Minerals critical to clean energy technologies see major price declines, bolstering market in face of future supply struggles

Published on May 20, 2024 by Chris Galford

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The energy transition continues marching on, according to the International Energy Agency (IEA), but in its Global Critical Minerals Outlook 2024 analysis, it determined additional, diversified investments are needed to achieve global energy and climate needs.

Helping matters was an easing of prices in 2023. Cost of key minerals that go into electric vehicles, wind turbines, solar panels and more all dropped last year, as supply surpassed demand. Lithium, copper, nickel, cobalt, graphite and rare earth elements were all included in this. It followed two straight years of significant increases, but last year’s drop finally put critical mineral prices to pre-pandemic levels.

The prices of each material varied significantly, though. Lithium, for example, dropped 75 percent, while cobalt, nickel and graphite tumbled between 30 percent to 45 percent.

Over the same year, investment in critical minerals mining grew by 10 percent, while exploration spending rose by 15 percent. There were no IEA scenarios in which demand for critical minerals slacked off again in the future, but the agency noted that projects are sufficient to meet only 70 percent of copper and 50 percent of lithium requirements in 2035 in a theoretical where all countries meet their national climate goals.

Still, IEA stressed that markets for other minerals remain more balanced, at least if projects go through as scheduled.

“Secure and sustainable access to critical minerals is essential for smooth and affordable clean energy transitions. The world’s appetite for technologies such as solar panels, electric cars and batteries is growing fast – but we cannot satisfy it without reliable and expanding supplies of critical minerals,” IEA Executive Director Fatih Birol said. “The recent critical mineral investment boom has been encouraging, and the world is in a better position now than it was a few years ago, when we first flagged this issue in our landmark 2021 report on the subject. But this new IEA analysis highlights that there is still much to do to ensure resilient and diversified supply.”

To ease future strains on supply, the IEA added that some $800 billion will likely need to be invested in mining between now and 2040 to get on track for the world’s 1.5 degrees Celsius constraint hopes.

However, China is likely to retain a strong position in the refining and processing sector – which could prove problematic amid deteriorating relations with the United States.