The Energy Transition Commission (ETC) has sounded an alarm. The agency outlined rapidly rising demand for and potential shortage of critical metals.
These are the metals that fuel the green energy megatrend, such as lithium, copper, nickel, cobalt, graphite, and others.
This shortage may derail the global economy from reaching its net-zero emission targets by 2050. To get back on track, the agency estimates that a $70 billion investment per year will be needed just for mining critical metals.
That’s much more than an average of $45 billion per year recorded over the last decade. Not to mention over $100 billion investment in refining and recycling.
The research highlights the two most vulnerable metals in this megatrend – lithium and copper. By 2050, ETC outlined that demand for lithium can grow by a factor of 15, and the demand for copper could grow 5x.
These metals are already in short supply as miners struggle to increase their output. The new mines can take up to two decades to get into production. Hence miners have to act now.
We see the activity picking up pace in the critical metals sector. Major companies working in the resource sector are quickly shifting to fill the gap. This includes not only known lithium and copper miners but also well-known energy giants.
Chevron and its rival Exxon Mobil made their lithium plans public. The oil majors realize that oil demand will decline in the coming decades. It will directly threaten their core business unless they find a substitute. Lithium is a perfect fit for companies with a strong track record in the resource sector.
Exxon has already planned to build a lithium processing plant in Arkansas. It may produce up to 100,000 metric tons of lithium per year. But it’s not as easy as it may sound.
Exxon will likely use direct lithium extraction technology (DLE) to extract lithium from the Arkansas brine. So far, this method has been tested on small pilot projects but remains unproven on an industrial scale.
There is no guarantee that Exxon will succeed.
At the same time, major lithium miner Albemarle outlined and funded a $135 million expansion of its Kemerton lithium plant in Australia. The company plans to expand production from 60,000 tons to 100,000 tons per year by 2025.
Another deal came from commodity trader Glencore. It agreed to fund French miner Eramet with $400 million for its lithium production in Argentina.
India’s Tata Group plans to build a $5 billion gigafactory in the UK. It will be one of the largest battery plants in Europe, with its launch slated for 2026.
As you can see, critical minerals sectors attract billions of dollars. They are flowing into the green energy transition trend, which is only the begging of this megatrend.
We believe this megatrend is far from over. It still provides investment opportunities in critical minerals.
We’ll likely see a number of self-made billionaires in this trend.
Make sure not to miss on this trend and invest accordingly.
Thank you for your loyal readership,
The Financial Star team
