Esomeone I really want More metal. In recent months, the UK has signed an agreement with Zambia and Japan with Namibia. european union shook Join hands with Chile. The bloc’s negotiators have also begun talks with the Democratic Republic of the Congo. Meanwhile, the United States visited Mongolia. This sporadic campaign also targets the Philippines and Saudi Arabia, with the sole purpose of acquiring the minerals needed for rapid decarbonization.
Seventy-two countries, accounting for four-fifths of global emissions, are committed to net-zero targets. According to the Energy Transition Commission (etc) The think tank’s plans call for a 15-fold increase in current wind power capacity, a 25-fold increase in solar power, a three-fold increase in the size of the electricity grid and a 60-fold increase in the number of electric vehicles by 2050 (Fs). By 2030, demand for copper and nickel could increase by 50-70%, cobalt and neodymium by 150%, and graphite and lithium by 6-7 times. After all, a carbon-neutral world in 2050 will require 35 million tonnes of green metals per year, the International Energy Agency, the official forecasting agency, predicts. When you add aluminum and steel to the mix; etc Demand between now and then is expected to reach 6.5 billion tonnes.
That’s why analysts and policymakers are worried about an omnipotent shortage toward the end of the 20th century.of etc The company predicts there will be a market-breaking shortage by 2030. It is about 10-15% for copper and nickel, and 30-45% for other battery metals. When prices rise due to declining inventories, producers increase production and customers use scarce materials more efficiently or look to cheaper alternatives. But even after this, unmet demand will be destroyed and prospective buyers unable or unwilling to pay higher prices will be forced out of the market. Too much of this demand destruction will undermine the green transition. So the question is simple. Is it possible to minimize crunch?
Start by considering the metal in question. Three are already widely used in industry. Aluminum and steel are the backbone of panels and turbines, and copper is essential to everything from cables to cars. Next comes what powers electric cars (Fs): Cobalt, lithium, and nickel, which make up the battery’s positive electrode, and graphite, which is the main negative electrode element. All of these have niche uses, except for nickel, which is also a component of stainless steel. The last group is characterized by magnetic rare earths such as neodymium. F motor and turbine generator. These are only needed in very small amounts.
The search for such metals is made more urgent by the unpleasant fact that climate policy is unlikely to limit global warming to 1.5°C above pre-industrial levels, as most forecasts assume. has fallen slightly. Furthermore, many looking to the future assume that demand for green gear, and by extension metal, will increase linearly, even though it is certain that some countries will only start sprinting in the final yards. Therefore, the net-zero forecast may be more reliable for 2050 than for 2030. There probably won’t be a drop of green steel left in the ocean. The supply of cobalt, a byproduct of other popular metals, could forever outstrip demand.
However, many challenges still remain.The industry oracle called economist They predict that by 2030, the copper supply gap will be 2-4 million tonnes, or 6-12% of potential demand. It also predicts that the lithium shortage will be 2% to 4%, or 50,000 to 100,000 tons. Nickel and graphite, which are theoretically abundant, can pose problems because batteries require materials of hard-to-obtain purity. There are too few smelters that refine bauxite into aluminum. No other country produces neodymium other than China.
These will be difficult problems to overcome. However, I found that with three levers I was able to reduce the pressure without interfering with the transition. First, producers may extract more supply from existing sources. This can be done quickly, but the amount of metal produced is limited. Secondly, companies may open new mines, which may completely solve the problem, but it will take time. Because of the limitations of these two measures, the third measure will be the most important, at least for the next decade. It’s about finding ways to avoid green bottlenecks.
full metal racket
Reusing more materials can yield quick wins. These gains are greatest for aluminum, copper, and nickel. All of that is widely recycled, but rising prices will encourage spending in a modest and fragmented industry. Some of that is already happening. horsepowerThe mining giant has backed a nickel recycling start-up in Tanzania. Hugh Mackay, the company’s chief economist, predicts that scrap could account for 50% of total copper supply in 10 years, up from 35% today. Fellow mining giant Rio Tinto is also investing in aluminum recycling centres. Last year, a startup focused on battery and metal recycling raised a record $500 million.
Reopening dormant mines could yield even more results. There aren’t that many of them. The surplus supply capacity is already decreasing due to the surge in demand after the coronavirus outbreak. Even if prices doubled, the cost curves for copper and nickel show that very few mines would reopen. However, aluminum is an important exception. Since December 2021, 1.4 million tons of annual smelting capacity (2% of the world’s total) has been shut down in Europe due to rising energy costs. Trader Graham Train of Trafigura expects much of that will come back if prices rise 25%.
The greatest hope lies in the technology to squeeze supply from recalcitrant deposits. New companies are developing a chemical process known as “tail leaching” to extract copper from ore with low metal content, making the waste valuable for use. At scale, the technology could produce an additional 1 million tonnes of copper per year at little cost, said Daniel Marchak of Jetti Resources, one such company. says. Meanwhile, in Indonesia, the world’s biggest nickel producer, miners are using “high-pressure acid leaching” to turn low-grade ore into material suitable for electric cars. Already he has a $3 billion plant under construction, and he has announced additional projects worth $20 billion. Daria Efanova of trader Sakuden believes Indonesia could produce around 400,000 tonnes of prime nickel by 2030, filling some of the 900,000 tonnes supply gap she predicts. .
However, these new technologies are uncertain and sometimes come with drawbacks such as pollution. The resulting supply cannot be taken for granted. The second lever, starting new mines, will bring greater returns, even if slowly. Consultancy McKinsey & Co. estimates that the market will remain roughly balanced if at least the 382 cobalt, copper, lithium and nickel projects that have begun pre-feasibility studies are completed by 2030. These projects represent a significant increase in production. There are currently approximately 500 cobalt, copper, lithium, and nickel mines in operation around the world. Many difficulties need to be overcome in order to open on time.
The first is lack of funds. McKinsey estimates that twice his $300 billion will be needed to cover the mining industry’s projected annual capital expenditures in 2030. cru, another consultancy, estimates that spending on copper alone should reach $22 billion by 2027, compared to an average of $15 billion from 2016 to 2021. Investments by major miners are increasing, although not yet at a sufficient pace. Customers are also entering the fray. Automaker General Motors is investing $650 million in Nevada mining company Lithium Americas. CatChinese battery companies are spending billions of dollars sourcing cobalt and lithium. Since the start of the year, pension funds and sovereign wealth funds have invested $3.7 billion in private mining assets, the most since 2013. Also chasing deals is the roughly $21 billion in capital raised by private equity firms since 2010.
But with new mines taking a long time to drill – four to seven years for lithium and an average of 17 years for copper – and delays exacerbated by a lack of permits, it’s not too long before things change. It will take a while. Fueled by activists, governments and regulators are increasingly blocking projects on environmental grounds. Between 2017 and 2021, it took an average of 311 days for a new mine in Chile to receive approval, compared to 139 days between 2002 and 2006. Meanwhile, the metal content of copper ore mined in moderate countries is declining, forcing miners to turn to more dangerous locations. Two-thirds of the new supply planned by 2030 is concentrated in countries that ranked below 50 on the World Bank’s Ease of Doing Business index in 2020. Reko Diq, a project led by Canadian company Barrick Gold, contains one of the world’s largest undeveloped copper deposits and is located between Iran and Pakistan.
All this means that in the long run, new supply could be the solution, perhaps only after continued price increases. So much of the adjustment over the next decade will come down to demand, the third lever. This side of the equation is less understood because it is more difficult to model than future production. But it’s probably more flexible than commonly realized.
Automakers and battery manufacturers are the type of buyers the metals market has never seen before. Highly innovative, price-sensitive and risk-averse, these companies avoid problems at the first sign of tight supply. They have already achieved a lot through frugality, which is continually finding small ways to reduce the amount of metal used. The amount of copper in a typical electric car battery has decreased from 80kg in 2020 to just 69kg now. cru He believes the next generation will require only 21 to 50 kg, saving up to 2 million tonnes of copper per year by 2035. He believes the lithium strength of batteries could be halved by 2027.
You can accomplish even more with substitutions. A nickel-manganese-cobalt chemical reaction containing an equal amount of nickel and cobalt. NMC 111 will be phased out; NMC 721 and 811 contain a lot of nickel but very little cobalt. These account for a quarter of him. F-Battery positive electrodes increased from zero in 2017. On the other hand, lithium iron phosphate (lithium iron phosphate) is cheap but has low energy density.LFP) Mix is currently conquering the fast-growing Chinese market, where city dwellers don’t really care about short range. surely, LFP currently accounts for 30% of F cathodes around the world.
The graphite anode is overdoped with silicon. Tesla in March F-The manufacturer said it will produce motors that do not require rare earths. Sodium-ion batteries, which replace lithium with sodium, the sixth most abundant element on Earth, may soon emerge victorious. Due to its low energy density, it will initially be used for stationary storage where volume is less constrained.
Customer preferences also come into play. Today, people want to be able to drive their own cars. F It can travel 600km on a single charge, but few people travel that distance often. With lithium in short supply, automakers are likely to design short-range vehicles that can be augmented by bolting on portable batteries, significantly reducing the size of standard packs. If the price is right, it can be adopted quickly.
The main problem is that copper cannot be easily manufactured from grid. But changes in consumption could help here too. cru We estimate that green demand will account for 21% of total copper demand by 2030, up from 7% today. Although this is a larger part, it is still a small part. This leaves a few grams of copper that can be diverted to green applications in case of a supply gap. As the price of metals rises, sales of phones and washing machines that also contain copper will likely decline, especially if clean technology markets are supported by subsidies and government mandates, as will sales of electrical wires and solar panels. will decline faster than that.
By the late 2030s, there will probably be enough new mining and recycling for the transition to proceed as planned. The question is how much confusion will occur in the meantime. The situation will become difficult. With supplies concentrated in a few countries, regional unrest, geopolitical conflicts and even bad weather could hit the market. Simulations by bank Liberum Capital suggest that a strike by miners in Peru or a three-month drought in Indonesia could tip the market. In 2028, the copper or nickel market will experience a 5-15% supply shortage. But with nimble buyers, solid governments, and a little bit of luck, a collision of green metal doesn’t have to cause an electric car disaster. ■