Prices for key minerals used in clean energy technologies dropped in 2023, but new IEA analysis shows need for greater and more diversified investment to support efforts to reach energy and climate goals
Pressure eased in 2023 on the market for minerals that go into electric vehicles, wind turbines, solar panels and other clean energy technologies, as supply outpaced surging demand. But a new report from the International Energy Agency finds that major additional investments are still needed to meet the world’s energy and climate objectives.
The Global Critical Minerals Outlook 2024, published today, updates the IEA’sinaugural review of the marketlast year while also offering new medium- and long-term outlooks for the supply and demand of important energy transition minerals, such as lithium, copper, nickel, cobalt, graphite and rare earth elements.
Following two years of dramatic increases, the prices of critical minerals fell sharply in 2023, returning to levels last seen before the pandemic. Materials used to make batteries saw particularly significant decreases, with the price of lithium dropping by 75% and the prices of cobalt, nickel and graphite falling by between 30% and 45% – helping drive battery prices 14% lower. With demand growth remaining robust, these declines were mostly driven by a strong increase in global supply – helping to offset the steep price rises in 2021 and 2022.
The report finds that while lower prices for critical minerals in the past year have been good news for consumers and affordability, they have also provided a headwind for new investment. In 2023, investment in critical minerals mining grew by 10% and exploration spending rose by 15% – still healthy, but slower than in 2022.
Today’s well-supplied market may not be a good guide for the future, with the Outlook noting that demand for critical minerals continues to grow strongly in all IEA scenarios, driven by the deployment of clean energy technologies. Today’s combined market size of key energy transition minerals is set to more than double to $770 billion by 2040 in a pathway to net zero emissions by mid-century.
Detailed project-by-project analysis suggests that announced projects are sufficient to meet only 70%of copperand 50% of lithium requirements in 2035 in a scenario in which countries worldwide meet their national climate goals. Markets for other minerals look more balanced – if projects come through as scheduled. However, announced projects do not change the high geographical concentration of supply, and China is projected to retain a very strong position in the refining and processing sector.
“Secure and sustainable access to critical minerals is essential for smooth and affordable clean energy transitions. The world’s appetite for technologies such as solar panels, electric cars and batteries is growing fast – but we cannot satisfy it without reliable and expanding supplies of critical minerals,” said IEA Executive Director Fatih Birol. “The recent critical mineral investment boom has been encouraging, and the world is in a better position now than it was a few years ago, when we first flagged this issue in our landmark 2021 report on the subject. But this new IEA analysis highlights that there is still much to do to ensure resilient and diversified supply.”
The latest Outlook features a first-of-its-kind risk assessment for selected energy transition minerals, scrutinising four key dimensions: supply risks, geopolitical risks, barriers to responding to supply disruptions, and exposure to environmental, social and governance (ESG) and climate risks. Lithium and copper are the most vulnerable to supply and volume risks, while graphite, cobalt, rare earths and nickel face more substantial geopolitical risks. For graphite in particular, today’s project pipeline indicates that the available supply outside of the dominant player meets only 10% of the requirements in 2030, making announced diversification goals highly challenging to achieve. Most minerals are exposed to high environmental risks.
Stepping up efforts to recycle, innovate and encourage behavioural change is vital to ease potential strains on supply. Some $800 billion of investment in mining is required between now and 2040 to get on track for a 1.5 °C scenario. Without the strong uptake of recycling and reuse, mining capital requirements would need to be one-third higher.
The report finds that the industry is making progress on worker safety, gender balance, community investment and using renewable energy for mineral production. However, the same cannot be said for reducing waste generation, greenhouse gas emissions and water consumption – suggesting ample scope for improvement.
The latest Outlook is accompanied by an updated version of the IEA’sCritical Minerals Data Explorer, an interactive online tool that allows users to explore the latest projections. Both form part of the Agency’s expanding work on critical minerals, as requested by governments. The IEA recently hosted a Critical Minerals and Clean Energy Summit at its headquarters in Paris and is also working on a new voluntary Critical Minerals Security Programme that was launched at the IEA Ministerial Meeting in February 2024.
FAQs
The IEA Energy Transition Mineral Price Index, which tracks a basket price of copper, major battery metals and rare earth elements, tripled in the two years following January 2020, but relinquished most of the increase by the end of 2023 – although copper prices remained at elevated levels.
What are the critical minerals for the clean energy transition? ›
The transition from fossil fuels to clean energy sources will depend on critical energy transition minerals. Minerals – such as copper, lithium, nickel, cobalt – are essential components in many of today's rapidly growing clean energy technologies, from wind turbines and solar panels to electric vehicles.
What problems can we expect in the future regarding mineral supply and cost of mining? ›
The IEA estimated that for lithium and cobalt supply shortfalls will commence by 2028, even if there is now more uncertainty given the lower use of cobalt in batteries. If mining capacity under construction does not deliver as expected, copper could face shortages starting this year, and lithium by 2027 (IEA 2021).
What are the critical mineral shortages? ›
Concentration of critical minerals production in a small number of countries increases the risk of shortages, the agency warned. It expects that, between now and 2030, as much as 75% of growth in the supply of lithium, nickel, cobalt, and rare earth elements will come from just a handful of countries.
What are the 50 critical minerals? ›
Critical minerals: The Secretary of the Interior, acting through the director of the U.S. Geological Survey, published a 2022 final list of critical minerals that includes the following 50 minerals: “Aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, dysprosium, erbium, europium, ...
What company bought IEA? ›
MasTec Completes the Acquisition of Infrastructure and Energy Alternatives, Inc. MasTec, Inc. is a leading infrastructure construction company operating mainly throughout North America across a range of industries.
What is the new mineral for energy? ›
The China National Space Administration and the China Atomic Energy Authority jointly announced in Beijing on Friday that the new mineral-Changesite-(Y)-was found by scientists at the Beijing Research Institute of Uranium Geology from surface samples returned by the country's Chang'e 5 robotic mission and has been ...
Is gold a critical mineral? ›
While the significant role played by gold in the research, manufacture and composition of most sophisticated technologies is not widely understood, this critical mineral is required to make a vast array of electronics across multiple industries.
Are there enough minerals for electric cars? ›
Yes, the world has enough lithium for our electric vehicles, decades into the future.
Who is the largest producer of critical minerals in the world? ›
Global critical minerals production share 2023, by majority producing country. Critical minerals can be defined as minerals that are essential to the economy, and their supply is generally limited. China is the largest producer of many of the world's critical minerals.
Concentration of Critical Minerals in Select Countries:
Specifically, Australia has 55% of lithium reserves, China has 60% of the rare earths, Democratic Republic of Congo (DRC) has 75% of cobalt, Indonesia has 35% of nickel, Chile has 30% of copper reserves.
What are the top risks for EY 2024? ›
Top risks and expectations for 2024
The ongoing economic uncertainty, growing geopolitical turmoil, cybersecurity, artificial intelligence and other disruptive technologies, labor shortages, cost-of-living crisis and extreme weather events continue to be areas of focus for organizations.
What is the most scarce mineral in the world? ›
The rarest mineral on Earth is kyawthuite. Only one crystal, found in the Mogok region of Myanmar, is known to exist. Caltech's mineral database describes it as a small (1.61-karat) deep orange gemstone that the International Mineralogical Association officially recognized in 2015.
What mineral is in highest demand? ›
Neodymium is responsible for most of the growth in demand for rare earth metals. It's in most of your electronics, electric vehicles, wind turbines, and more. It has fantastic magnetic and conductive properties. In fact, neodymium is used in the most powerful type of permanent magnet ever created.
Are we gonna run out of minerals? ›
Countries will need copper for power and transmission lines, lithium for batteries, silicon for solar panels and zinc for wind turbines. But there are a few reasons to think that — even as the world prepares to mine huge quantities of minerals — we won't run out anytime soon.
What is the Transition energy Index? ›
The Energy Transition Index (ETI) benchmarks countries on the performance of their energy system, as well as their readiness for transition to a secure, sustainable, affordable, and reliable energy future. ETI scores on a scale from 0 to 100.
What is the energy cost index ECI? ›
ECI can be used to compare the impact on energy cost from a single device all the way up to complex systems. Calculated by dividing contributory Annual Energy Consumption Cost by the number of units affected by the device or system being measured.
What is the energy price index? ›
Energy Price Index (I:EPI)
Energy Price Index is at a current level of 102.58, down from 105.98 last month and down from 108.71 one year ago. This is a change of -3.20% from last month and -5.64% from one year ago.
What is the energy transition readiness index? ›
Energy Transition Readiness Index (ETRI)
It includes detailed analysis of the requirements for demand-side flexibility to support the deployment of variable renewable power.
