Prices for Key Energy Transition Metals Dropped in 2023 Amid Increased Demands Following Supply Growth
In its second annual Global Critical Minerals Outlook, released in May, the International Energy Agency reviewed rising demands of critical metals, such as copper, lithium, nickel, cobalt, graphite, and rare earth elements. These demands are fueled in part by the deployment of clean energy strategies to limit global warming to 1.5 °C (2.8 °F) under the Net Zero Emissions by 2050 Scenario (NZE Scenario) and the APS (Announced Pledges Scenario). A key finding is that demands for critical energy transition metals need to increase by 1.5 to 8.7 times to meet NZE Scenario targets.
Demand for key energy transition metals continued to rise in 2023 from 2021, with copper at 25,855 kilotons (kt) from 24,928 kt, lithium at 168 kt from 101 kt, nickel at 3,104 kt from 2,759 kt, cobalt at 215 kt from 181 kt, graphite at 4,632 kt from 3,920 kt, and rare earth metals* at 93 kt from 78 kt.
Demand growth expanded in 2023 from the previous year, with lithium at the highest with about 30%. Nickel, cobalt, graphite, and rare earth elements expanded by 8% to 15%.
However, dramatic price increases for metals seen in 2021-2022 fell sharply in 2023. This led to a 10% contraction in the market size for energy transition minerals and brought the aggregate market value of these minerals to $325 billion. The slowing growth of electric vehicle battery sales, coupled with China’s expansion of battery plants, added to the pressure.
The world’s top metal producers remained the same: Chile has the most copper (5,311 out of 22,508 kt, or 23.5%), Australia has the most lithium (84 out of 194 kt, or 43.2%), Indonesia has the most nickel (1,787 out of 3,451 kt, or 51.7%), the Democratic Republic of the Congo has the most cobalt (157 out of 240 kt, or 65.4%), and China has the most natural graphite (1,320 out of 1,617 kt, or 81.6%) and rare earth metals (47 out of 75 kt, or 62.6%).
In the NZE Scenario, demand for key energy transition metals needs to grow by 1.5 to 8.7 times from 2023 to 2040, with certain percentages set aside for clean energy. Copper needs to grow by 1.5 times to nearly 40,000 kt (50%), lithium by 8.7 times to about 1,400 kt (91%), nickel by 2.1 times to about 6,500 kt (56%), cobalt by 2.2 times to about 470 kt (59%), graphite by 3.9 times to about 18,000 kt (63%), and rare earth metals by 1.8 times to about 160 kt (41%).
Under the APS in the same time frame, copper needs to reach 36,378 kt (with 16,343 kt or 44.9% for clean energy), lithium needs to reach 1,326 kt (with 1,203 kt or 90.7% for clean energy), nickel needs to reach 6,238 kt (with 3,381 kt or 54.2% for clean energy), cobalt needs to reach 454 kt (with 260 kt or 57.2% for clean energy), graphite needs to reach 16,023 kt (with 9,839 kt or 61.4% for clean energy), and rare earth metals need to reach 169 kt (with 64 kt or 37.8% for clean energy).
*In this report, rare earth elements also include neodymium, praseodymium, dysprosium, and terbium.
Source: