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“The level of over-concentration that we see in critical minerals markets today is unlike that for any other major commodity we have come to rely on in the modern world. History has shown us that failing to properly diversify supplies and trade routes of essential resources comes with profound risks.”
Dr. Fatih Birol,
International Energy Agency (IEA).
Almost 50 countries from continents across the world – including large and emerging critical mineral producers and consumers – came together in September 2023 with leaders from industry, investment and civil society at the first IEA Critical Minerals and Clean Energy Summit to share experiences and discuss effective courses of action on critical minerals to ensure rapid and secure energy transitions.
The first-of-its-kind international summit builds on the ministerial mandate given to the IEA in 2022 to further its work on critical minerals, the materials at the heart of key clean energy technologies such as wind turbines, electric vehicles and solar panels. The IEA has been asked by governments around the world to make recommendations on options to diversify supplies of critical minerals and clean energy technology manufacturing. To deliver on this, the IEA is creating a new Energy Security and Critical Minerals Division within its Secretariat dedicated to these issues.
“Locking in secure and sustainable supplies of critical minerals for the clean energy transition has quickly become a top priority for governments, companies and investors around the world. The IEA has been working on this issue for years and established a leadership role, as reflected by the broad and high-level participation in this Summit. With many stakeholders now asking how well prepared they are for this new reality, the IEA is expanding and deepening our work to help countries around the world develop robust and resilient clean energy supply chains,” Fatih Birol, Executive Director, IEA.
The first annual IEA Critical Minerals Market Review, released in July along with a new online data explorer, shows that record deployment of clean energy technologies is propelling huge demand for minerals such as lithium, cobalt, nickel and copper. Devising new strategies to meet this new wave of demand was at the centre of discussions among participants at September Summit. Six key action areas were identified including: 1) accelerating progress towards diversified minerals supplies; 2) unlocking the power of technology and recycling; 3) promoting transparency in the markets; 4) enhancing the availability of reliable information; 5) creating incentives for sustainable and responsible production; and 6) strengthening efforts on international collaboration.
“Fostering inclusive dialogue must be at the forefront of the critical minerals agenda as we navigate this complex and multifaceted issue within the clean energy transition,” Dr. Birol said. “Through its analysis and data, it is the IEA’s mission to ensure that critical minerals become a symbol of international cooperation rather than resource anxiety.”
The Summit has delivered six key actions to ensure secure, sustainable and reliable supplies of critical minerals:
The Rise of Base Metals Production in Africa
Buried beneath the surface of Africa is a wealth of valuable and extractable natural resources, making its mining industry one of the most important in the world. Some of the major mining countries in Africa are Democratic Republic of Congo (DRC), South Africa, Namibia, and Zimbabwe. The continent is a major producer of many commodities with many reserves of metals and minerals such as gold, diamond, cobalt, bauxite, iron ore, coal, and copper across the continent though this article will focus more on base metals. It is estimated that Africa has roughly 30 percent of the known global mineral reserves, and these desirable commodities have been extracted, and often exploited, for centuries. However, with the growing pressure mounting in the industry to decarbonize, greater investment in these base metals is of great importance for global decarbonization and collaboration is key.
The World Bank projects that a surge in investment for renewable energy and green technologies, crucial for mitigating climate change’s severe impacts, would demand an almost 500% boost in base metals production. Notably, Russia, a major producer of nickel, aluminum, copper, iron, and zinc, has seen these metals experience significant price hikes since early 2022, with ongoing supply disruptions likely to drive prices even higher. In the face of sanctions on Russia, major mining companies are seeking new metal sources for the energy transition, increasing their risk appetite for Africa, a resource-rich continent.
This global supply deficit has provided an opportunity for African base metal producers, such as Zimbabwe, Botswana, and several West African countries like Guinea, to fill the gap. Consequently, heightened investment in these metals can expedite global decarbonization. Some companies and investors are reevaluating projects that were previously overlooked, while governments are turning to Africa to secure sufficient metals for an accelerating net-zero push.
Africa holds a pivotal role in metal production crucial for global decarbonization, including significant positions in cobalt, copper, zinc, nickel, and aluminum. Many diversified mining companies have already set environmental impact reduction targets in response to Environmental, Social, and Governance (ESG) pressures. However, the pressure to decarbonize more aggressively may intensify, necessitating collaboration with a broader set of stakeholders to reduce consumption by incorporating circular economy concepts and enhanced recyclability in the mining lifecycle.
The African continent stands to gain substantially from the transition to clean energy and technologies, possessing 30% of the world’s mineral reserves, including those essential to the green transition. For instance, the Democratic Republic of Congo (DRC) contributes about 70% of the world’s cobalt, while South Africa holds the largest share of manganese reserves. Madagascar and Mozambique have significant graphite shares, and Zimbabwe boasts extensive lithium deposits.
The African Development Bank (AfDB) is actively developing a base metal strategy, a focal point at the recent African Forum on Mining in October 2022 hosted by the African Union in Addis Ababa, Ethiopia. However, numerous challenges, including skill acquisition, ensuring reliable electricity supply, and improving the investment climate, need to be addressed. Additionally, green technologies require diverse inputs; for example, electric vehicle batteries necessitate lithium, nickel, cobalt, manganese, and graphite. Establishing the DRC as a battery manufacturing hub must not exclusively rely on its cobalt reserves.
Last year, BHP Group invested $40 million in a Tanzania nickel project- Kabanga Nickel. The global miner is pivoting back to Africa after exiting the continent in 2015 when it spun off South32. Kabanga is the biggest development-ready nickel sulphide deposit in the world. It contains in situ nickel equivalent resources estimated at 1.86-million tonnes and an in-situ nickel equivalent grade of 3.44%. As the demand for nickel, a key component in electric vehicle batteries is projected to rise, Kabanga which is expected to start producing in 2025, aims for minimum annual output of 40,000 tonnes of nickel, 6,000 tonnes of copper and 3,000 tonnes of cobalt. BHP’s investment in Kabanga will give it an 8.9% stake once conditions are met and BHP plans to invest a further $50 million which would increase its stake to 17.8%, valuing the project at $658 million. All these efforts are made to complement the move to a net zero world.
US-based artificial intelligence exploration firm KoBold Metals has reportedly pledged a $150m investment to own, explore, and develop the Mingomba copper-cobalt mine in Zambia. Maximizing copper production will also likely be critical to meeting the needs of a low-carbon future. While the technologies that will prevail in a low-carbon economy can only be speculated, experts agree that solar power, wind power, and energy storage are likely to be at the forefront of renewable energy efforts and each of these technologies relies heavily on copper hence its significance in the mining industry is greater towards global decarbonization.
Presently, there are negotiations between the United States and Saudi Arabia concerning the acquisition of essential metals in Africa for their respective energy transitions, as reported by the Wall Street Journal. A state-backed Saudi initiative is poised to invest $15 billion, equivalent to approximately $46 per person in the U.S., to secure stakes in mining assets across African nations like the Democratic Republic of Congo, Guinea, and Namibia. This strategic move would grant U.S. companies the right to purchase a portion of the produced metals.
Furthermore, metals such as aluminium and silicon, often collectively referred to as “solid electricity” due to their substantial electricity consumption in basic metal production, emerge as paramount in the discourse on power requirements and are pivotal to the process of decarbonization.
Looking forward, the International Energy Agency (IEA) is set to convene a Ministerial Meeting in February 2024, aligning with the 50th anniversary of the Agency’s establishment. The 2024 Ministerial presents a crucial juncture for nations to evaluate the significance of critical minerals in the evolving landscape of international collaboration concerning energy security and climate change. This assessment encompasses the role of the IEA in guaranteeing a secure, sustainable, and responsible supply of critical minerals for clean energy supply chains. The upcoming event will also involve the announcement of the next phase of the IEA Voluntary Critical Mineral Security Programme, incorporating options like stockpiling and other measures aimed at ensuring transparent and resilient supply chains based on shared experiences and information.