global Critical Minerals Outlook 2024) of the IEA which carried out a risk assessment on some critical minerals used for the energy transition (lithium, copper, nickel, cobalt elements, graphite and rare earths), analyzing four key dimensions:
- supply risks,
- geopolitical risks,
- obstacles to responding to supply disruptions,
- exposure to environmental, social and governance (ESG) factors.
Critical minerals, prices falling in 2023
The research shows how, after two years of strong increases, the prices of critical minerals fell dramatically in 2023, returning to pre-pandemic levels. The most significant decline was recorded by the materials used in the production of batteries. Specifically, the lithium price dropped by 75% and prices of cobalt, nickel and graphite have fallen by between 30% and 45%, in turn helping to reduce battery prices by 14%.
However, although the reduction in prices of critical minerals over the last year has been good news, at the same time this trend has held back new investments. In 2023, investments destined for the extraction of critical minerals grew by 10% and exploration spending increased by 15%, still positive, but decreasing compared to 2022.
Projects insufficient to meet critical mineral needs
The study also highlights how currently announced critical minerals projects are only sufficient to meet 70% of copper and 50% of lithium needs by 2035.
All in a scenario in which countries around the world achieve their national climate goals. The markets for other minerals – the research also explains – appear more balanced, if the projects are implemented as planned.
According to IEA Executive Director Fatih Birol thesafe and sustainable access to critical minerals it is essential for successful clean energy transitions. Global demand for technologies such as solar panels, electric cars and batteries is growing rapidly, but it cannot be met without reliable and expanding supplies of critical minerals.
Birol also highlighted how the recent boom in critical mining investments has led to important steps forward on a global scale. However, there is still much to be done to ensure a resilient and diverse supply of these commodities.
Over 800 billion in investments needed by 2040
The report also highlights how, to reach a 1.5°C scenario, approximately $800 billion of investments in the critical raw materials sector will be needed by 2040.
Another important challenge will be that relating to recycling and reuse of these mineralsa topic on which there is still much to be done.
The industry is making progress in worker safety, gender balance, community investment and the use of renewable energy for mining production. However, the same cannot be said for reducing waste production, greenhouse gas emissions and water consumption, where there is ample room for improvement.
Online tool with projections on critical minerals
The IEA study is also accompanied by an updated version of the Critical Minerals Data Explorer. Specifically, it is an interactive online tool, developed by the agency, which allows users to have a constantly updated picture of the latest projections on the various critical materials.
Among the initiatives carried out by the IEA there is also a new voluntary program for safety of critical minerals, launched in February 2024.
