Critical Minerals Are Critical to The World’s Future
Originally posted on theassay.com
It wasn’t that long ago that miners were considered a global environmental scourge. Nowadays, in many quarters, miners are considered a key to saving the world’s environmental future – thanks to critical minerals.
What are critical minerals and why are they critical?
International law firm, Gowling WLG, says the pivotal role of critical minerals, particularly lithium, in the worldwide shift to net-zero has given a major boost to the image of the mining industry as a potential partner to meet net-zero emission targets.
Following the landmark Paris Agreement in December 2015, countries have gradually escalated their efforts to meet the commitments set out in the accord, whose 200 signatories promised to keep global warming below two degrees Celsius this century, and ideally below 1.5 degrees, to avoid the worst effects of climate change.
However, Russia’s invasion of Ukraine in 2022 caught Europe and the world unprepared, leaving many western nations with a large hole in their energy supplies. This shock created an immediate and desperate need to lessen the world’s dependency on fossil fuels.
Now, rather than searching for replacement sources of fossil fuels to replace Russian imports, European countries are accelerating their adoption of greener fuels and transforming international energy markets, according to the International Energy Agency (IEA), which forecasts global clean energy investment will exceed US$2T per year by 2030 as a result.
Governments and even environmentalists, agree that critical minerals are vital for clean energy and advanced technologies like smartphones, computers, solar panels, batteries, and electric vehicles.
According to US-based IEA, critical minerals such as lithium, graphite, copper, nickel, cobalt, and rare earth elements are essential components in many of today’s rapidly growing clean energy technologies – from wind turbines and electricity networks to electric vehicles.
Demand for these minerals will grow quickly as clean energy transitions gather pace. The types of mineral resources used vary by technology. Lithium, nickel, cobalt, manganese, and graphite are crucial to battery performance. Rare earth elements are essential for permanent magnets that are used in wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies.
Critical Minerals Lists
Many leading governments and agencies have identified different minerals and reasons for creating critical minerals lists. The number and type of minerals varies by location.
The Society for Mining, Metallurgy & and Exploration (SME), says critical and strategic minerals are essential to economic and national security of nations like the United States and the other 84 countries that its members span across.
The organization website states that critical minerals “are key to manufacturing and agricultural supply chains, and to the successful deployment of modern technologies in a variety of industries, including telecommunications, national defence, and both conventional and renewable energy.”
The US Geological Survey has named 50 minerals that are deemed ‘critical,’ Canada has a list of 31 minerals, and Australia only considers 26 resource commodities to be critical minerals.
Geoscience Australia defines critical minerals as: metals and non-metals that are considered vital for the world’s economies, technologies, or national securities, yet is at a risk of supply chain disruptions due to geological scarcity, geopolitical issues, trade policies, or other factors.
Echoing that sentiment is the University of Adelaide in Australia, which defines critical mineral as metals and non-metals that are irreplaceable inputs for society’s future, including in renewable energy systems, infrastructure, transport, high tech equipment, and defence systems.
Nearly all institutions, organizations, and governments have similar definitions, but the actual approved list can vary for which minerals make the cut as a top priority.
Government Investment
The importance of critical metals to the world’s green future has created a major ‘arms race’ by leading nations to scramble to ensure they aren’t left behind.
Canada
In the last year, the Canadian federal government launched its Canadian Critical Minerals Strategy, staking a claim for the country to become a global supplier of choice in the evolving commodities market.
The strategy, released in December 2022 and backed by almost C$4B in financial commitments over the next eight years, detailed their plans for over 30 minerals that the federal government considers critical because of their strategic value, limited reserves, and increasing concentration in terms of extraction and processing.
Australia
Australia, a leading producer of many critical metals, is considered an early mover in the race to shore up its own supplies – and to identify new markets for its natural bounty.
The A$2B Critical Minerals Facility, administered by Export Finance Australia, offers financing to get early-stage critical minerals projects off the ground.
It is just one of many critical minerals focused support programmes offered by the Australian Federal and State and Territory Governments.
A new three-year A$50M Critical Minerals Development Program will offer competitive grants to early and mid-stage projects. The Federal Government has also unveiled an A$1B Value Adding in Resources Fund aims to ensure a greater share of the local raw materials are processed in Australia. It forms part of the Australian Government’s $15B National Reconstruction Fund.
USA
With a major focus on creating a home-grown supply network and to diversify away from Chinese critical minerals supplies, the Biden Government is investing billions into new exploration and production, particularly for metals such as lithium and rare earth elements (REEs).
Demand
Analysts, governments, and international agencies are forecasting trillions of dollars will need to be invested into critical minerals exploration and development as the world races towards a ‘clean energy’ future.
According to the IEA, to reach net-zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around US$4T.
In its Energy Technology Perspectives 2023 report, the IEA analysis shows the global market for key mass-manufactured clean energy technologies will be worth around US$650B a year by 2030 – more than three times today’s level – if countries worldwide fully implement their announced energy and climate pledges.
The related clean energy manufacturing jobs would more than double from 6M today to nearly 14M by 2030 – and further rapid industrial and employment growth is expected in the following decades as transitions progress.
EVs and Batteries
EVs and batteries are fuelling much of the demand. The Global Battery Alliance says that thedemand for batteries will see exponential growth and as the world seeks emission-free energy alternatives, batteries are an essential component of our future.
The World Bank Group report projects that the “production of minerals such as graphite, lithium and cobalt could increase by nearly 500% by 2050 to meet growing demand for clean energy technologies.”
