The energy transition is central to the increase in global demand for metals and mined commodities, but with supply challenges escalating as ESG criteria come under stricter scrutiny by governments and investors, our experts presented the potential solutions in relation to policy changes, recycling and the constraint of materials supply in the race to achieve zero carbon.
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BRMs are vital to the energy transition. Our experts say we will see a continuation of soaring demand for cobalt, with batteries accounting for 70% of overall demand, and by 2035 the lithium market will have increased more than ten times that of its current size. So, as countries get underway honing their minerals policies, government incentives will be key to diversifying value chains.
The pressure to deliver is immense and new investment is needed, but even with it, increased production costs and ESG issues will affect supply with lithium, cobalt, nickel and graphite all have structural shortfalls on a 10 to 15 year timeframe.
As key enablers to the energy transition, our researchers showed that rare earths will experience a significant increase in demand as they support the continued growth of renewable technologies, with magnet materials at the forefront for both renewables and rare earth products.
We learnt that in order to meet demand growth, the market needs several new projects in addition to expansions by existing producers and recycling. Significant capital investment is also pivotal to the essential build-out of new capacity to avoid price fluctuations and supply deficits, as well as the inevitable increase in the substitution of rare earth technologies.
The metals and mining industry is responsible for approximately 15% of annual global emissions, but there’s good news from mining majors and mid-tier companies as they make important progress towards near-term targets. Carbon intensive commodities in portfolios that are hard to abate throw up challenges, but we are seeing that tangible reductions are underway across the board.
Collaboration and alignment, together with technology and policy are core to supporting mining companies in their challenge to reduce emissions. Access to green electricity, the availability of low-to-zero carbon equipment powertrains, and favourable changes to carbon policy will compound the successful decarbonisation of this industry.
Zinc mine production has proved resilient in the face of recent low prices and we’re set to see further steady growth that will push the concentrate market to surplus. Meanwhile surpluses in lead concentrate will take longer to emerge.
Zinc smelter production will recover, however, high energy prices, carbon taxes and carbon abatement costs will affect long-term margins. The outlook for lead smelting is that we will see an increase in domination by secondary plants, as the number of primary smelters dwindles. .
In the refined market, a bounce back in zinc demand is expected in 2024. This recovery, along with more positive sentiment will see higher near-term zinc prices. However, in the medium term there will be price pressure from rising stocks. In the lead market, demand and prices are expected to remain stable.
The energy transition and green sectors are driving demand for copper as an electrical conductor. Our experts estimate that in ten years, total copper end-use demand from green end-uses, such as energy storage and EVs, will more than treble to reach 6.7 Mt.
Base case mine supply is expected to grow by 2.6% before peaking in 2026, however, new projects are required to meet future demand for copper and must be sanctioned at a rate of 700 ktpa if the copper market is to avoid an implied supply gap of 6.2 Mt by 2033. The potential shortfall has made scrap increasingly important and government policy will create the change that will support higher collection and recycling rates.
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