The global energy transition is leading to an enormous increase in the demand for mineral resources. Depending on the scenario, this demand could grow by a factor of between two and six in the coming two decades according to the estimates produced by the International Energy Agency (IEA) in its report entitled “The Role of Critical Minerals in Clean Energy Transitions .”
Exploding demand for raw materials
“Critical minerals such as lithium, cobalt, copper, nickel, and rare earth elements are the key components of the world’s future energy systems,” explains Fatih Birol, Executive Director of the IEA. This should not come as a surprise, because lithium, nickel, cobalt, manganese, and graphite are needed for electric vehicles, for example. They play a crucial role in the performance, service life, and energy density of batteries. Rare earths are an essential component of the permanent magnets in electric motors and wind turbines. For example, an onshore wind farm needs nine times more minerals than a gas power station of a similar size, most importantly copper, nickel, manganese, zinc, and rare earths. In the future, we will also need a much larger quantity of mineral resources, in particular silicon and copper, than we currently do to meet our requirements for battery capacity and photovoltaic systems.
Additional consumption in the transport and energy sector
This is why the overall demand for rare earths over the coming 20 years will increase around sevenfold, according to the IEA, depending on the speed at which renewable energy generation expands. The agency’s calculations indicate that demand for nickel and cobalt will increase 19-fold and 21-fold respectively. The need for graphite will rise by a factor of 25, and in the case of lithium the figure is 42. The IEA explains that electric cars and batteries have already overtaken entertainment electronics as the largest consumer of lithium.
“The transition to a clean energy system will lead to a huge increase in the demand for these minerals,” the study says. One consequence will be that the energy sector, which used only a small proportion of these minerals up until the mid-2010s, will become one of the major drivers of the raw materials market. Although the IEA explains that there is currently no shortage of resources, the supply of critical minerals will be a key factor for energy security.
“The data show an impending disparity between the world’s growing climate goals and the availability of the critical minerals needed to achieve these targets,” warns Birol. Because in contrast to oil, a raw material that is produced throughout the world and traded on liquid markets, the extraction, production, and processing of mineral resources such as lithium, cobalt, and rare earths take place in only a few countries. The top three producers control more than three quarters of the global extraction. For example, in 2019, around 70 percent of the cobalt used throughout the world came from the Democratic Republic of Congo and 60 percent of the rare earths from the People’s Republic of China. The Asian superpower also processed around 35 percent of global nickel, 50 to 70 percent of lithium and cobalt and almost 90 percent of the rare earths in its refining plants.
However, according to the IEA, it is not only this concentration on the few countries that extract and process the minerals that puts the security of supply of an energy landscape reliant on renewable energy and electric vehicles at risk. The complex and therefore easily disrupted supply chains, trade restrictions, and unpredictable political developments in the producing countries also jeopardize the progress of the energy transition. In addition, it is becoming increasingly difficult to extract the minerals because the most easily accessible deposits have already been exploited. Opening new mines will take more than 16 years.
“If we do not address these potential weak points, global progress toward a clean energy future could become slower and more costly and this would present an obstacle to international efforts to combat climate change,” says Birol. Ensuring the availability of critical minerals must therefore form part of any system to safeguard energy security.