Imposed by the fight against global warming, the energy transition will shift the demand for fossil energy towards that of the metals essential for the growing production of electric vehicles and their batteries, wind turbines, particularly marine ones, solar panels and kilometers of electrical networks. As a result, the demand for metals will explode in the coming decades, raising fears of supply tensions due to the concentration of production, in which China exercises a dominant position. A dependency that worries the Western powers at a time of strong economic and geopolitical tensions between Beijing and Washington, but also Europe. For the developed economies, which have neglected this sector for decades, salvation lies in massive recycling, and more marginally in a revival of mining activity, to depend less on imports. This requires long-term policies.
One of the most dramatic aspects of the – relative – exit from the Covid-19 pandemic crisis is the disruption of supply chains that leads to shortages. It showed the vulnerability of developed economies. A weak point to be addressed as soon as possible to remain in the international competition structured around the new cold war waged between the United States and China for world leadership.
Especially since this war will intensify, with the energy transition and the accelerated digitization of activities which add an additional geopolitical challenge to secure, in particular, the needs of Western countries and their access to a number of raw materials.
Indeed, the fight against global warming will impose on Western countries a new economic paradigm: replacing in barely three decades the consumption of fossil fuels – coal, oil and natural gas – on which global economic development has been based since the industrial revolution by the increasing use of metals. In other words, replacing abundant, cheap and efficient raw materials, but whose combustion generates significant greenhouse gas (GHG) emissions, with other raw materials, the demand for which will increase considerably.
Reconfiguration of the metals market
The shift in the global car fleet to 100% electric vehicles fitted with specific batteries – which use 6 times more metals, in particular 4 times more copper than a thermal engine vehicle -, the construction of wind turbines (on land and in sea), solar panels, as well as the extension of electricity networks will reconfigure the metals market.
If we reason statically, the cumulative demand for certain “rare earths”, lithium, graphite, cobalt and nickel will quadruple between 2020 and 2040 (it will be multiplied by 42 for lithium alone, by 19 for nickel and by 7 for “rare earths”). On the other hand, if we reason dynamically, that is to say taking into account the adaptation of the actors – producers as well as consumers – to deal with these problems, these estimates should be understated.
“There are substitution effects, for example lithium by sodium, or the disappearance of cobalt and nickel from LFP batteries, or even titanium in fuel cells”, tempers Didier Julienne, international expert in the metals markets, President of Commodities & Resources.
In addition, the thousands of kilometers of electrical networks alone that will have to be installed will cause copper needs to jump by 50% and aluminum needs by 44% between 2020 and 2040, warns the International Energy Agency (IEA). ) in a landmark report, published in May 2021, “The role of critical minerals in clean energy transition”.
This agency scenario is based on the various policies currently implemented by the States for the coming years. It is already below the objective of the Paris Agreement which aims for carbon neutrality in 2050, and which in this case provides that demand will be multiplied by 6! In this perspective, the markets for many strategic metals could experience tensions: lithium, nickel, cobalt, manganese and graphite are crucial for battery performance, longevity and energy density – even if new models batteries require fewer metals – copper is ubiquitous (electric vehicles, electronics, power grids, etc.), but also silicon (for semiconductors and solar panels), and other lesser-known elements such as indium , osmium, iridium, titanium (hydrogen fuel cell), chromium, molybdenum… whose properties boost physical performance.
Sami Nemli with agencies / Les Inspirations ECO
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