(p. A17) The drive toward energy transition will increase demand for lithium, cobalt and other minerals many times over. An offshore wind project uses nine times the minerals of a natural-gas-fired power plant of the same generating capacity.
As countries roll out targets for “net zero” carbon emissions by 2050, it’s becoming clear how difficult it will be to source this huge increase in minerals. The U.S. and Japanese governments, the European Union and a host of multilateral organizations have issued alarming reports about the magnitude of the challenge. The International Monetary Fund warns that striving to achieve net zero by 2050 will “spur unprecedented demand for some of the most crucial metals,” leading to price spikes that “could derail or delay the energy transition itself.”
Consider a recent S&P Global study on copper. Much of the energy transition is predicated on electrifying as much as possible, as fast as possible. That will require a huge amount of copper, as it is the “metal of electrification.” The report concludes that translating the 2050 net zero goals into the equipment and technologies that will be needed—electric-vehicle batteries and charging stations, offshore wind, onshore wind, solar panels, battery storage, etc.—adds up to a doubling of the need for copper by the mid-2030s.
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Two countries mine about 40% of world’s copper supplies—Peru, where the government is in disarray after the president was impeached and arrested, and Chile, whose government is struggling between its populist agenda and the need for economic growth.
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The quest for net zero emissions will face similar challenges with other commodities, where the growth in demand will be much greater. Seventy percent of cobalt, critical for electric-vehicle batteries, comes from the Democratic Republic of the Congo, where large mining operations coexist with small, hand-dug mines in which both adults and children work.
There’s a further complication—about 60% of the world’s lithium is processed in China, and 47% of copper is smelted there. By comparison, the U.S. processes 4% of world copper. Once the U.S. had more than a dozen copper smelters; now it has two.
For the full commentary, see:
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(Note: the online version of the commentary has the date April 12, 2023, and has the same title as the print version.)
The S&P Global study mentioned above is: