## Metals Demand From Energy Transition May Top Current Global Supply _IMF Blog, December 8, 2021_ ## Source details **Canonical URL:** [Metals Demand From Energy Transition May Top Current Global Supply](https://www.imf.org/en/blogs/articles/2021/12/08/metals-demand-from-energy-transition-may-top-current-global-supply) ## Other formats - [Markdown version](/en/blogs/articles/2021/12/08/metals-demand-from-energy-transition-may-top-current-global-supply/index.md) - [Structured JSON version](/en/blogs/articles/2021/12/08/metals-demand-from-energy-transition-may-top-current-global-supply/index.json) - [Bundle manifest](/en/blogs/articles/2021/12/08/metals-demand-from-energy-transition-may-top-current-global-supply/bundle-manifest.json) ## Bibliographic details - Authors: Nico Valckx, Martin Stuermer, Dulani Seneviratne, Prasad Ananthakrishnan - Published: December 8, 2021 --- ### Overview - The clean energy transition needed to avoid the worst effects of climate change could unleash unprecedented metals demand in coming decades, requiring as much as 3 billion tons. - A typical electric vehicle battery pack needs around 8 kilograms (18 pounds) of lithium, 35 kilograms of nickel, 20 kilograms of manganese and 14 kilograms of cobalt; charging stations require substantial amounts of copper. - Solar panels use large quantities of copper, silicon, silver and zinc; wind turbines require iron ore, copper, and aluminum. - The needed ramp-up in mining investment and operations could be challenging and mining development often takes a decade or more. ### Supply constraints and projected gaps - Under the International Energy Agency’s Net-Zero by 2050 Roadmap: - The share of power from renewables would rise from current levels of around 10 percent to 60 percent. - Fossil fuels would shrink from almost 80 percent to about 20 percent. - Replacing fossil fuels with low-carbon technologies would require an eightfold increase in renewable energy investments. - Projected production gaps versus demand through 2050 under a net-zero scenario: - Graphite, cobalt, vanadium, and nickel: more than two-thirds gap versus the demand. - Copper, lithium and platinum: a 30 percent to 40 percent gap versus demand. - Some minerals’ current reserves could allow greater production with more extraction investment (examples noted: graphite and vanadium), while other minerals’ current reserves could be a constraint (examples noted: lithium and lead, and also zinc, silver, and silicon). - Metal prices have already seen large increases as economies re-opened, highlighting potential for prolonged price surges if supply cannot respond. ### Reserves, recycling, and technological responses - Metal reserves and production are not static: firms can expand reserves through innovation in extraction technology and further exploration may increase future supply. - Metals recycling can augment supplies: - Reuse of scrap metals occurs on a large scale primarily for copper and nickel. - Recycling is now increasing for some scarcer materials like lithium and cobalt. ### Concentration of supply and geopolitical risk - Important supplies are often highly concentrated among a few producers, creating distributional benefits and risks: - The Democratic Republic of the Congo accounts for about 70 percent of cobalt output and half of reserves. - China, Chile, and South Africa are top producers for some metals crucial to the energy transition. - Supply growth could be complicated by breakdowns or disruptions in institutions, regulations, or policies in major producing countries. ### Financing concerns and ESG dynamics - Insufficient financing for metals and mining investment is a related challenge, driven in part by growing investor focus on environmental, social, and governance considerations (ESG). - Mining involves environmental impacts and contributes to global warming, though the piece notes it is just a fraction of coal and gas generation per a World Bank report on the mineral intensity of the energy transition. - S&P Global analysis findings: - The ESG average score of the S&P Global 1200 stood at 62 out of 100. - The metals and mining sector’s ESG score rose to 52 in the latest year from 39 in 2018. - IMF analysis of S&P 1200 firms shows mining companies that raised their ESG ratings from 2018 to 2020 also saw an increase in debt and equity financing. - Efforts to unlock more green financing are aided by global initiatives such as the World Bank’s Climate-Smart Mining Initiative and IMF support for greening the recovery and promoting green finance. ### Conclusions and policy implications - The world needs more low-carbon energy technologies to keep temperatures from rising by more than 1.5 degrees Celsius, and the transition could unleash unprecedented metals demand. - While deposits are broadly sufficient in many cases, the needed ramp-up in mining investment and operations could be challenging for some metals and may be derailed by market- or country-specific risks. - Key policy priorities implied by the analysis: - Scale up exploration and extraction-technology innovation to expand reserves where feasible. - Expand metals recycling, especially for scarcer materials like lithium and cobalt. - Mobilize green financing and improve mining-sector ESG performance to unlock capital for mining investment. - Monitor and mitigate geopolitical and concentration risks in producer countries to avoid supply bottlenecks. *IMF Blog post by Nico Valckx, Martin Stuermer, Dulani Seneviratne, and Prasad Ananthakrishnan, December 8, 2021.* --- ## Content in this bundle - **Greening the Recovery** - [Greening the Recovery (Markdown version)](/-/media/files/publications/covid19-special-notes/en-special-series-on-covid-19-greening-the-recovery.pdf.md){rel="alternate" type="text/markdown"} - [Greening the Recovery (PDF)](/-/media/files/publications/covid19-special-notes/en-special-series-on-covid-19-greening-the-recovery.pdf){rel="external" type="application/pdf"} --- ## References - [blog](https://blogs.imf.org/2021/11/10/soaring-metal-prices-may-delay-energy-transition/) - [October World Economic Outlook](https://www.imf.org/en/Publications/WEO/Issues/2021/10/12/world-economic-outlook-october-2021) - [IMF staff paper](https://www.imf.org/en/Publications/WP/Issues/2021/10/12/Energy-Transition-Metals-465899) - [large increases](https://blogs.imf.org/2021/06/08/four-factors-behind-the-metals-price-rally/) - [https://www.imf.org/wp-content/uploads/2021/12/eng-metals-blog-nov-16-chart-191.jpg](https://www.imf.org/wp-content/uploads/2021/12/eng-metals-blog-nov-16-chart-191.jpg) - [green finance](https://www.imf.org/en/Topics/climate-change/green-finance) - [Andrea Pescatori](https://blogs.imf.org/bloggers/andrea-pescatori/) - [Surging Energy Prices May Not Ease Until Next Year](https://blogs.imf.org/2021/10/21/surging-energy-prices-may-not-ease-until-next-year/) - [Global Carbon Emissions Are on the Rise Again](https://blogs.imf.org/2019/12/05/global-carbon-emissions-are-on-the-rise-again/) _Source: https://www.imf.org/en/blogs/articles/2021/12/08/metals-demand-from-energy-transition-may-top-current-global-supply_