Banananomics: New Concern For Looming Global Mineral Shortage

New Concern For Looming Global Mineral Shortage

An International Energy Agency (IEA) analysis finds that while supplies of critical minerals have outpaced demand so far, sharp increases in production are needed to facilitate Paris climate targets.

Inputs that matter: These minerals are vital to producing renewable energy and powering electric vehicles.

• The IEA's detailed project-level analysis shows that announced critical mineral projects would only meet about 70% of copper and 50% of lithium requirements in 2035, in a scenario in which countries were to meet the climate goals they have already stated.

• The price of many critical minerals and rare earths fell in 2023, with a 75% drop in lithium prices; meanwhile, cobalt, nickel, and graphite dropped between 30% and 45%, helping to drive down battery costs.

The opportunity: The report calls out increasingly vulnerable supply chains, with diversifying production of many critical minerals amid highly concentrated control of key industrial processes in China.

• The report finds that China's spending on and purchase of overseas mines reached a record high of $10 billion in the first half of 2023, with a focus on lithium, nickel, and cobalt.

Zoom in: Each IEA scenario presented in the report, including the net zero scenario that would meet Paris Agreement targets, would require a drastic scale-up in critical minerals production.

• To achieve a net-zero pathway by 2050, the current market size of all key energy transition minerals would need to more than double to $770 billion by 2040.

Between the lines: Critical mineral mining, refining, processing, and recycling are concentrated in China and only a few other countries.

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Emerging Unrest In The EV Supply Chain

France has lost control of parts of New Caledonia, the world's third-largest producer of critical nickel, a mineral critical to electric vehicle batteries.

Inputs that matter: Hundreds of French police reinforcements have arrived in New Caledonia amid rioting that has left five people dead in the Pacific Ocean territory.

• The unrest erupted this week after lawmakers in Paris voted to change electoral rolls to allow more French residents to vote. Indigenous leaders say the move will dilute the political influence of the native people.

• Hundreds of people have been injured, and about 200 people have been arrested so far.

• Schools remain shut, and Noumea's airport is closed to commercial aircraft.

• Under the state of emergency, authorities have imposed a night-time curfew and banned public gatherings, carrying weapons and the sale of alcohol.

• Many supermarkets are closed, and those that remain open are experiencing shortages because of roadblocks, eyewitnesses say.

The opportunity: The Melanesian Spearhead Group (MSP), a regional group, said on Wednesday: "These events could have been avoided if the French government had listened and not proceeded to press forward with the Constitutional Bill aimed at... changing the distribution of seats in Congress."

• French Prime Minister Gabriel Attal said 1,000 extra police were joining the 1,700 personnel already there. He said authorities would push for "the harshest penalties for rioters and looters."

Zoom in: On Tuesday, U.S. President Joe Biden announced plans to impose new tariffs on certain products made in China, including a 100% tariff on electric cars. 

• With that, he escalated a policy begun during the Trump administration and marked the decisive rejection of an economic orthodoxy that had dominated American policymaking for nearly half a century. 

• The leaders of both major parties have now turned away from unfettered free trade, a fact that would have been unimaginable less than a decade ago.

• That thinking guided the trade deals struck during the 1990s and 2000s, including the North American Free Trade Agreement 1994 and the decision to allow China into the World Trade Organization in 2001.

Between the lines: Meanwhile, Chinese President Xi Jinping and Russian President Vladimir Putin doubled down on their alliance against the West this week, accusing the United States and the G7 of trying to block their nations' rise during the Kremlin leader's two-day official visit to China that ended Friday.

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