Hence, today’s oversupplied and low-priced critical minerals market may not be a good indicator of their future.

In its Global Critical Minerals Outlook 2024, the International Energy Agency (IEA) projected future demand for critical minerals under three scenarios. The first one, the Stated Policies scenario (STEPS), represents the prevailing environment and is associated with a temperature rise of 2.4 degrees Celsius (C) in 2100.

The Announced Pledges scenario (APS) assumes that governments worldwide will fulfill all climate-related commitments towards Net Zero carbon emission on time. It is associated with a temperature rise of 1.7 degrees C in 2100.

The third one, the Net Zero Emissions (NZE) scenario by 2050 represents the projected roadmap to achieve Net Zero by 2050. By 2100, it can limit the global temperature rise to 1.5 degrees C above pre-industrial levels.

The acceleration in energy transitions will significantly boost the demand for critical minerals across all three scenarios. In the STEPS, demand is set to double by 2030. In the APS, demand will more than double by 2030 and triple by 2050. In NZE, with swifter adoption of clean energy, demand for critical minerals will surge — nearly tripling by 2030, and rising over 3.5 times the current levels by 2050.

These projected demands will depend upon the pace of solar panel installations, Electric Vehicles (EVs) sales and deployment of battery storage.

Copper Demand To Grow Rapidly In All Scenarios

Copper is the only critical mineral used almost everywhere in clean energy technologies (EVs, solar PV, wind, electricity networks) due to its conductivity, longevity, ductility and corrosion resistance. That is why the supply security of copper is essential for the energy transition.

Refined copper demand is dominated by construction and electricity networks, with 30 per cent and 15 per cent of global demand respectively, in 2023. Industrial machinery and equipment, and the transportation sector are other key sources of demand.

Global refined copper demand is projected to grow from 26 Mt (million tonnes) in 2023 to 31 Mt in the STEPS and APS, and to 33 Mt in 2030 in NZE, rising further by 20 per cent to reach around 40 Mt in 2050.

Electricity networks remain the second largest source of demand after the construction sector for STEPS and APS. However, under NZE, it will be the largest source of demand by 2030 — before construction again overtakes it after 2040.

Copper demand from EVs is likely to see the largest demand growth, increasing more than 12 times, from 2 per cent of the total in 2023 to 12 per cent in 2050 in the APS, and 13 per cent in NZE.

However, construction will remain the leading source of refined copper demand in climate-driven scenarios.

The estimated project pipeline analysis predicts a copper-primary supply shortfall after 2025 in all three scenarios, despite the significant secondary supply growth (driven by scraps).

Even the high production scenario, with almost 2 Mt of extra mined supply, is likely to result in a supply gap of 2.2 Mt (10 per cent of the total) to meet the APS demand. There will be a 4.5 Mt (20 per cent) shortfall to match the demand under NZE in 2030.

This anticipated primary supply gap in copper is a matter of growing concern for the future of clean energy technology deployment. Meeting the increased demand will require new projects, which will be possible only with a constant investment flow.

Lithium Demand To Grow Tenfold Under NZE By 2050 

Traditional industrial uses of lithium are in sectors like ceramics, lubricants and pharmaceuticals. However, the demand structure has completely transformed over the last decade, as batteries became the dominant demand driver.

Lithium demand is projected to grow almost threefold in the current decade under STEPS, expanding faster than others. By 2050, it is likely to reach 1,200 kt (thousand tonnes) in STEPS and 1,600 kt in APS. In NZE, demand will rise to 1,700 kt by 2050, a tenfold growth from today’s levels.

EVs will contribute about 90 per cent of the lithium demand growth between today and 2050 under APS. In 2030, the EV sector’s annual lithium demand is expected to be 40 per cent higher under NZE than under APS.

The development of battery storage, which currently accounts for about 5 per cent of the total demand, will accelerate by the end of 2020s. Under NZE, lithium demand for battery storage will rise to 130 kt in 2050, well over 10 times the current demand.

Annual production of lithium raw materials (hard rock, brines and clays) in 2023 amounted to around 190 kt, more than double since 2021. Projections indicate that raw lithium supply will grow to 450 kt around 2030 in the base case — more than double the current production, and five times that in 2020.

In the high-production case, an additional 70 kt of raw materials will be available. If announced projects fructify, the supply will tend towards the STEPS and APS requirements in 2030, but will be insufficient to stay on the NZE roadmap.

Beyond 2030, all scenarios require further investment in new supplies to keep pace with the demand growth.

Nickel Demand May Double By 2050

Apart from clean energy, nickel is used in traditional applications, including alloys and stainless steel. The largest in clean-energy deployment is in EV batteries, but nickel is also used in low-emissions power generation, like wind and geothermal energy.

Global nickel demand remained steady between 2018 and 2020, at around 2.4 Mt, but then increased rapidly, reaching around 3.1 Mt in 2023. Demand is projected to grow in all scenarios, increasing to 4.5 Mt in 2030 in the STEPS.

Under APS, demand growth is slightly higher, rising to 4.8 Mt in 2030. Under NZE, demand increases to 5.6 Mt in 2030. By 2040, demand under NZE will be slightly higher than the APS, but will be less than the APS in 2050 due to lower demand in the stainless steel sector as secondary supplies increase.

From 2018 to 2023, mined nickel supply increased by almost 1.5 times from 2.4 Mt to 3.5 Mt, primarily driven by the rapid mining expansion in Indonesia. Increases were also seen in Brazil, New Caledonia and Canada.

There has also been an increasing shift in the type of nickel ore, moving away from historically mined nickel sulphide to laterite. From 2018 to 2023, laterite mining nearly doubled from 1.5 Mt to 2.8 Mt, whereas sulphide mining fell slightly from 0.8 Mt to 0.7 Mt.

In the base case, the mined nickel supply is expected to grow to 4.4 Mt by 2040. In the high-production scenario, assuming early-stage projects come online, the mined nickel supply will double around 6 Mt by 2040.

In the short term, there may be oversupply in the mined nickel market due to recent high investments. In the long term, the expected supply from announced projects in the base case may fall short of meeting primary supply requirements under both STEPS and APS by 2030.

Under NZE, planned and high-potential projects fall short of primary supply requirements by 2030, requiring new projects to come through.

Cobalt Demand To Grow But Less Than Others

Recently, cobalt demand has grown strongly, with traditional usage boosted by EV batteries. In 2023, the non-clean energy tech accounted for 70 per cent of total consumption, while EV batteries accounted for the rest.

Within the non-clean energy, portable batteries used in electronics has the largest share. Its share in total demand, however, diminishes to 25 per cent by 2040 in both the APS and NZE.

Cobalt demand for EVs triples in STEPS by 2040, and grows by more than fourfold by 2040 in APS and 4.5 times in NZE. EV batteries will have the largest share by 2030, and it will rise to 60 per cent by 2040 in NZE.

Cobalt’s role decreases steadily for battery storage, reaching negligible levels by 2050 under both APS and NZE. Storage batteries are not limited by space constraints, so the market is heading towards cheaper alternatives like LFP cathode chemistries or sodium-ion batteries, neither of which contains cobalt.

The cobalt market is well supplied today. In the short term, the current oversupply may continue from new mines and inventories. In the long term, global mined supply begins to subside from 2030.

Future cobalt supply could face major challenges as the current low-price environment makes financing new projects more challenging.

Cobalt is mostly extracted as a by-product of copper ore or nickel ore. Traditionally, copper is the primary mineral from which cobalt is refined, accounting for 70 per cent of the primary supply today.

However, in the base case, the declining ore quality of existing copper-cobalt mines in the Democratic Republic of Congo (DRC) restricts supply post-2030, reducing copper’s share to below 60 per cent by 2040.

Nickel will replace copper as the primary mineral for cobalt production with the rise of Indonesia’s nickel production. Today, 30 per cent of the primary mineral refined into cobalt comes from nickel, but this share will rise to 40 per cent by 2040 in the base case.

With weak cobalt prices persisting, mining projects are witnessing delays as project developers are forced to seek additional funding for future production.

The process of seeking better quality copper-cobalt ores would involve significant energy uses and emissions.