Miners could need to double CAPEX to meet decarbonization goals by 2050 - Bank of America
(Kitco News) -Renewed focus on global decarbonization as the United NationsClimate Change Conference (COP26) wraps up will lead to more demand forcritical industrial metals, according to commodity analysts at Bank of America.
In a report published Monday, the U.S. bank said that the globalgoal for a sustainable low-carbon future would put more pressure on demand formetals that are already seeing significant supply and demand imbalances.
"Decarbonisation effectively means an electrification of theglobal economy through renewables, power storage and EVs," the analystssaid in the report. "Working some of the IEA's Net Zero assumptions intoour metals demand models, we calculate CAGR in consumption of 3.6%, 24.6%,7.6%, 18%, 2.5% and 3.3% for copper, lithium, nickel, cobalt, silver andplatinum respectively."
Bank of America used lithium, a hot commodity through 2021, as anexample of how demand is expected to grow as more battery storage and electricvehicles come online.
The analysts noted that the total lithium supply in 2020 was387,000 tonnes; demand is forecasted to rise to 3 million tonnes and 5 milliontonnes by 2030 and 2050, respectively.
Lithium has the most significant growth potential as the worlddecarbonizes; however, it is not alone. Bank of America sees copper demandgrowing 3.5% by 2030; nickel demand is expected to grow 7.6% in the next 10years; among precious metals, silver demand is expected to grow 2.5% by 2030and platinum demand is projected to rise 3.3%.
"What does this mean for the mining industry? To facilitatethat demand growth, miners need to boost CAPEX. True, recycling can help, butultimately, some primary capacity is also needed.," the analysts said."We estimate that the industry needs to spend $72B annually out to 2030just to prevent bottlenecks towards achieving Net-Zero. To put this number intocontext, global mining CAPEX averaged around $99.5B in the past decade," theanalysts said.
To reach the targets set for 2050, Bank of America added thatCAPEX might need to double.
Looking at precious metals, the analysts said that solar powerwill drive silver demand in the coming years.
Platinum is also a metal that is attracting some attention as thegreen revolution moves forward.
"The hydrogen economy could potentially have profoundimplications for the global economy. Indeed, electrolysis can be used to storepower generated from renewables as hydrogen, before the gas is being re-convertedinto electricity as the needs arise," the analysts said.
Bank of America said that platinum demand from the hydrogeneconomy is expected to rise to more than 1.1 million tonnes within the next tenyears. By 2050 demand could increase to 1.7 million tonnes.
The analysts also noted that hydrogen fuel-cell vehicles willalso increase demand for platinum.
By Neils ChristensenFor Kitco News
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