IEA Critical Minerals Market Review: Demand Is Surging
Critical minerals are becoming, well, increasingly critical.
As we noted in Part I of our series about the U.S. lithium supply chain, a Li-Bridge report released in mid-February said the rapid growth in lithium battery demand is primarily related to the growing adoption of electric vehicles (EVs) and energy storage systems (ESSs) on the electrical grid.
As a reminder, Li-Bridge is a project created in early 2022 by the U.S. Department of Energy (DOE) when it “identified and brought together the leading experts in lithium battery technology from across the U.S. industry…” to “develop a strategy for establishing a robust and sustainable supply chain for lithium battery technology in North America.”
Underscoring the fact that the U.S. is “highly import-dependent” when it comes to the global lithium battery supply chain, the report noted that one of the issues creating this vulnerability is a limited supply of essential raw materials: “…several raw minerals essential to batteries (particularly lithium, nickel, and copper) are forecasted to be in short supply globally over the next decade as demand grows faster than extraction capacity. Global competitors have spent the last decade buying up much of this limited supply.”
Additionally, among the eight key challenges reported to be inhibiting the development of a U.S. lithium battery supply chain that is “robust and sustainable,” report authors identified “lack of access to critical minerals and raw and processed energy materials” as among the top three.
According to a recent report from the International Energy Agency (IEA), that could also become an issue for other countries around the world.
The following video from Forbes Middle East provides a quick overview.
Embed 1 min video
Source: Forbes Middle East on YouTube
IEA Critical Minerals Market Review
Released on July 11, the new IEA report said that over the past five years, the market for minerals needed to power electric vehicles, wind turbines, solar panels, and other clean-energy technologies has doubled.
“The first annual IEA Critical Minerals Market Review…shows that record deployment of clean energy technologies is propelling huge demand for minerals such as lithium, cobalt, nickel and copper,” the news release said. “From 2017 to 2022, the energy sector was the main factor behind a tripling in overall demand for lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel. The market for energy transition minerals reached USD 320 billion in 2022 and is set for continued rapid growth, moving it increasingly to centre stage for the global mining industry.”
As a result, the IEA says there was a 30% jump in investments to develop critical minerals last year, which was up from a 20% increase the year prior.
“Among the different minerals, lithium saw the sharpest increase in investment, a jump of 50%, followed by copper and nickel,” the release notes. “The strong growth in spending by companies on developing mineral supplies supports the affordability and speed of clean energy transitions, which will be heavily influenced by the availability of critical minerals.”
“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,” said IEA Executive Director Fatih Birol. “Even so, major challenges remain. Much more needs to be done to ensure supply chains for critical minerals are secure and sustainable. The IEA will continue its early leadership in this space with cutting-edge research and analysis – and by bringing together governments, companies and other stakeholders to drive progress, notably at our Critical Minerals and Clean Energy Summit on 28 September.”
An analysis by the IEA estimates that if all of the critical mineral projects that are planned globally come to fruition, supply “could be sufficient to support the national climate pledges announced by governments.”
“However, the risk of project delays and technology-specific shortfalls leave little room for complacency about the adequacy of supply,” the IEA says. “And more projects would in any case be needed by 2030 in a scenario that limits global warming to 1.5 °C.”
Diversity of supply is also a concern, since already-dominant countries are those announcing many of the plans for new projects.
“Compared with three years ago, the share of the top three critical mineral producers in 2022 either remained unchanged or increased further, especially for nickel and cobalt,” according to the statement. “Additionally, environmental, social and governance (ESG) practices are making mixed progress. Companies are making headway in community investment, worker safety and gender balance. However, greenhouse gas emissions remain high, with roughly the same amount emitted per tonne of mineral output every year. Water withdrawals almost doubled from 2018 to 2021.”
Along with the Critical Minerals Market Review 2023, the organization released the new IEA Critical Minerals Data Explorer, “an interactive online tool that allows users to easily access and navigate the IEA's data and projections for critical minerals.”
The IEA says the initial version gives users access to the IEA's “demand projections under various scenarios and technology trends,” and notes that “supply-side information” will be added in the future.
“Since the IEA’s landmark analysis on the Role of Critical Minerals in Clean Energy Transitions in 2021 and the new ministerial mandates it received from its member governments in March 2022, the Agency has been expanding its work on critical minerals to help policy makers address emerging challenges,” the release notes. “It was also recently asked by the G7 to provide support across various aspects of critical minerals supply and demand.”
Key trends in the critical minerals market
Other key market trends identified in the IEA report include:
“The affordability and speed of energy transitions will be heavily influenced by the availability of critical mineral supplies.”
“Countries are seeking to diversify mineral supplies with a wave of new policies.”
“Exploration spending…rose by 20% in 2022, driven by record growth in lithium exploration.”
“Despite headwinds in the wider venture capital sector, critical minerals start-ups raised a record USD 1.6 billion in 2022.”
“The battery sector is undergoing transformative changes with the emergence of new technology options.”
“In a bid to secure mineral supplies, automakers, battery cell makers and equipment manufacturers are increasingly getting involved in the critical minerals value chain.”
The IEA says that in an effort to “strengthen international dialogue and cooperation” related to critical minerals, it will host the inaugural “international summit on critical minerals and their role in clean energy transitions.”
The summit will be held September 28 in Paris, “convening ministers from countries in the IEA Family and beyond – including both large mineral producers and consumers – as well as business leaders, investors, heads of international organisations and civil society representatives.”
As noted in the full report, IEA member countries include:
Republic of Türkiye
IEA association countries include:
The IEA notes that the European Commission also participates in its work.