The global race for critical minerals essential for clean energy technologies is intensifying, unveiling alarming concentrations of supply within a few key nations, notably China. This situation poses significant risks to global energy security, as underscored in the International Energy Agency's (IEA) recent “Global Critical Minerals Outlook 2024.” The rise in demand for minerals like lithium, nickel, cobalt, and copper, driven primarily by the rapid expansion of electric vehicles and renewable energy, highlights both opportunities and vulnerabilities in the supply network.
As global investments in critical minerals have surged, increasing by 10% in 2023, they still fall short of the levels necessary to meet climate objectives. The IEA’s report reveals a concerning trend: the share of the top three mineral producers has increased from 63% in 2020 to 68% in 2023. China, which dominates the refining of crucial minerals, controls over 50% of the world’s capacity for lithium, cobalt, and rare earth elements. This significant grip on the supply chain has raised geopolitical concerns, prompting Western governments to seek alternatives amid rising trade tensions.
Fatih Birol, the IEA executive director, noted, “Even in a well-supplied market, critical mineral supply chains can be highly vulnerable to supply shocks,” referring to disruptions from weather events or trade restrictions. The impact of such shocks, particularly for industrial competitiveness, could be profound, leading to higher consumer prices and an overall weakening of global market resilience.
The report also raises alarms about the potential shortfall in copper supply, which is crucial for power grids and electric vehicles, projecting a deficit of 7 million tonnes by 2035 if the current pace of new projects does not accelerate. This could severely hinder efforts to expand clean energy infrastructure. Notably, while lithium refining capacity has predominantly grown in China, advancements in Africa and Latin America have lagged due to infrastructure and financial constraints.
In response to China's recent export restrictions on strategic minerals like graphite and gallium, which are vital for semiconductors and electric vehicles, there have been renewed calls for developing strategic stockpiles and enhancing domestic investment in mineral extraction. The IEA advises stronger international cooperation and improved transparency in supply chains, alongside elevating environmental and labour standards in mining operations. Ensuring reliable, sustainable supplies of critical minerals is portrayed as essential for a successful and orderly energy transition, urging world leaders to convert their climate pledges into actionable strategies.
The geopolitical implications of this mineral dependency are profound. As countries strive to reduce reliance on China, the U.S. has been working on alternative supply agreements with nations like Ukraine and exploring domestic mining opportunities. However, the ongoing trade dispute between the U.S. and China complicates these efforts, as various tariffs and export controls have initiated local production constraints.
Moreover, the humanitarian implications in mineral-rich regions, such as eastern Congo, further highlight the need for a more responsible approach. Here, miners extracting vital coltan work under harsh conditions, with over 70% of the population living on less than $2.15 a day. The contrast between the wealth generated by these resources and the poverty faced by local communities underscores the urgent need for equitable practices and cleaner supply chains.
As the 30th Conference of the Parties (COP30) approaches, set to be hosted by Brazil in 2025, world leaders face mounting pressure to address not only emissions targets but also the security and sustainability of the critical materials essential for building a cleaner global economy. The IEA's findings serve as a clarion call for immediate action on international commitments to diversify sources, ensure ethical mining practices, and invest in a more resilient and equitable future for global energy supply chains.
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Source: Noah Wire Services