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The International Energy Agency (IEA) reveals that investment in critical minerals is aligning with the global clean energy goals. However, the IEA warns of supply chain diversification challenges for metals like lithium, nickel, and cobalt.
In 2022, investment in developing critical minerals surpassed $40 billion, marking a growth of 30%. China has led this surge in spending, raising concerns over its increasing market control.
If all announced projects to develop critical-mineral resources, necessary for electric cars, wind turbines, and solar panels, are delivered on time, there should be sufficient supply to meet national climate pledges by 2030, according to the IEA report.
Fatih Birol, the IEA executive director, commented, “While demand continues to increase significantly on the supply side there is some encouraging news. We are less worried than we were two years ago in terms of availability of critical minerals.”
Shortages of raw materials, including lithium and copper, pose significant threats to the transition to clean energy. However, the report reveals that surging prices for minerals, like lithium, have driven increased investment.
Nevertheless, the report acknowledges that mining projects often face delays due to permitting issues, funding challenges, and technical risks.
Despite the increase in investment and supply, the IEA emphasizes the limited progress in diversifying supply sources over the past three years. Additionally, reducing the high emissions and water usage associated with metal production remain significant concerns.
The IEA discloses that Chinese companies are surpassing their Western counterparts in securing resources essential to clean energy, with a nearly doubled investment in 2022.
Furthermore, the reliance on a small number of countries in processing critical minerals has become even more pronounced. China is planning half of all future lithium chemical plants, while 90% of new nickel refineries will be located in Indonesia.
China’s increasing control over supply chains for critical minerals is highlighted after announcing plans to curb exports of gallium and germanium. These raw materials are essential for chipmakers, and the restrictions are in response to US-led export limitations on semiconductors.
The US is in the early stages of implementing policies to reshape global supply chains for strategic minerals through its $369 billion Inflation Reduction Act package. However, mining projects typically take several years to materialize, ranging from seven to 20 years.
With demand for critical minerals projected to more than double by 2030, the slow-moving mining sector faces challenges in scaling up in a timely manner. The market, worth $320 billion in revenue last year, doubled in size in the previous five years, primarily due to higher prices.
Birol warns that if the world aims to limit global warming within 1.5C of pre-industrial levels, which exceeds most current climate targets, there will be only 75% of the necessary minerals available by 2030.
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