This is why the energy transition will be reliant on the mining industry

The energy transition will put new, and greater, pressures on the global mining industry, triggering demands for enhanced mineral supply chain security.

The reason for this is that many new-energy items – from turbines to vehicles – need greater volumes of minerals than their existing, old-energy equivalents.

“A typical electric car requires six times the mineral inputs of a conventional car and an onshore wind plant requires nine times more mineral resources than a gas-fired plant,” according to the International Energy Agency’s (IEA) report The Role of Critical Minerals in Clean Energy Transitions.

Minerals like cobalt, lithium, and nickel are common in the make-up of a range of tech products. Lithium, nickel, cobalt, manganese and graphite help increase the performance and improve the longevity of batteries. While the magnets inside wind turbines and electric vehicle motors require rare earth minerals.

In its 2021 report, Fostering Effective Energy Transition, the World Economic Forum explains: “The production of minerals such as graphite, lithium and cobalt could increase by nearly 500% by 2050 to meet the growing demand for clean energy technologies.”

The growth in the use of electric vehicles, wind turbines and other clean-tech equipment is increasing the demand for these minerals, as well as for aluminium and copper, which have long been integral to electrical items.

Securing adequate supplies will put pressure on the mining sector to redirect operations into new areas, to secure supply chains, and to do so while limiting the environmental impact. The IEA has drafted a six-point plan including key recommendations for policymakers and private organizations to collaborate on enhanced mineral security.

Strong signals are needed

To encourage investment from private business, governments must be clear about their long-term support for the energy transition. Clear signals of intent will support business confidence and increase the chances of adequate investment: “Governments can play a major role in creating conditions conducive to diversified investment in the mineral supply chain,” the report says.

Innovate, innovate, innovate

At all points along the value chain, from production to consumption, innovation needs to be fostered and encouraged. Research and development into the most efficient use of resources, materials and energy can help deliver “substantial environmental and security benefits.”

Get serious about recycling

Current waste processing facilities may need significant investment to cope with an impending influx of new recyclables. Electric vehicle batteries are just one product that will require recycling at scale in the near future as components in clean-energy devices reach their end of life. Recycling could also take some of the pressure off the supply of minerals.

Prioritize supply chain resilience

As the COVID-19 pandemic illustrated, global supply chains are vulnerable to unexpected disruption. When that happens, the consequences are widespread. A future global pandemic that brought mineral supplies to a halt could have dire consequences for energy supplies worldwide. The IEA report states: “Policy makers need to explore a range of measures to improve the resilience of supply chains for different minerals, develop response capabilities to potential supply disruptions and enhance market transparency.”

Higher standards, bigger rewards

“Efforts to incentivise higher environmental and social performance can increase sustainably and responsibly produced volumes and lower the cost of sourcing them,” the IEA says. The idea is fairly simple, organizations in the mineral supply sector that follow high standards of social and environmental performance should be rewarded. This sends out a signal to the rest of the market and will encourage others to follow suit, which in turn should open up supply-side diversification.

Collaboration between producers and consumers

Effective international coordination can help safeguard supplies, the IEA suggests. For example, reliable and transparent data would enable better planning and decision-making, while regular vulnerability assessments across supply chains could help sharpen up collective responses to future crises.

At the heart of the energy transition, the minerals mentioned above, and others like them, will be needed in greater and greater volumes. The mining sector currently derives most of its revenues from coal, however. Switching from coal to other minerals, which presently are a smaller revenue stream for mining businesses, the IEA says, means mining businesses are about to face a period of transition, too. It will be one characterized by opportunities and challenges, and will require the support of governments to set the future direction of global energy, and therefore global mining.