Metals and raw materials, the new East-West battleground
By 2050, Europe needs to cumulatively spend $5.3 trillion on clean energy projects. But there’s a sixfold increase in the global production of some metals and raw materials required for that purpose.
Specifically by 2040, when copper, lithium, graphite, nickel and some rare earths have to be available for the energy transition, according to International Energy Agency estimates.
Russia’s invasion of Ukraine only increased the stakes in the global trade war by highlightening the risk of relying on autocratic states for energy.
So the fight for metals and raw materials will require a more strategic aproach.
According to Reuters, that means Western manufacturers’ focus will switch to reducing China’s dominance in materials.
A good example of how high the stakes are is United States, which only holds 3% of the world’s lithium reserves.
Even so, Washington has passed legislation to subsidise domestic extraction of crucial materials.
But reducing China’s dominance will be tricky since Beijing dominates the processing, and to a lesser extent the extraction, of many critical industrial ingredients.
Europe is the most vulnerable in that department, for it imports between 75% and 100% of most metals.
Opening mines at home could be one response of Western companies, but that takes very long. Also, mining in developed markets may mean pushback from environmentally conscious citizens.
That aside, if all European lithium mining projects transpire, they could supply around 40% of its expected demand of 600,000 tonnes of lithium carbonate equivalent a year by 2030.
Another solution could be if Western companies strike deals with suppliers in friendly countries, or even better boost recycling.
The first approach is already underway since 2022, when carmakers have ramped up partnerships with mines and invested directly in mining projects, data from Fitch Solutions shows.
But critical metals producers could make life trickier for buyers by forming cartels. That’s why Western nations’ best option is to recycle metals from used appliances.
Europe shows that it can be done, for the old continent recycles 17% of the globe’s battery production.
This share will only rise to 48% by 2025, Fitch Solutions suggests, even though recycling is costly.