Energy and Power


Powering the Future: How Critical Minerals Drive Clean Energy Technologies

Author : Priyanka | May 8, 2024

In today's rapidly evolving world, the global economy faces challenges due to technological advancements, clean energy transitions, and geopolitical dynamics. The increasing demand for essential minerals and the risks associated with their availability raise concerns about supply chain vulnerabilities, economic competitiveness, and industry sustainability. However, critical minerals emerge as a promising solution. With their unique properties and pivotal role in advanced technologies, these minerals have the potential to reshape the global economic landscape. According to Kings Research, the demand for critical minerals is growing as the market is projected to accrue a valuation of $494.23 billion by 2030.

What are Critical Minerals?

Critical minerals are non-fuel or mineral materials essential for economic or national security and have a supply chain vulnerable to disruption. These minerals play a crucial role in various industries, including high-tech manufacturing, renewable energy technologies, defense systems, and transportation. These minerals' absence or limited availability can have significant consequences for the economy and national security.

The designation of minerals is not static and can change over time based on shifts in supply and demand, technological advancements, and policy priorities. Different countries may have their lists based on their specific industrial needs and assessments of supply risks.

Some examples include rare earth elements, platinum group elements, copper, lithium, cobalt, and others. These minerals are essential components in clean energy technologies, such as wind turbines, solar panels, electric vehicles, and energy storage systems.

What are the Most Critical Minerals?

Identifying the most crucial minerals depends on several factors, like national security, economic significance, and vulnerability in the supply chain. Here's a glimpse at some minerals often deemed critical:

  • Rare Earth Elements (REEs): These encompass 17 elements vital for diverse high-tech applications such as electronics, renewable energy technologies, and defense systems.
  • Platinum Group Elements (PGEs): Including platinum, palladium, rhodium, ruthenium, iridium, and osmium, PGEs find extensive industrial uses, particularly in catalytic converters, electronics, and jewelry.
  • Copper: A fundamental mineral in electrical wiring, power generation, and various industrial applications, copper's high conductivity and corrosion resistance are pivotal for infrastructure development and electrical systems.
  • Lithium: Playing a pivotal role in rechargeable batteries, especially for electric vehicles and energy storage systems, lithium's demand surge is fueled by the rise of clean energy technologies.
  • Cobalt: Primarily utilized in rechargeable batteries, including those powering electric vehicles, cobalt also features in aerospace alloys, superalloys, and diverse industrial applications.

What is Driving the Demand for Critical Minerals Industry?

The swift uptake of clean energy technologies like solar PV and batteries fuels the need for minerals, paving the way for substantial growth opportunities. With escalating demand for these technologies, businesses in the critical minerals industry must emphasize sustainable and ethical practices. Prioritizing sustainability guarantees the welfare and safety of workers, local communities, and indigenous groups. This encompasses fair labor standards, upholding human rights, and conducting business operations with transparency and ethics. By integrating sustainable practices, businesses can mitigate their environmental footprint, including curbing energy usage, cutting down on waste production, and safeguarding ecosystems.

Which Countries Have the Most Critical Minerals?

  • China stands out as the leading producer and possessor of vast reserves of several critical minerals, notably rare earth elements, tungsten, magnesium, and gallium.
  • Australia boasts substantial reservoirs of critical minerals like rare earth elements, lithium, cobalt, and nickel, cementing its position as a key global player in mineral production.
  • The United States has prioritized minerals that are critical and possesses significant reservoirs of various minerals, including rare earth elements, lithium, cobalt, and copper, indicating its strategic importance in the mineral market.
  • Canada emerges as a hub, housing abundant reserves of rare earth elements, cobalt, lithium, and nickel. The nation actively explores and exploits its mineral wealth to bolster its economic prospects.
  • The Democratic Republic of the Congo (DRC) serves as a primary source of cobalt, a critical mineral indispensable for electric vehicle batteries and energy storage systems, underscoring its pivotal role in the global mineral supply chain.

Understanding the Role of Critical Minerals in Clean Energy Technologies

The types of mineral resources utilized vary depending on the technology involved. Lithium, nickel, cobalt, manganese, and graphite play crucial roles in enhancing battery performance, longevity, and energy density. Meanwhile, rare earth elements are indispensable for the production of permanent magnets vital for wind turbines and electric vehicle (EV) motors. Furthermore, copper and aluminum are in high demand for electricity networks, with copper serving as a cornerstone for various electricity-related technologies.

The transition to a clean energy system is poised to significantly increase the demand for these minerals, positioning the energy sector as a major player in mineral markets. Traditionally, the energy sector represented a minor portion of total mineral demand until the mid-2010s. However, as energy transitions accelerate, the demand for clean energy technologies is experiencing rapid growth. In scenarios aligned with the goals of the Paris Agreement, such as the International Energy Agency's Sustainable Development Scenario (SDS), the share of total demand for minerals rises substantially over the next two decades. For instance, copper and rare earth elements could account for over 40% of total demand, while nickel and cobalt may represent 60-70%. Additionally, lithium demand could surge to nearly 90%. Electric vehicles (EVs) and battery storage systems are already the largest consumers of lithium, and by 2040, they are expected to surpass stainless steel as the primary end-user of nickel.

How Do Critical Minerals Impact Global Economies?

  • Industrial and Technological Development: Essential minerals are pivotal for advancing technology and industry. They are indispensable in the production of electronics, renewable energy technologies, electric vehicles, aerospace equipment, defense systems, and more. The availability and affordability of these minerals significantly influence the pace of technological progress and industrial expansion.
  • Supply Chain Security: The vulnerability of global supply chains for essential minerals has become evident, particularly during events like the COVID-19 pandemic. Overreliance on a limited number of countries for mineral supplies poses risks to economies. Therefore, efforts to bolster supply chain security and diversify sources of these minerals are imperative to ensure uninterrupted access to these crucial resources.
  • Clean Energy Transition: Essential minerals play a crucial role in the transition to clean energy. They are fundamental components in renewable energy technologies like solar panels, wind turbines, and energy storage systems. The surging demand for these minerals is driven by the growth of the clean energy sector, and their availability can significantly influence the pace and scale of the shift to a low-carbon economy.
  • Economic Competitiveness: Nations endowed with substantial reserves or production of essential minerals stand to gain economic advantages. They can attract investments, generate employment opportunities, and stimulate technological innovation in related sectors. Moreover, countries that adopt sustainable and responsible mining practices for these minerals can position themselves as leaders in the global economic landscape.
  • Geopolitical Considerations: The geopolitics surrounding the supply chains of essential minerals hold significant sway over global economies. Countries with control over these mineral resources wield influence and can leverage their position in international trade negotiations. Ensuring a diversified and secure supply of essential minerals is crucial for mitigating geopolitical risks and preserving economic stability.

End Note

Critical minerals play a vital role in global economies, with far-reaching impacts on industrial development, supply chain security, clean energy transition, economic competitiveness, and geopolitical considerations. Their indispensability in advanced technologies and the increasing demand for renewable energy underscore their significance.

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