BackCritical minerals market surges on soaring demand for clean energy: Report
Responding to the surge in demand, investment in critical mineral development witnessed a significant rise of 30% last year, following a 20% increase in 2021. Among these minerals, lithium observed the sharpest increase in investment, with a remarkable jump of 50%, followed by copper and nickel
PremiumNew Delhi: The market for critical minerals, essential for powering clean energy technologies, has experienced a remarkable surge, doubling in size over the past five years, the International Energy Agency (IEA) said in a report on Tuesday.
The IEA’s inaugural Critical Minerals Market Review, released today along with a new online data explorer, highlights the soaring demand for minerals like lithium, cobalt, nickel, and copper driven by the increasing deployment of clean energy technologies such as electric vehicles, wind turbines, and solar panels.
The report reveals that the energy sector played a pivotal role in tripling the overall demand for lithium from 2017 to 2022, while cobalt witnessed a 70% jump in demand and nickel saw a 40% rise. Consequently, the market for energy transition minerals reached an impressive $320 billion in 2022 and is projected to witness further rapid growth, making it a focal point for the global mining industry.
Responding to this surge in demand, investment in critical mineral development witnessed a significant rise of 30% last year, following a 20% increase in 2021. Among these minerals, lithium observed the sharpest increase in investment, with a remarkable jump of 50%, followed by copper and nickel. The substantial growth in corporate spending on mineral supplies reinforces the affordability and pace of clean energy transitions, underscoring the significance of the availability of critical minerals.
“At a pivotal moment for clean energy transitions worldwide, we are encouraged by the rapid growth in the market for critical minerals, which are crucial for the world to achieve its energy and climate goals," said IEA Executive Director Fatih Birol. However, Birol acknowledged the existence of major challenges and stressed the need to secure and sustain the supply chains for critical minerals.
The IEA aims to lead in this area by conducting cutting-edge research, analysis, and by fostering collaboration among governments, companies, and other stakeholders. The agency has planned the Critical Minerals and Clean Energy Summit on 28 September, where progress in this critical field will be discussed.
The IEA’s analysis suggests that if all planned critical mineral projects worldwide materialize, the supply could meet the national climate pledges announced by governments. Nevertheless, concerns remain due to potential project delays and technology-specific shortages, leaving little room for complacency in ensuring an adequate supply. Meeting the target of limiting global warming to 1.5 °C by 2030 would require even more projects to be undertaken.
The report also raises concerns regarding supply diversity, with numerous new project announcements coming from countries that already dominate the critical minerals market. In 2022, the share of the top three critical mineral producers either remained unchanged or increased further, particularly in the case of nickel and cobalt.
The report also highlights mixed progress in environmental, social, and governance (ESG) practices. While companies have made advancements in community investment, worker safety, and gender balance, greenhouse gas emissions associated with mineral production remain high, with consistent annual emissions per tonne of mineral output. Additionally, water withdrawals nearly doubled between 2018 and 2021.
Alongside the Critical Minerals Market Review 2023, the IEA has introduced the Critical Minerals Data Explorer, an interactive online tool that provides easy access to the agency’s data and projections for critical minerals. The initial version of the tool enables users to explore demand projections under various scenarios and technology trends, with plans to include supply-side information in future updates.
Since the publication of the IEA’s influential analysis on the Role of Critical Minerals in Clean Energy Transitions in 2021, the agency has expanded its work on critical minerals to aid policymakers in addressing emerging challenges. Moreover, the IEA has been requested by the G7 to provide support in various aspects of critical minerals supply and demand.
To foster international dialogue and cooperation on this matter, the IEA is set to host the world’s first international summit on critical minerals and their role in clean energy transitions on 28 September in Paris. The summit will bring together ministers from IEA member countries, as well as major mineral producers and consumers, business leaders, investors, heads of international organizations, and civil society representatives.
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