The supply of critical minerals could be “sufficient” to support climate commitments by 2030, provided all planned projects are implemented, Kallanish learns from the International Energy Agency (IEA).

In its inaugural Critical Minerals Market Review report, released Tuesday, the IEA highlights that a “record deployment” of clean energy technologies, including solar PV and batteries, is driving the increasing demand for critical minerals. Between 2017 and 2022, the energy sector demand tripled lithium consumption. For cobalt and nickel, the demand rose by 70% and 40%, respectively.

Overall, the IEA predicts the demand for critical minerals to “increase rapidly” under all forecast scenarios. Under the Announced Pledges Scenario (when all long-term energy and emission targets are met), demand will more than double by the end of this decade. On the other hand, to achieve net zero emissions by 2050, demand will grow by 3.5 times by 2030.

In response to this surging demand, the critical minerals market size doubled in the last five years to hit $320 billion in 2022. At the same time, investments in critical mineral development have also seen a sharp increase, rising 20% in 2021, followed by a 30% boost in 2022. Lithium led the investment boom with a 50% jump, surpassing copper and nickel. 

Similarly, exploration spending rose 20% last year, spurred by exploration activities in countries such as Australia and Canada. Here too, lithium took the lead, with a 90% increase in spending. 

“The secure and affordable clean energy transition will be critically hinging on the availability of critical minerals around the world,” IEA executive director Fatih Birol said in a press conference on Tuesday. “The increasing investment is an important signal that the markets are buying in. The clean energy transition will be even faster in the next years to come so we will need more critical minerals.”

However, major challenges remain. The IEA warns that project delays, technology-related issues, and cost overruns could pose a risk for supplies. Lack of diversification of supply is also an issue, with new projects being initiated in countries already dominant in the space, such as China, Indonesia and the Democratic Republic of the Congo.

In terms of environmental, social and governance (ESG) practices, the energy agency notes that greenhouse gas emissions from minerals production “remain high.” Water withdrawals have also doubled between 2018 and 2021. 

Source: IEA