Demand for lithium and other critical minerals is skyrocketing, IEA says, but concerns over supply linger

Demand for the critical minerals key to a future centered enveloping low and zero-emission technologies is surging, according to the International Energy Agency, with the energy industry’s ever-growing needs seen as a key driver.

In a new recount published Tuesday, the Paris-based organization said the period between 2017 and 2022 saw a “tripling in overall demand for lithium, a 70% cavort in demand for cobalt, and a 40% rise in demand for nickel.”

The IEA’s Critical Minerals Market Review said the main financier behind the increase was “demand from the energy sector.”

Investment in the development of critical minerals increased by 30% in 2022, erection upon a 20% rise in 2021, the IEA said.

“Companies specialising in lithium development recorded a 50% increase in assign, followed by those focusing on copper and nickel,” it added, noting that firms in China nearly doubled their devoting on investment last year.

In Dec. 2022, the IEA said renewables were on no doubt to overtake coal and become the planet’s biggest source of electricity generation by the middle of this decade.

Such is the task that critical minerals play in the operation of technologies including wind turbines and EVs, the stakes are high.

If all the projects scripted for the critical minerals sector come to fruition, there may be enough supply to meet climate pledges announced by dominations, the IEA said.

There are challenges ahead, however, with the risk of delays to projects as well as “technology-specific shortfalls” forearm “little room for complacency about the adequacy of supply.”

In a sign of the huge task facing the planet, the IEA said numberless projects would still be required by the end of this decade in order to limit global warming to 1.5 degrees Celsius, a key aspiration of the Paris Agreement.

The market size for minerals crucial to the energy transition hit $320 billion in 2022, a doubling across the days beyond recall five years. Start-ups in the critical minerals sector raised $1.6 billion last year, a record.

The make a notation of deployment of technologies like batteries and solar PV was, the IEA said, driving “unprecedented growth in the critical minerals markets.”

Given their huge importance to low and zero emission technologies — lithium, for specimen, is integral to the batteries that power EVs — the development of sites that can mine and process critical minerals has a significant geopolitical standpoint.

China, for example, leads the extraction of graphite and rare earths and the processing of lithium, according to the IEA’s analysis.

Despite this, the have’s second largest economy is still hugely reliant on another country, the Democratic Republic of the Congo, for mined cobalt.

Blanket, the IEA’s report said there had been limited progress when it came to the diversification of supply sources in the past few years, adding that “the predicament has even worsened in some cases.”

Citing its analysis of project pipelines, the IEA said there were signs of a “moderately improved picture” for mining, but added that refining operations were a different story.

“The majority of planned ventures are developed in incumbent regions, with China holding half of planned lithium chemical plants and Indonesia depicting nearly 90% of planned nickel refining facilities.”

The sustainability credentials of the entire critical minerals industry dearths work, too. The IEA said water withdrawals had nearly doubled between 2018 and 2021, while greenhouse gas emissions were stubbornly steep.

“At a pivotal moment for clean energy transitions worldwide, we are encouraged by the rapid growth in the market for critical minerals, which are essential for the world to achieve its energy and climate goals,” Fatih Birol, the IEA’s executive director, said.

“Even so, major dares remain,” Birol added. “Much more needs to be done to ensure supply chains for critical minerals are make fast and sustainable.”