With demand for key metals used in solar panels, wind turbines, batteries and electric vehicles expected to grow fivefold by 2050, the market value for energy transition metals is expected to present a $10 trillion investment opportunity in the coming decades, according to a Transition Metals Outlook report and Net Zero Scenario by research firm, BloombergNEF (BNEF).
“The energy transition has put a spotlight on raw materials. It presents an opportunity and a responsibility as well,” stated Kwasi Ampofo, Head of Metals and Mining at BNEF.
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“Responsible mining must underpin the extraction of the resources needed to meet this demand. Mining is the bedrock of the energy transition, hence, the industry must lead the way, by first decarbonizing its own footprint,” added Ampofo.
Despite the increased demand however, supply will likely remain constrained due to a lack of investment, depleting reserves, as well as increased country risk toward mining as a result of the global slowdown in the wake of COVID-19 and Russia’s invasion of Ukraine, with resource nationalism and higher resource taxes presenting a barrier to global net-zero ambitions.
According to BNEF’s Economic Transition Scenario, the demand for metals used for fossil fuel-based power plants will account for less than 6% of the total demand in power generation by 2050, representing a decline from approximately 16% in 2022. Meanwhile, energy transition metal consumption over the same period is expected to more than double.
“Despite the bearish outlook for metals used in fossil-fuel technologies, the energy transition could lead to a super-cycle for the metals and mining industry,” stated Yuchen Huo, Metals and Mining Analyst at BNEF, adding, “This cycle will be driven by massive expansions in clean energy technologies, which would spur demand for growth for both critical minerals and traditional metals.”
Confounded by reduced investor confidence in mining as a result of recent market volatility and risks associated with the sector, it is noted in the report that the improvement of Environmental, Social and Governance standards has the potential to enable companies to distinguish themselves in the capital markets and drive investment in raw materials extraction.
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“The mining industry has a trifecta of challenges – raising capital, keeping costs low and reducing its environmental and carbon footprint at the same time. It is like solving a Rubik’s cube. Not easy but not impossible to do,” concluded Ashish Sethia, Global Head of Commodities, Energy and Environmental Markets at BNEF.
