In 2023, the market for minerals essential to wind turbines, solar panels, and other clean energy technologies saw a decrease in pressure as supply outpaced rising demand, according to a new report by the International Energy Agency (IEA). However, the report also highlighted the need for substantial additional investments to meet global energy and climate goals.
The Global Critical Minerals Outlook 2024 updates the IEA's first review from last year and provides new medium- and long-term forecasts for the supply and demand of key energy transition minerals, including lithium, copper, nickel, cobalt, graphite, and rare earth elements.
Following two years of significant price increases, the cost of critical minerals dropped sharply in 2023, returning to pre-pandemic levels. Battery materials experienced notable price reductions, with lithium prices falling by 75% and cobalt, nickel, and graphite prices dropping between 30% and 45%. This contributed to a 14% decline in battery prices.
The IEA report found that while demand remained robust, the price decreases were primarily driven by a substantial increase in global supply, counteracting the steep price hikes of 2021 and 2022. Despite the benefits of lower prices for consumers and increased affordability, the reduction has posed challenges for new investments.
Investment in critical minerals mining grew by 10% in 2023, and exploration spending increased by 15%. Although these figures indicate healthy growth, they are slower compared to 2022.
The report warns that the current well-supplied market may not be indicative of future conditions. Demand for critical minerals is expected to grow significantly in all IEA scenarios, driven by the expansion of clean energy technologies. The combined market size of key energy transition minerals is projected to more than double to $770 billion by 2040 on a path to net zero emissions by mid-century.
Detailed analysis suggests that announced projects will meet only 70% of copper and 50% of lithium requirements by 2035 if countries achieve their national climate goals. Additionally, these projects do not alter the high geographical concentration of supply, with China maintaining a dominant position in the refining and processing sector.
IEA Executive Director Fatih Birol stated, “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. 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. But this new IEA analysis highlights that there is still much to do to ensure resilient and diversified supply.”
