Critical mineral shortages threaten global clean energy transition, analysts warn

A number of international organisations have again raised concerns that a lack of reliable critical mineral supplies is threatening the global transition to clean energy.

Leading data and analytics company GlobalData has identified several major challenges to scaling clean energy technologies, highlighting mineral depletion and resource monopolisation.

The company’s latest strategic intelligence report, Critical Minerals (2024), says the growing demand for renewable technologies such as solar photovoltaic cells and wind turbines, alongside energy transition solutions like hydrogen, energy storage and carbon capture, has triggered an unprecedented surge in demand for critical minerals.

‘Near-term depletion’

Martina Raveni, a strategic intelligence analyst at GlobalData, said this increasing demand is posing significant challenges to achieving international energy transition goals.

“The near-term depletion of critical minerals raises concerns, especially as instability in the green technologies market causes price volatility,” Ms Raveni said.

“Lower-grade ores complicate extraction, making it less efficient, particularly in the copper industry.”

Regional concentration

Ms Raveni said the issue is further impacted by the fact that many critical minerals are concentrated in specific regions.

For example, much of the world’s lithium reserves are concentrated in South America and Australia, while the Democratic Republic of the Congo provides much of the world’s cobalt and Indonesia dominates nickel production.

“Geographic monopolies worsen supply risks and are further exacerbated by geopolitical tensions, ESG disclosure rules and environmental factors like water scarcity.”

“The race to control these critical minerals has intensified rivalries between China, the US and the EU, with China currently dominating the mineral supply chain and energy transition technologies.”

“Given these issues, there are concerns that shortages of critical minerals may make it harder for nations to achieve energy transition goals.”

IEA concerns

Meanwhile, the International Energy Agency (IEA) has also raised concerns about the impacts critical mineral shortages can have.

The IEA’s recent Energy Snapshot noted that as the rollout of clean energy accelerates and countries around the world continue to expand, ensuring reliable and affordable access to materials such as lithium, nickel, copper, cobalt and graphite is rising up the policy agenda.

The IEA noted that in 2023 and 2024, pressure eased on the market for metals and minerals that go into electric vehicles, wind turbines, solar panels and other clean energy technologies, as a surge in supply outpaced the rise in demand.

Prices, which reached record highs in the aftermath of the pandemic, dropped significantly.

Investment shortage

However, IEA analysis found that today’s well-supplied market may not be a good guide for the future, as demand for critical minerals continues to rise.

“Notably, the recent declines in critical mineral prices have made it harder to attract new investment in production, which rose at a slower rate in 2023 than in 2022,” the IEA report stated.

“Greater efforts are needed to ensure sufficient and secure mineral supplies.”

Supply boost

A faster ramp-up of clean energy deployment would require boosting the supply of critical minerals from mining.

But the recycling and reuse of minerals form a secondary source of supply that could also make substantial contributions to total supply in the longer term.

“On a pathway in which countries meet their announced energy and climate goals, recycling reduces the need for mining copper and cobalt by around 40% in 2050 and by about a quarter for lithium and nickel,” the IEA said.