Dominic Barton, Chairman of Rio Tinto, has cautioned that the global energy transition is facing risks due to low levels of investment in the mining sector, leading to a widening supply gap for critical minerals like copper. Speaking at the Ecosperity conference in Singapore via video link, Barton expressed deep concern about the size of the supply gap, stating, “The gap is humungous, and I am actually very worried about whether we will be able to close (it).”
The transition to cleaner energy sources, essential for reducing carbon dioxide emissions, relies heavily on securing significant supplies of minerals such as copper, lithium, and cobalt. These minerals are vital for the production of electric vehicles, solar panels, and wind turbines.
According to the International Energy Agency, the amount of metals needed for each kilowatt of generation capacity has surged by 50% since 2010. Additionally, electric vehicles require six times more minerals than traditional combustion engine vehicles.
Barton emphasized that the mining sector not only faces a shortage of minerals but also a shortage of capital required to develop new mines. He noted a substantial decrease in mining investments since the 2015-2016 period, stating, “We're hundreds of billions of dollars below what we need.”
Addressing the industry's challenges, Barton stressed the importance of building trust and improving public perception of the mining sector's role in global decarbonization efforts. He acknowledged past missteps, such as Rio Tinto's destruction of sacred rock shelters belonging to Aboriginal communities in 2020, describing the incident as “terrible” and “embarrassing.”
Scott Clements, a partner at Tribeca Capital, highlighted the vast opportunities still available in the mining sector, which could yield significant returns. He emphasized the industry's need to be perceived as part of the solution to global challenges, rather than part of the problem.
The remarks from industry leaders underscore the urgent need for increased investment and responsible mining practices to support the global energy transition and meet the growing demand for critical minerals.
