Critical minerals supply has increased, but demand is growing faster – IEA report

Critical minerals supply has increased, but demand is growing faster - IEA report | Windpower Monthly

The IEA’s Global Critical Minerals Outlook 2024 report showed that prices of critical minerals such as copper, lithium, nickel, cobalt and rare earth metals generally decreased last year, thanks to an increase in their supply.

Prices for cobalt, nickel and graphite, for example, all dropped by 30-45% last year, according to the report. These and other critical minerals are considered essential for use in various key components of the energy transition such as wind turbine nacelles, electric vehicles and battery storage solutions.

Demand growth for critical minerals meanwhile remained strong across last year, the report found. Lithium demand alone increased 30%, while demand for nickel, cobalt, graphite and rare earth elements — which are used to make vital components of most wind turbine nacelles — all saw increases ranging from 8% to 15%.

Increased demand was linked in part to the rollout of new clean energy capacity across the IEA’s member countries.

Following the 75% growth in deployment of new wind and solar in 2023 year on year, these two energy sources alone account for the majority of capacity additions in every region in all of the IEA’s future scenarios, the report shows..

The capacity of new wind installations alone in 2023 went up by 60% according to the IEA.

“This is accompanied by a substantial expansion of electricity networks, pushing up demand for copper and aluminium,” the report states.

Climate goals

The IEA said its modelling for different stated and aimed climate policies of member states in line with global climate goals suggested the 2023 picture of a well supplied market may not be the best indicator of a future trend because even faster increases in demand growth are expected in the coming years.

Even in the most conservative scenario, the stated policies scenario (Steps) reflecting todays policy settings ,“mineral demand for clean energy technologies doubles between today and 2030,” the report states.

Under the more ambitious announced pledges scenario (APS), steeper demand growth for critical minerals is envisaged, while it would almost triple by 2030 and quadruple by 2040 in the net zero emissions scenario.

This means that significant supply chain gaps for several critical minerals, including copper, a vital conductor in electricity and transmission networks from wind and solar farms, is likely to emerge in the coming years without action to address the shortfall.

The IEA report warns anticipated mine supply of copper by 2035 would meet just 70% of the expected demand by that year, for example.

“There are sufficient resources and the potential to make this [the 2015 Paris Climate Agreement] work, but an absence or insufficient attention to this could make energy transitions slower or more costly,” Tim Gould, the chief economist at the IEA, told reporters.

Working conditions

Increased supply of critical minerals has come amid concerns about the conditions of the workers involved in their extraction, many of whom live in the Global South.

Cobalt mining in the Democratic Republic of Congo has recently been linked with cases of modern slavery, for example, while land and human rights violations have been tied to nickel mining operations in Indonesia.

The IEA's report pointed to some tentative signs of improvement on working conditions, with reported worker injuries in the critical minerals market down 30% between 2019 and 2022.

Responding to a question from Windpower Monthly on how concerned the IEA was on this issue in light of existing environmental and social goals, the report’s lead author Tae-Yoon Kim stated:

“Worker injury rate has declined over the past three years, and also child labour and other issues have improved. This is not satisfactory, there are still a lot of issues that we need to handle, but still we are making some slight progress on that front.”