The supply of metals and minerals necessary for the energy transition, whose demand is exploding, remains a “challenge” with many uncertainties, warned the International Energy Agency (IEA), Tuesday, July 11.
Given a surge in demand, the global market for these minerals essential for the production of batteries, wind turbines and other solar panels reached in 2022 some 320 billion dollars (290 billion euros), according to the OUCH. From 2017 to 2022, it has doubled: the demand for lithium has tripled, that of cobalt has increased by 70%, that of nickel by 40%…
This galloping growth is set to continue, “but a combination of volatile price movements, supply chain bottlenecks and geopolitical concerns” are jeopardizing a safe and rapid energy transition, the IEA warns in a first annual report published on Tuesday. China still concentrates the majority of the production of these minerals, in particular lithium.
The prices of most of these raw materials, after having soared in 2021 and at the beginning of 2022 under the effect of the post-Covid recovery and then the war in Ukraine, have experienced a lull since the second half of 2022 but they remain largely above their usual levels. “Many challenges remain,” said IEA Director Fatih Birol, for whom “much more” needs to be done to ensure a “secure and sustainable” supply chain.
The Agency refers to the “risk of delays” in new production projects and technological “gaps”, which leave no respite in the efforts to be made to develop the offer. In any case, it will take “more projects” by 2030 to limit global warming to 1.5°C above pre-industrial levels, the objective of the Paris agreement.
China and Indonesia concentrate refining capacities
During a press conference presenting the report, Fatih Birol on Tuesday mentioned the “issue of permits”, among the factors likely to delay mineral extraction and production projects. In Chile, home to the largest copper mines in the world, the time to exploit new deposits would have doubled, taking into account environmental regulations, according to a good connoisseur of the sector: “Between the decision to open and the first extractions, it’s fifteen years,” he said recently, at a symposium in Paris.
The IEA also warns of the insufficient diversity of supply, particularly for refining where the concentration is stronger than ever: the agency, based in Paris, recalls that China represents half of the lithium plant projects , while Indonesia concentrates nearly 90% of the planned nickel refining plants.
The report is also mixed on progress in terms of sustainability and working conditions of mining projects. Some groups have implemented actions to improve their practices, in particular societal, but environmental indicators “are not improving at the same pace”, judges the report, for which the responsibility lies in part with end customers, often not very attentive on the practices of their suppliers. In order to address all these questions, the IEA has announced the holding of a summit bringing together all the actors on September 28 in Paris.
