Critical Minerals and Geopolitical CompetitionRoundup
tags: geopolitics, mining, natural resources, Minerals
Gregory Brew (@gbrew24) is a Henry A. Kissinger Postdoctoral Fellow at International Security Studies and the Jackson School of Global Affairs at Yale University.
Morgan Bazilian (@MBazilian) is a professor at the Colorado School of Mines and directs its Payne Institute for Public Policy. He was previously lead energy specialist at the World Bank.
This week, world leaders are gathering in Sharm El Sheikh, Egypt for COP27, the 27th annual United Nations conference on climate change.
This year’s conference carries with it the weight of the climate challenge, an enormous threat facing humanity, but also comes at a time of growing volatility in global energy markets, rising energy prices, a food security crisis, and war. As a result, countries both rich and poor will be focused on immediate security and economic threats.
While Russia’s war in Ukraine has convinced policymakers of the necessity of divesting from volatile oil markets, the lack of readily available raw materials and supply chain issues continue to impede rapid transitions toward clean energy.
Specifically, the world needs to expand its supply of critical minerals—graphite, nickel, cobalt, and especially lithium, and the chemicals into which they are refined.
And while COP27 is meant to be part of the journey to organize national efforts into collective solutions, the reality is that geopolitical competition over access to critical minerals is accelerating, both among consumers and producers. The challenge of procuring adequate supplies of critical minerals is thus a key obstacle facing both global decarbonization and international security.
This competition is driven by expectations that demand for critical mineral components will increase as the world transitions away from fossil fuels. Electric vehicles (EVs), for example, are growing rapidly as a share of the overall automotive market, accounting for 17% of total auto sales in Europe in 2021 and 35% in China in 2022. Markets in the United States, such as California, have vowed to only permit EV sales by 2035, while nearly every major auto manufacturer plans to produce only EVs by the end of the next decade.
This new fleet of cars will require millions of tons of lithium, graphite, nickel, and other minerals that presently do not exist. Battery demand for EVs is currently driving 75% of lithium demand, and in 2021 enough lithium was mined to produce just 11.4 million new EVs—far fewer than will eventually be required. According to the latest forecasts, the market for lithium will double in size by 2030, while demand for other critical minerals will grow as well.
The story goes beyond electric cars. According to the latest critical minerals report from the International Energy Agency (IEA), growing quantities of relatively scarce minerals will be needed to feed the world’s demand for clean energy. By 2040, the clean energy sector will demand more than 60% of the world’s cobalt and nickel, 40% of its copper, and 80% of its lithium. In a high-growth scenario, mineral demand will increase by 400% by 2040. Achieving this level will be necessary for nations to meet climate goals.
In short: to reduce emissions, mitigate climate change, and accomplish a speedy energy transition, the world is going to need vast new quantities of critical minerals. And that means new challenges for building transparent and resilient supply chains, well governed markets, and changing patterns of geopolitical tensions and alliances.
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