Demand for lithium and other critical minerals is skyrocketing, IEA says, but concerns over supply linger

Demand for the essential minerals key to a future centered round low and zero-emission applied sciences is surging, in keeping with the International Energy Agency, with the vitality trade’s ever-growing wants seen as a key driver.

In a brand new report revealed Tuesday, the Paris-based group stated the interval between 2017 and 2022 noticed a “tripling in overall demand for lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel.”

The IEA’s Critical Minerals Market Review stated the primary issue behind the rise was “demand from the energy sector.”

Investment within the improvement of essential minerals elevated by 30% in 2022, constructing upon a 20% rise in 2021, the IEA stated.

“Companies specialising in lithium development recorded a 50% increase in spending, followed by those focusing on copper and nickel,” it added, noting that companies in China practically doubled their spending on funding final yr.

In Dec. 2022, the IEA stated renewables had been heading in the right direction to overhaul coal and develop into the planet’s greatest supply of electrical energy era by the center of this decade.

Such is the position that essential minerals play within the operation of applied sciences together with wind generators and EVs, the stakes are excessive.

If all of the tasks deliberate for the essential minerals sector come to fruition, there could also be sufficient provide to fulfill local weather pledges introduced by governments, the IEA stated.

There are challenges forward, nevertheless, with the danger of delays to tasks in addition to “technology-specific shortfalls” offering “little room for complacency about the adequacy of supply.”

In an indication of the massive process dealing with the planet, the IEA stated extra tasks would nonetheless be required by the top of this decade with a purpose to restrict international warming to 1.5 levels Celsius, a key objective of the Paris Agreement.

The market measurement for minerals essential to the vitality transition hit $320 billion in 2022, a doubling throughout the previous 5 years. Start-ups within the essential minerals sector raised $1.6 billion final yr, a report.

The report deployment of applied sciences like batteries and photo voltaic PV was, the IEA stated, driving “unprecedented growth in the critical minerals markets.”

Given their enormous significance to low and nil emission applied sciences — lithium, for instance, is integral to the batteries that energy EVs — the event of websites that may mine and course of essential minerals has a major geopolitical facet.

China, for instance, leads the extraction of graphite and uncommon earths and the processing of lithium, in keeping with the IEA’s evaluation.

Despite this, the world’s second largest financial system remains to be massively reliant on one other nation, the Democratic Republic of the Congo, for mined cobalt.

Overall, the IEA’s report stated there had been restricted progress when it got here to the diversification of provide sources prior to now few years, including that “the situation has even worsened in some cases.”

Citing its evaluation of undertaking pipelines, the IEA stated there have been indicators of a “somewhat improved picture” for mining, however added that refining operations had been a special story.

“The majority of planned projects are developed in incumbent regions, with China holding half of planned lithium chemical plants and Indonesia representing nearly 90% of planned nickel refining facilities.”

The sustainability credentials of your entire essential minerals trade wants work, too. The IEA stated water withdrawals had practically doubled between 2018 and 2021, whereas greenhouse fuel emissions had been stubbornly excessive.

“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,” Fatih Birol, the IEA’s government director, stated.

“Even so, major challenges remain,” Birol added. “Much more needs to be done to ensure supply chains for critical minerals are secure and sustainable.”