Pressure eased in 2023 on the market for minerals that go into wind turbines, solar panels and other clean energy technologies, as supply outpaced surging demand, according to a new International Energy Agency (IEA) report.
However, the report found that major additional investments are still needed to meet the world’s energy and climate objectives.
The Global Critical Minerals Outlook 2024 updates the IEA’s inaugural review of the market last year while also offering new medium- and long-term outlooks for the supply and demand of important energy transition minerals, such as lithium, copper, nickel, cobalt, graphite and rare earth elements.
Following two years of dramatic increases, the prices of critical minerals fell sharply in 2023, returning to levels last seen before the pandemic, according to the analysis.
Materials used to make batteries saw particularly significant decreases, with the price of lithium dropping by 75% and the prices of cobalt, nickel and graphite falling by between 30% and 45% – helping drive battery prices 14% lower.
With demand growth remaining robust, these declines were mostly driven by a strong increase in global supply – helping to offset the steep price rises in 2021 and 2022, the report found.
The report finds that while lower prices for critical minerals in the past year have been good news for consumers and affordability, they have also provided a headwind for new investment.
In 2023, investment in critical minerals mining grew by 10% and exploration spending rose by 15% – still healthy, but slower than in 2022, it added.
Today’s well-supplied market may not be a good guide for the future, with the Outlook noting that demand for critical minerals continues to grow strongly in all IEA scenarios, driven by the deployment of clean energy technologies.
Today’s combined market size of key energy transition minerals is set to more than double to US$770bn by 2040 in a pathway to net zero emissions by mid-century.
Detailed project-by-project analysis suggests that announced projects are sufficient to meet only 70% of copper and 50% of lithium requirements in 2035 in a scenario in which countries worldwide meet their national climate goals, IEA said.
However, announced projects do not change the high geographical concentration of supply, and China is projected to retain a very strong position in the refining and processing sector, it added.
IEA executive director Fatih Birol, said: “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 on the subject.
“But this new IEA analysis highlights that there is still much to do to ensure resilient and diversified supply.”