The IEA's Critical Minerals Market Review highlights a three-fold increase in demand for lithium, a 70 percent surge in demand for cobalt, and a 40 percent increase in demand for nickel between 2017 and 2022. The Paris-based organization concedes the energy sector has mainly been responsible for this growth, yet they predict additional projects are necessary by the end of the decade to keep global warming to the 1.5 degrees Celsius threshold.
The International Energy Agency (IEA) published a report on Tuesday, which revealed that the requirement for the essential minerals vital to low and zero-emission technologies is on the rise. According to the report, between 2017 and 2022, the demand for lithium increased by threefold, for cobalt by 70%, and for nickel by 40%. The primary factor driving the demand is the energy industry. The IEA also reported that in 2022, there was a 30% increase in investment into the development of these minerals, following a 20% rise in 2021. Firms working on lithium projects elevated their spending by 50%, those concentrating on copper and nickel by a close amount, and companies in China nearly doubled their investment.
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The IEA said in December 2022 that renewables were set to surpass coal and become the Earth's leading electricity producer by the mid-decade. The importance of minerals in the use of technology such as wind turbines and EV's is clear. If all of the planned projects in the critical minerals sector come true, it could provide enough material to reach the climate goals set by governments. Despite this, there are still difficulties, such as possible delays to projects or lack of the right resources, so there is no room for a relaxed attitude. Despite this news, the IEA claimed that even more projects would be required to uphold the 1.5 degree Celsius temperature limit set by the Paris Agreement. The markets for such minerals rose to $320 billion in 2022, a two-fold increase in the past five years. Furthermore, start-ups in the critical minerals sector raised $1.6 billion in the last year, another record. The IEA identified that the wide use of technology including solar PV and batteries is driving the crucial minerals market to an unprecedented level.
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Given their essential part in low and zero emission technologies – lithium being a prime example in powering EVs – the exploration and processing of critical minerals has a remarkable geopolitical component. China, for instance, is a top producer and refiner of graphite and rare earths, according to the IEA's assessment. Nevertheless, the second largest economy in the world is still significantly reliant on the Democratic Republic of the Congo for mined cobalt. In general, the IEA's report found that there had been small steps to diversify sources of supply in the past few years, and in some cases it has even regressed. Examining project pipelines, the IEA found some indications of a "better picture" for mining, yet refining operations had a different story to tell. "The majority of planned projects are based in existing regions, with China controlling half of planned lithium chemical plants and Indonesia accounting for almost 90% of prospective nickel refining sites." Moreover, the sustainability of the whole critical minerals industry needs consideration. The IEA observed that water withdrawals had almost doubled between 2018 and 2021, while greenhouse gas emissions remained high. “At a turning point for global clean energy transitions, we are enthusiastic about the fast growth of the critical minerals market, which are indispensable for the world to meet its energy and climate objectives,” said the IEA’s Executive Director, Fatih Birol. “Nevertheless, considerable challenges remain,” Birol added. “A lot more has to be done to ensure secure and sustainable supply chains for critical minerals.”
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