Market size for Lithium and other key minerals needed for energy transition is worth $320 billion and counting

According to the IEA report, between 2017 and 2022, the lithium demand has tripled, cobalt demand has jumped by 70 percent, and the demand for nickel has increased by 40 percent. This surge in demand has driven the market size of key energy transition minerals to double, reaching an impressive $320 billion in 2022.

Acknowledging the critical importance of ensuring a steady supply of minerals, the report highlighted a positive trend in investment. In 2022, investment in critical minerals witnessed a 30 percent increase following a 20 percent growth in 2021.

This demonstrates a growing recognition of the significance of securing the necessary resources for the global energy transition. However, despite this progress, supply concerns continue to cast a shadow on the sustainability of the energy transition.

The IEA report raises concerns about limited progress in diversifying the sources of critical mineral supply. In some cases, the supply situation has even worsened. The share of the top three producers in 2022 has remained unchanged, indicating a lack of progress in breaking the dependence on a few key players. Notably, China currently holds half of the planned lithium chemical plants, further underscoring the concentration of production in specific regions. Similarly, Indonesia represents almost 90 percent of planned nickel refining facilities, emphasising the vulnerability of supply chains to geopolitical risks.

To ensure a sustainable and resilient energy transition, it is imperative to address the supply chain vulnerabilities associated with critical minerals. Some of the ways that it can be done are:

Diversifying supply sources: Efforts must be made to identify and develop alternative sources of critical minerals to reduce dependence on a few countries. Exploring and supporting new mining projects in diverse regions could enhance supply chain resilience.

Recycling and circular economy: Encouraging the recycling and reuse of critical minerals from end-of-life products can contribute to reducing demand for primary raw materials. Investing in research and development of recycling technologies and establishing efficient recycling infrastructure will be crucial.

Technological advancements: Continued innovation and research in materials science and battery technologies can help reduce the reliance on scarce resources or enable the substitution of critical minerals with more readily available alternatives.

International cooperation: Collaborative efforts among countries, industry stakeholders, and international organizations can facilitate knowledge-sharing, technology transfer, and the development of sustainable supply chains.