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Supply Gap Widening for Critical Minerals

May 21, 2024
There will be an issue with copper and lithium, says the International Energy Agency.

In a new report, Global Critical Minerals Outlook 2024, released on May 17, the International Energy Agency (IEA) notes that there is a significant gap between prospective supply and demand for copper and lithium. And anticipated mine supply from announced projects meets only 70% of copper and 50% of lithium requirements.

The report also notes that “graphite and rare earth elements may not face supply volume issues but are among the most problematic in terms of market concentration: over 90% of battery-grade graphite and 77% of refined rare earths in 2030 originate from China. “Furthermore the share of the top three producing nations have all increased since 2020, “ with the trend most pronounced for nickel and cobalt

The agency notes that this conclusion comes from an analysis of two different supply chain scenarios, with the base case including production from both current assets and those under construction. Given that they are predicting that in 2035 “balances for nickel and cobalt look tight relative to confirmed projects."

However, the report concludes that even with potential projects being developed in geographically diverse regions for refined minerals, "the shares of the top three producing nations have increased since 2022, with the trend most pronounced for nickel and cobalt." And the projects announced so far will still remained concentrated in a few countries. 

This analysis is based on the strong growth for critical minerals in 2023, with lithium demand rising by 30%, while demand for nickel, cobalt, graphite and rate earth elements all experiencing increases ranging from 8% to 15%.

The driver of this increase has been clean energy applications, with electric vehicles consuming lithium, and increasing their share in demand for nickel, cobalt and graphite.