Critical minerals - will we have enough?

Kathryn Porter, who writes the Watt Logic blogs, recently did a two part detailed dive into the potential demand from the sustainability transitions for critical minerals. Part 1 sets the scene in some detail. In Part 2, the blog we are highlighting, she looks at the supply situation for two pinch point resources - copper and aluminium. Copper you probably know about - it's widely used in power grids, solar farms, and EVs.

Critical minerals for the energy transition: copper and aluminium

Two of the most important critical minerals for the energy transition are copper and aluminium, but both have supply challenges

Watt-LogicKathryn Porter

She highlights that annual copper demand just for electricity grids is forecast by the IEA to grow from 5 million MT in 2020 to 7.5 million MT by 2040 in its Stated Policies Scenario and to nearly 10 million MT in its Sustainable Development Scenario. In other words even based only on the policies in place (assuming they survive) copper demand for grids would grow by c. 50% out to 2040. And to deliver global carbon objectives, it would double. And grids are only part of the picture.

The problem is that expanding copper production is tough, at least at any sort of speed. At the current pace of progress BNEF estimates that demand could outstrip supply as soon as 2027. And yet, many ESG funds have avoided mining companies, and even traditional investors have concerns about the capex requirements.

And then there is aluminium. Many of you might be less aware of how important this is for the sustainability transitions. It's used in wind turbines, batteries, electrolysers, transmission lines, and hydroelectric plants. Plus, it's essential for solar PV. Demand is set to increase at a similar annual pace, from 9 million MT in 2020 to 12.8 million MT in the IEA Stated Policies Scenario and 16 million MT in its Sustainable Development Scenario by 2040.

The challenges for aluminium are slightly different. Its production uses a lot of electricity and refining can cause serious environmental damage. But the end result is similar, there are real questions about how supply can keep up with demand.

People have very understandable concerns about the mining industry. These range across environmental and social impacts, and as a result in many western countries obtaining new mining permits can be challenging. But, if we want the sustainability transitions, we will need more mining of certain minerals. Maybe it's time that investors explained this better, and engaged more intensely with the industry to improve standards. Work is already underway, but much more is needed.

Link to blog 👇🏾

Perspective: Critical mineral mining meets social license

We know we need more mining of critical minerals if the move to net zero is going to actually happen. But, how willing are we to give up other priorities, including environmental and social protections.

The Sustainable InvestorSteven Bowen

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