Decline in critical mineral prices risks stalling clean energy transition, IEA warns

New research has found that while the decrease in prices for key minerals essential for clean energy technologies has provided temporary relief for consumers, it has also hindered the incentive for new investments, potentially resulting in supply chain shortages and impeding the clean energy transition.

Decline in critical mineral prices risks stalling clean energy transition, IEA warns

Critical minerals are vital for electric vehicle (EV) batteries, wind turbines, and solar panels.

This is according to the Global Critical Minerals Outlook 2024, released by the International Energy Agency (IEA), providing insights into the global market for minerals such as lithium, copper, nickel, cobalt, graphite and rare earth elements.

These minerals are vital for electric vehicle (EV) batteries, wind turbines, solar panels, and other clean energy technologies.

The report highlights that following two years of price increases, critical mineral prices dropped sharply in 2023, returning to pre-pandemic levels. Specifically, materials crucial for battery production saw considerable decreases, with lithium prices falling by 75%, and cobalt, nickel, and graphite prices dropping by 30% to 45%.

The IEA notes that while this may have benefited consumers, it has hampered incentives for new investments. Despite a 10% increase in mining investment and a 15% rise in exploration spending in 2023, the pace of investment growth has slowed compared to previous years, as per the report.

The IEA warns that the current supply might not meet future demand for critical minerals as the demand is anticipated to rise across all IEA scenarios due to the growing adoption of clean energy technologies. The current combined market size of key energy transition minerals could more than double to $770bn by 2040 in a pathway to net-zero emissions by mid-century.

IEA’s executive director Fatih Birol said: “Secure and sustainable access to critical minerals is essential for smooth and affordable clean energy transitions.

“The world’s appetite for technologies such as solar panels, electric cars and batteries is growing fast – but we cannot satisfy it without reliable and expanding supplies of critical minerals.”

Future demand and supply dynamics

The report highlights that the currently announced projects are only projected to meet a fraction of future requirements, leaving significant gaps that could lead to supply strains in the years to come.

One of the key concerns outlined in the report is the high geographical concentration of supply, with China projected to retain a dominant position in the refining and processing sectors.

Nevertheless, detailed project-by-project analysis suggests that while some minerals, such as copper and lithium, may see supply shortfalls in the near future, others appear to have a more balanced market outlook if projects come to fruition as scheduled.

To mitigate future supply strains, the IEA recommends promoting recycling, innovation and behavioural changes to reduce demand for critical minerals.

According to the report, an estimated $800bn investment in mining will be needed by 2040 to align with a 1.5C scenario. However, without advancements in recycling and reuse, the IEA warns that mining capital requirements could increase significantly.

Comments (2)

  1. Richard Phillips says:

    Science, technology and business have not always been comfortable bedfellows!

  2. Richard Phillips says:

    Is mineral graphite an essential, as opposed to grahitised carbon?
    Does not the second fill most purposes?

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