Investing in critical minerals facilitates climate targets – 07/12/2023 – Market

Investments in critical minerals are close to sufficient for the world’s clean energy ambitions, according to the International Energy Agency. At the same time, however, she warned that efforts to diversify mineral sources have been insufficient in the case of metals such as lithium, nickel and cobalt.

The Paris-based IEA said investment in developing crucial minerals rose 30% last year to surpass $40 billion, after rising 20% ​​in 2021. large increase in spending by China, raising fears that Beijing will expand the control it exercises over the market for certain products.

If all the announced projects to develop critical mineral resources – which help power electric cars, wind turbines and solar panels – are delivered on schedule, supply should be enough for national climate pledges to be met by 2030, added the IEA report.

“Demand continues to increase significantly, but there is some encouraging supply news,” said IEA Executive Director Fatih Birol. “We are less concerned about the availability of critical minerals than we were two years ago.”

The scarcity of raw materials, including lithium and copper, is one of the biggest problems that could delay the transition to clean energy, and the IEA report highlights how rising prices of a commodity like lithium are driving increased investment.

But the report also pointed to the high likelihood of delays in mining projects that could suffer problems such as “permission issues”, funding problems and technical risks.

Investment and supply increases notwithstanding, Birol said the “limited” progress in diversifying raw material sources over the last three years, in addition to the failure to reduce the high levels of emissions and water normally required to generate metallic products, are “two major concerns”.

Chinese companies are stepping up to source the materials needed for clean energy, having nearly doubled their investment spending by 2022, while western mining companies like BHP, Anglo American and Glencore have increased their investment by 25% on average, according to the IEA. .

The agency said that at the stage of processing the crucial minerals, the increasing dependence of a small number of countries has grown even more. Half of future lithium chemical plants are planned to be built in China and 90% of new nickel refineries will be located in Indonesia, it said.

Evidence of China’s growing hegemony over supply chains for critical minerals comes a week after Beijing announced plans to limit its exports of gallium and germanium, crucial raw materials for chipmaking, in response to the adoption of led restrictions. by the US to semiconductor exports.

The US is in the early stages of adopting policies to overhaul global supply chains for strategic minerals with its $369 billion Inflation Reduction Act package. But mining projects usually take between seven and 20 years to come online.

Demand for critical minerals is forecast to more than double by 2030, intensifying the slow-acting mining sector’s struggle to ramp up production on time. The market, which last year had revenues of US$320 billion, has doubled in size in the previous five years, partly due to higher prices, according to the report.

Birol warned that if the world wants to limit global warming to as little as 1.5 degrees above pre-industrial temperatures – a higher target than most current national climate targets – it will only have three-quarters of the minerals it needs by 2030.

Translated by Clara Allain