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October 29, 2021 – The demand for critical minerals per year for the energy transformation towards the net zero goal is expected to increase more than sixfold by 2050, according to a report by the International Energy Agency. This begs the question, where will these minerals come from if there are not enough now? Steel prices are rising again in Asia and Europe. And aluminium remains scarce despite Chinese coal subsidies.

Stainless Espresso: Demand for critical minerals will increase more than sixfold
Stainless Espresso: Demand for critical minerals will increase more than sixfold

Steel prices on the rise again

While steel futures had fallen in recent days due to market consolidation, they are now rising again. Hot-rolled coil on the SHFE already rose by about 1.7% today and stainless steel futures by more than 1%.

Stainless steel spot prices remain high

Spot prices for Chinese stainless steel also hardly reacted to the changes on the commodity exchanges. Due to limited Chinese stainless steel production, spot prices were more than $300 higher than futures.

Rising prices in Europe

Rising prices for steel are also reported from Europe after the first figures from the automobile negotiations leaked into the market. Especially in view of the end of the chips shortage, the accumulated backlog at the car manufacturers is likely to suck the steel market dry, especially for hot dipped galvanised (HDG).

Aluminium still in short supply despite coal subsidies

Aluminium prices on the SHFE and LME have consolidated and are already showing some upward movements again. This is because even though the Chinese government has announced its intention to keep coal prices at a certain level, the important factor of energy remains scarce in the Asian country.

Magnesium and silicone in short supply

The supply situation for magnesium has not improved yet. And Chinese silicone metal is also scarce and expensive. This affects a large part of the aluminium alloys.

Where do we get the critical minerals? IEA report raises questions

The World Energy Outlook 2021 of the International Energy Agency (IEA) raises a central and particularly critical question: Where will we get the critical minerals for the net zero emissions targets that are currently being hotly debated in the run-up to the COP26 climate meeting?

According to the IEA’s calculations, the global community needs an increase in annual copper production of up to 14 million tonnes in 2050 – 50 times current production. Or a hundredfold increase in current lithium production.

Future nickel demand at 6.5 millionen tons per year

Similarly, according to IEA data, the demand for the critical mineral nickel is expected to increase from the current 200,000 tonnes (MT) per year for alternative energy to almost 4,000,000 MT/pa by 2050. This would mean an increase of almost twenty times. This would increase the total nickel demand to more than 6.5 million tonnes per year.

Critical minerals demand to increase more than sixfold in 2050

The situation is hardly different for cobalt, manganese and graphite. Overall, the IEA projects that the transformation towards net zero emissions will mean critical mineral demand for critical minerals of 40 million tonnes per year in 2050 – a 6-fold increase compared to 2020.

A fair question: where will we get the critical minerals?

If nickel, lithium, cobalt, copper, manganese and graphite are already in short supply, where will the raw materials for the transformation come from? Of course, some critical minerals can be substituted in the future – manganese is a hopeful candidate here. But that would only exacerbate the supply situation for manganese and only marginally relieve the other energy metals. Exciting competition between minerals is likely to develop here in the coming years and influence prices and availability accordingly.

We could well observe the first effects in 2021. The run on the deposits has already begun.

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