The clean/green energy revolution is driving demand for “energy metals”, the raw materials that are vital components in batteries and other modern devices. Key to a transition to clean energy is battery storage and battery minerals such as lithium, nickel, copper and cobalt are important components in established battery chemistry.
Lithium is a key metal for the manufacture of high energy density lithium-ion batteries used in modern devices
Traditional battery manufacturers are scaling up battery production and car manufacturers are either directly or in partnership, developing their own plans, with many Mega-factories built, in construction or planned throughout the world. This activity has resulted in an increased demand for raw materials and off-take agreement negotiations.
Electric Vehicles are seen as a key driver of demand for battery minerals and in a 100% EV world supplies are predicted to fall short of demand.
While demand is predicted to continue to rise, supply for many of these minerals, including lithium, faces a crunch. Although a 100% EV world is still only a thought experiment the impact on key commodities needs consideration as supply chains require time to develop.
If driven by consumer demand and aggressive emission regulations we could see 60% EV penetration by 2040 and 90% by 2045.
Sources: Bloomberg New Energy Finance, USGS, Avicenne, CRU, UBS Electric car teardown report May 2017.