As countries switch to green energy, demand for copper, lithium, nickel, cobalt and rare earth elements is soaring. But they are all vulnerable to price volatility and shortages, the agency warned in a report published on Wednesday, because their supply chains are opaque, the quality of available deposits is declining and mining companies face stricter environmental and social standards.
In the past, mining companies have responded to higher demand by increasing their investment in new projects. But it takes on average 16 years from the discovery of a deposit for a mine to start production, according to the IEA. Current supply and investment plans are geared to “gradual, insufficient action on climate change,” it warned.
“These risks to the reliability, affordability and sustainability of mineral supply are manageable, but they are real,” the Paris-based agency said in the most comprehensive report on the issue to date. “How policy makers and companies respond will determine whether critical minerals are a vital enabler for clean energy transitions, or a bottleneck in the process.”
The minerals are essential to technologies that are expected to play a leading role in combating climate change.
The average electric car requires six times more minerals than a conventional car, according to the IEA. Lithium, nickel, cobalt, manganese and graphite are crucial to batteries. Electricity networks need huge amounts of copper and aluminum, while rare earth elements are used in the magnets needed to make wind turbines work.
“The data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions,” Fatih Birol, executive director of the IEA, said in a statement. “The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action.”
The agency said that policymakers should provide more clarity on the energy transition, promote the development of new technology and recycling, enhance supply chain resilience and encourage higher environmental, social and governance (ESG) standards.
The IEA, which advises the world’s richest countries and was founded after the oil supply shocks in the 1970s, said that mineral supplies will be the energy security challenge of the 21st century.
“Concerns about price volatility and security of supply do not disappear in an electrified, renewables-rich energy system,” it said.