Market review – Global Critical Minerals Outlook 2024 – Analysis - IEA (2024)

Clean energy technologies had another record year, with annual additions of solar PV growing 85% and wind turbines growing 60%. Electric car sales neared 14 million in 2023, a 35% year-on-year increase, and more than six times higher than five years earlier in 2018. Almost half of global battery storage capacity, over 40 GW, was added in 2023 alone, a record year that saw additions doubling from 2022. Propelled by this expansion, the rate of demand growth for critical minerals remained robust in 2023, with lithium demand rising by 30% and demand for nickel, cobalt and graphite expanding by 8-10%. Clean energy applications were one of the primary contributors to this demand growth. Across all key minerals, the share of clean energy technologies has risen consistently.

However, the critical minerals market had a turbulent year in 2023 and the main story of the year was falling prices. Battery minerals saw particularly large declines with lithium spot prices plummeting by 75% and other key materials such as nickel, cobalt, manganese, and graphite seeing declines of 30-45%. In contrast, prices for copper stayed relatively resilient. Overall, a combination of demand and supply-side trends, alongside a correction of overly steep price rises in 2021-2022 contributed to the lower price environment, which is likely to continue in 2024. As a result, despite demand growth, the market size for energy transition minerals contracted by 10% to USD 325 billion in 2023.

In the case of refined materials, the share of the top three producing nations have all increased since 2020, except for lithium. This trend is most pronounced for nickel and cobalt, where the rise of Indonesia has significantly boosted the level of supply concentration. Between 2020 and 2023, Indonesia's share of mined nickel production increased from 34% to 52% and its share of refined nickel increased from 23% to 37%.

For mining, however, assessing production by ownership (based on the leading owner company’s headquarter location) shows a very different picture compared with the geographical mine location. Companies in the United States and Europe play a much greater role in the supply of all critical minerals than what the geographical location of mines may suggest. Much of this is from some of the largest multi-national mining majors such as Glencore and Rio Tinto. Both nickel and cobalt also show stark differences between the geographical location of mines compared with the ownership. Although Indonesia is the leading location of nickel mining, Indonesian companies lead hold less than 10% of production. Chinese companies are the major nickel mine owners, accounting for around 40% of production. European companies also have a sizeable share with over 20% of supply, predominantly due to operations in Indonesia owned by Eramet. For cobalt, the majority of mines are located in the Democratic Republic of the Congo (DRC), whereas European companies such as Glencore and Chinese companies such as CMOC own a third each of the supply. Notably, DRC-owned companies account for less than 5% of production.

Investment in critical mineral mining grew by 10% in 2023, a smaller increase than seen in 2022, as price declines placed pressure on producers’ financial capacity.

We have assessed the combined investment levels of 25 major mining companies with substantial involvement in developing minerals essential for the energy transition. These companies encompass diversified mining majors and specialised developers focused on specific energy transition minerals such as copper, nickel, cobalt, and lithium. The assessment suggests that investment in critical minerals mining grew by 10% in 2023 (6% when adjusted for inflation), a smaller increase compared with the 30% growth in 2022. While investment spending by diversified majors increased by 15%, investment by lithium specialists saw a sharp rise by 60%, despite headwinds from weak prices.

Exploration spending grew by 15% in 2023, with Canada and Australia registering the largest increases, followed closely by Africa. Spending for lithium exhibited an impressive 80% increase despite challenging market conditions, followed by platinum and nickel.

Notable critical mineral deals in 2023 included USD 50 million series A investment by Canada-based Summit Nanotech to scale its more sustainable lithium extraction technology. In the United States, Kobold Metals raised USD 195 million in growth equity to expand cobalt extraction, Energy Exploration Technologies raised USD 50 million for direct lithium extraction from GM Ventures, and Atlas Materials raised USD 27 million in seed money to develop nickel extraction technologies.

In Latin America, both Mexico and Chile enacted policies to develop their domestic lithium mining industries. Mexico followed its 2022 Mining Reform with legislative amendments in 2023 that streamlined the mining permitting process and strengthened environmental and social protections. Chile also followed its 2023 National Lithium Strategy with an update to its Mining Royalty Law in 2023. The law established a mining royalty for the exploitation of copper and lithium to distribute economic benefits across the country, along with a legal body to administer it.

The Inflation Reduction Act of the United States provides funding to various government agencies to hire new personnel and develop tools and guidance to strengthen and accelerate environmental reviews. The proposed Critical Raw Materials Act (CRMA) of the European Union would allow certain projects to be designated as “strategic” that would have a streamlined permitting process. The act lays out criteria for a project to be designated as “strategic,” including whether the project would be implemented sustainably and responsibly. Besides permitting processes, the CRMA would also create a monitoring mechanism to mitigate the risk of supply chain bottlenecks.

Consumer countries have developed laws and regulations targeting sufficient supplies of responsible critical minerals. This has been particularly true in countries with large downstream manufacturing industries, which rely on a supply of these minerals.

Japan announced a policy on initiatives for ensuring stable supply of critical minerals in 2023, which aims to secure supplies for its battery manufacturing goals and provides subsidies for exploration, feasibility studies, mine development, smelting and research and development to develop supplies. Korea announced a list of 33 critical minerals and 10 strategic critical minerals, of which the latter will be prioritised to stabilise the supply chain of high-tech industries such as semi-conductors and secondary batteries.

Some countries also make financing support available for overseas projects through direct equity investments or sovereign wealth funds, such as in Japan, Saudi Arabia and China. The United Kingdom also pledged USD 1 million to identify bankable projects in processing and midstream value addition in 14 African countries.

Strategic plans have incorporated measures aimed at boosting rates of battery recycling, and 2023 saw a notable uptick in policies aimed at increasing the recycling of clean energy technologies to secure critical minerals from both consumer and producer countries. The European Union’s Critical Raw Materials Act will require member states to identify, adopt and implement measures to improve the collection and recycling of critical mineral-rich waste, as well as investigate the potential for recovery of critical raw materials from extractive waste in active and historic mining sites. Specific measures to increase recycling have come in the form of investment into research and development and waste collection, such as the United States’ USD 192 million of funding for increasing recycling rates and research and development into battery recycling technologies from consumer products.

Progress has been observed for several ESG indicators. From 2019 to 2022, reported injury rates decreased by nearly 30%, investments in communities surged from USD 0.3 billion to USD 1 billion, and the average share of female workers went from just over 15% to 20%.

On the other hand, there are many areas where progress has been limited and some even show negative trends. The amount of waste generated per unit of mineral produced increased by over 20% from 2019 to 2022, potentially due to the development of lower-grade resources. Reported water consumption increased by around 25% during this period even in the face of high supply risks related to droughts for copper and other minerals. Similarly, indicators related to land rehabilitation, effluent discharge and GHG emissions did not exhibit visible improvements despite growing ESG commitments.

Voluntary sustainability standards can help actors improve performance and earn ESG credentials. These include the ICMM‘s Mining Principles and performance expectations, the Initiative for Responsible Mining Assurance‘s Standard for Responsible Mining, Canada’s Towards Sustainable Mining, the Responsible Minerals Initiative and the Copper Mark’s Risk Readiness Assessment Criteria Guide. Material traceability services are also on the rise. This involves working with suppliers to track sources and related impacts up to the point of incorporation into an end product. It can allow an assessment of risks and ESG performance along the supply chain, contributing to increased mineral security.