According to a new article by The Economist, analysts and policymakers are worried about a significant green-metals supply crunch towards the end of the decade, with the Energy Transitions Commission (ETC) predicting shortages of 10-15% for copper and nickel, and 30-45% for other battery metals by 2030.
The article warns that this could mean net-zero projections may be more credible in 2050 rather than 2030.
Additionally, the ETC predicts that in 2050 the world will require 15 times today’s wind-power capacity, 25 times more solar, a tripling of the grid’s size and a 60-fold increase in the fleet of electric vehicles.
Looking closer to the present day, it anticipates that copper and nickel demand could rise by 50-70% by 2030 with cobalt and neodymium soaring by 150%. Meanwhile, graphite and lithium will potentially see a six- to seven-fold increase.
The International Energy Agency, an official forecaster, adds that a carbon-neutral world in 2050 will require 35m tonnes of green metals a year. When aluminium and steel are added to the mix, the ETC forecasts that demand between now and then will hit an enormous 6.5bn tonnes.
The Economist goes on to explain that when dwindling stocks cause prices to rise, this leads to producers increasing their output while customers use scarce materials more efficiently or even turn their attention to cheaper alternatives.
It adds: “What demand remains unmet after this will be destroyed, however, as would-be buyers that cannot or will not pay higher prices are forced out of the market. Too much of such demand destruction will kill the green transition. The question, then, is simple. Can the crunch be minimised?”
It suggests the starting point is considering the metals in question, with the three most widely used being aluminium and steel for panels and turbines, plus copper for everything from cables to cars.
Then there’s cobalt, lithium and nickel which essentially power electric vehicles, followed by magnetic rare earths like neodymium which are found in electric vehicle motors and turbine generators but only required in tiny amounts.
According to the article, industry oracles canvassed by The Economist predict copper-supply gaps of 2-4m tonnes which equates to 6-12% of potential demand by 2030. Then there’s a 50,000-100,000 tonne (or 2-4% deficit) shortfall of lithium.
Finally, although plentiful in theory, nickel and graphite still remain a problem because batteries require a purity of material that is hard to find.
Despite being problems that are hard to overcome, The Economist suggests the ‘three levers’ may lower the pressure without wrecking the transition.
It says: “First, producers may extract more supply from existing sources, which can be done straight away but will produce limited quantities of metal. Second, firms may open new mines, which could solve the problem entirely but will take time. The limitations of these two levers make a third the most important of all, at least over the course of the next decade: finding ways to circumvent green bottlenecks.
Quick wins could come from reusing more material. Such gains will be greatest for aluminium, copper and nickel. All are widely recycled, but higher prices will motivate spending in an unglamorous, fragmented industry. Some of this is already happening. BHP, a big miner, has backed a nickel-recycling upstart in Tanzania. Huw McKay, the firm’s chief economist, reckons that scrap could represent 50% of the total copper supply in a decade, up from 35% now. Rio Tinto, another mining giant, is investing in aluminium recycling centres. Last year startups focused on battery-metal recycling raised $500m, a record”, it adds.
The article also suggests that restarting idle mines may be helpful, while the greatest hope lies in technologies that squeeze supply from tricky deposits. However, it warns that these new techniques are uncertain and may come with drawbacks such as pollution.
It optimistically concludes: “But with nimble buyers, steadfast governments and a dash of luck, the green-metal bump need not cause an electric-car crash.”
To learn more, view the full article from The Economist, which includes the consequences of rising metal costs and how much disturbance there will be in the interim.
PASA will also be hosting the 3rd Sustainable Procurement & ESG Today online event on 15-16th November, which includes expert contributors on ESG in a procurement context, with a special double feature on Net Zero and particularly the challenge of Scope 3 emissions reduction up the supply chain.