Energy transition driving demand and supply growth of battery minerals
As the energy transition gains momentum and countries scramble to get in line with climate targets, battery mineral supply chains are growing increasingly strained. Global shortages of battery minerals, particularly cobalt and lithium, may be likely to occur in the near future as a result of supply chain dynamics and unprecedented demand from electric vehicles and renewable energies. Each year, battery production accounts for increasing shares of the total global consumption of cobalt, graphite, lithium, and nickel. To try to meet this growing demand, the exploration and production of battery minerals has increased in recent years. Over the past decade, the global reserve volume (economically mineable resources) of each core battery mineral has also increased significantly, yet another indicator of the growing demand. It is forecast that by 2028, the demand for nickel, cobalt, lithium, and graphite for battery production will grow by a factor of 2.5 to 12.4, depending on the mineral.The environmental, geopolitical, and social impact of battery minerals
Although battery minerals are used to manufacture the hardware for renewable energy technologies, the life cycle of the minerals themselves is not environmentally benign. Conventional lithium production (hard rock mining), for example, is quite land- and water-intensive, in addition to having sizeable carbon dioxide emissions. Between 2019 and 2050, the cumulative global emissions from the extraction and processing of cobalt, graphite, lithium, and nickel for energy technologies is forecast to amount roughly to a combined 700 million metric tons.Another important aspect of the battery minerals supply chain is the geopolitical element. China is the world’s largest producer of several battery minerals, and other critical minerals are produced in a small number of countries. This situation has led many countries to stockpile critical minerals (of which many are used to produce batteries) and seek alternative sources amidst fear of export controls and other supply chain bottlenecks. Another geopolitically challenging aspect of this demand boom is that a significant proportion of battery minerals are produced in countries that are politically unstable. While battery minerals allow for the manufacturing of technologies that will help with emissions reductions and ultimately climate change mitigation to some extent, their heavy share of production in politically unstable countries means that they are imbued with social issues along the supply chain.
