The Demands for Critical Minerals

13 March 2023

The mining industry is currently under pressure to meet increased demand for many minerals. This is particularly true for minerals that are critical inputs to clean energy technologies including lithium, copper, nickel, cobalt, and other rare earth elements. Looking ahead to the mineral demands needed for the economy to make a green transition, it is not obvious that adequate additional reserves and production capacity will be ready to be brought online over the coming years.

The supply crunch is causing concern for countries that are reliant on imports, and leading some manufacturers — notably Tesla — to consider investing directly in mining to secure their own supplies of battery minerals. There will undoubtedly need to be a many-fold increase in the supply of lithium and rare earth metals, though as current production is relatively modest, that’s imaginable. In fact, it may be more challenging to keep up with the growing demand for metals like copper and nickel — respectively the cornerstones of electricity-related technologies and stainless steel — which are already produced on a massive scale.

The global mining industry is well aware of its role in the green transition, and mining companies are gearing up to provide the raw materials needed while reducing their own carbon footprint. As with many industries, perceptions of mining tend to be rooted in the past. The early days were crude and had large, negative environmental impacts, earning the industry a reputation that has been hard to shake. But mining has also benefitted from incredible scrutiny over decades, driving much better performance on environmental, social and governance issues than many sectors that enjoy more favourable press. The companies that we work with are focused on continued improvements in ESG and are investing to improve efficiency and transparency, while implementing technologies such as hydrogen-powered trucks, solar and wind installations, and on-site carbon sequestration to meet net-zero targets.

However productive and sustainable mining can become, there will remain a shortfall in the supply of critical minerals. The pace for ongoing exploration and development to expand critical minerals reserves is a priority that governments and the private sector need to work together on to accelerate. In an increasingly competitive market, it may well be possible for advanced economies to pay more to secure the minerals they need. But if we are going to achieve net zero, and create a fairer, healthier world, we need clean, green technologies to be applied everywhere.

Around the world, cities are major consumers of available minerals, and their extractive footprint is only set to expand, in both size and range, as greener technologies are pursued. As cities will continue to consume the majority of minerals, the way they do so matters enormously. For example, although many metals are already recycled, we need to do better, particularly on rare earth elements that are used in such small quantities that extracting them for recycling wasn’t seen as worthwhile. Here, government or local policies could help to divert old consumer electronics from landfill so their components can be reused, and establish the infrastructure for recycling new waste streams such as spent EV batteries.

There will also be key planning decisions that affect the overall quantity of minerals required. In the coming era of autonomous vehicles, do we continue to prioritize individual car ownership, or do we incentivize a shift to shared mobility? The consequences for resource use — not to mention congestion — could be very significant. In the electrically powered cities of the future, could we reduce the overall level of battery capacity required by designing efficient buildings that use passive cooling as much as possible? Above all, can we rethink life in cities to work within sustainable boundaries, rather than simply powering high-consumption lifestyles in a different way?

The supply of minerals is only half the equation, the choices that shape demand are becoming increasingly important to enable broad adoption of green technologies. While the goal is to move towards a circular economy where needs are met through reusing and recycling, we are not there yet, and the mining industry will continue to play a key role in the coming years if we are to meet our climate ambitions.