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25/06/2024
Mining News

IEA report highlights need for increased investment in critical minerals despite 2023 price drop

Prices for key minerals used in clean energy technologies fell in 2023 as supply outpaced demand, easing pressure on the market. However, a new report from the International Energy Agency (IEA) emphasizes that significant additional investments are still required to meet global energy and climate goals.

The Global Critical Minerals Outlook 2024, released today, updates the IEA’s initial review from last year and offers new medium- and long-term projections for the supply and demand of essential energy transition minerals, including lithium, copper, nickel, cobalt, graphite and rare earth elements.

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After two years of dramatic increases, the prices of critical minerals returned to pre-pandemic levels in 2023. Battery material prices saw significant declines, with lithium prices dropping by 75% and cobalt, nickel, and graphite prices falling between 30% and 45%, leading to a 14% reduction in battery prices. This price decrease was largely driven by a strong increase in global supply, which balanced the steep price rises of 2021 and 2022.

While the price drop has benefited consumers and improved affordability, it has also hindered new investment. In 2023, investment in critical minerals mining grew by 10%, and exploration spending rose by 15%—healthy but slower than in 2022.

The report warns that the current well-supplied market may not reflect future conditions, as demand for critical minerals continues to rise in all IEA scenarios due to the deployment of clean energy technologies. The market size for key energy transition minerals is expected to more than double to $770 billion by 2040 in a net-zero emissions pathway.

A project-by-project analysis indicates that announced projects will meet only 70% of copper and 50% of lithium requirements by 2035 under current national climate goals. Other minerals’ markets appear more balanced, provided projects proceed as planned. However, the geographical concentration of supply remains high, with China projected to maintain a dominant position in refining and processing.

IEA Executive Director Fatih Birol stated, “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.”

The Outlook introduces a risk assessment for energy transition minerals, examining supply risks, geopolitical risks, barriers to addressing supply disruptions, and environmental, social, and governance (ESG) and climate risks. Lithium and copper are most vulnerable to supply and volume risks, while graphite, cobalt, rare earths, and nickel face significant geopolitical risks. For graphite, the current project pipeline outside the dominant supplier meets only 10% of 2030 requirements, challenging diversification goals. Most minerals face high environmental risks.

Increasing efforts to recycle, innovate, and promote behavioral change is crucial to alleviate potential supply strains. The report estimates that $800 billion in mining investment is needed by 2040 to stay on track for a 1.5°C scenario. Without significant recycling and reuse, mining capital requirements would rise by one-third.

The industry is progressing in areas like worker safety, gender balance, community investment, and renewable energy use. However, improvements are needed in reducing waste generation, greenhouse gas emissions, and water consumption.

The Outlook is accompanied by the updated IEA Critical Minerals Data Explorer, an interactive tool for exploring the latest projections. These resources are part of the IEA’s expanding critical minerals work, including hosting the Critical Minerals and Clean Energy Summit and launching the Critical Minerals Security Programme.

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