Challenges in the supply of crucial minerals threaten global energy transitions

An unprecedented increase in demand for critical minerals due to the global clean energy transition poses significant challenges in achieving these goals, as the critical minerals sector faces several challenges, says data and analytics company GlobalData.

“The global clean energy transition is gaining momentum and relies heavily on renewable technologies such as solar PV cells and wind turbines, in addition to energy transition solutions such as hydrogen, energy storage and carbon capture,” GlobalData explains, adding that this growing demand exerts pressure. on the mineral supply.

The company notes in its latest Strategic Intelligence report on critical minerals that the key challenges to scaling up clean energy technologies are mineral depletion, resource monopolization, geopolitical tensions and water scarcity.

Strategic intelligence analyst Martina Raveni says the depletion of crucial minerals is a concern in the short term, especially as instability in the green technologies market causes price volatility.

She adds that lower quality ores complicate extraction, making it less efficient, especially in the copper industry.

To this end, recycling is expected to play a key role in diversifying supply chains.

Many critical minerals are concentrated in specific regions, creating uneven distribution of resources and volatile market dynamics.

For example, much of the world’s lithium reserves are concentrated in South America and Australia, while the Democratic Republic of Congo dominates international cobalt supplies, as is the case with nickel in Indonesia.

“Geographic monopolies increase supply risks and are exacerbated by geopolitical tensions; environmental, social and governance disclosure rules; and environmental factors such as water scarcity.

“The race for control of these crucial minerals has intensified the rivalry between China, the US and the EU, with China currently dominating the supply chain of minerals and energy transition technologies,” Raveni said.

These tensions have led to the introduction of sanctions by Western countries to level the playing field, disrupting global supply chains and creating market volatility. In response, China banned rare earth elements in 2023, further escalating the situation.

“Given these issues, there are concerns that shortages of crucial minerals could make it more difficult for countries to achieve energy transition goals,” Raveni concluded.