The new kids on the block: redefining “critical” minerals essential for a clean energy future

As the world battles the coronavirus (COVID-19) pandemic, and mine sites across the world delay or suspend operations, we are reminded of Matshona Dhliwayo’s quote: “stars are born out of dark moments.” While the price of most so-called “critical minerals” may be down now, demand for these minerals will rise again, and certainly well before 2050. Indeed, the World Bank Group’s latest report has found that the more ambitious the climate targets become, the more minerals and metals will be needed for a low-carbon future.

In a first of its kind analysis, the World Bank Group examined how differing “pathways” for the deployment of clean energy technologies will impact the demand for a variety of minerals and metals. While over 3 billion tons of metals and minerals will be needed by 2050 to scale up wind, solar and geothermal power and energy storage to reach a below 2°C future, the exact amount will vary, according to what the energy transition looks like. In other words, how much is needed of any given mineral will depend on how widely that mineral is used, across renewable energy technologies.

While some minerals, like copper and molybdenum, will be used in a range of technologies, others, such as graphite and lithium, may be needed for just one technology: battery storage. This means that any changes in clean energy technology deployments could have significant consequences on demand for certain minerals.

While we cannot fully predict the future, we can gain some insight into who the new (mineral) kids on the block will be, by 2050. Based upon what we call the demand risk matrix, we know that aluminum, copper and nickel are “critical” minerals that will play a strong role in the transition to a low-carbon future, as they will be needed for a wide variety of technologies. Graphite and lithium are also “critical”, but their outlook depends on the extent to which battery storage is deployed between now and 2050.

• Minerals that are both “high-impact” and “cross-cutting” will be used in a wide range of technologies and a great amount of them will be required to meet projected demand in a low-carbon world. One example is aluminum: it is used widely for both energy generation and storage technologies, with roughly 103 million tons of aluminum needed to supply 87% of solar PV and a range of other clean energy technologies to achieve a below 2°C future. Aluminum is thus a “critical” mineral because it will be necessary for the clean energy transition, regardless of scenario plays out.  
• Minerals that are “cross-cutting” will be important because they will be used across a wide variety of technologies. One example is copper: it is used across all 10 energy technologies – so regardless of the low-carbon “pathway”, it is likely to be relevant in 2050. It also means that the clean energy transition will depend very much on the availability of copper itself.  
• “High-impact” minerals only feature in a small number of technologies, but their future demand is significantly greater than today. One example is lithium, which will only be used in energy storage, but must ramp up its production by 488% to meet demand. Cobalt and graphite fall in the same category.
• “Medium-impact” minerals, such as neodymium and silver, will be needed for a small range of energy technologies, and their demand is not expected to grow significantly between now and 2050. However, neodymium is a key ingredient for offshore wind turbines. 

The good news is that regardless of the future clean energy pathway, developing countries, from Guinea to Madagascar to Peru to Zambia, have a real opportunity to benefit from the rise in demand for critical minerals. However, they will also have to manage a range of risks and challenges associated with increased mining activities. Without climate-smart mining practices, the negative impacts from mining activities will increase, affecting vulnerable communities and the environment and potentially endangering progress on tackling climate change. If unchecked, the volume of mining over such a short time frame (between 2020 and 2050) would increase global emissions, water use, deforestation and waste. Mineral-rich countries will also need to plan for a range of so-called “pathways” and play close attention to how the nature of the clean energy transition will shape future demand.   

The World Bank is committed to helping countries to manage the clean energy transition. Our support will include implementing climate-smart mining practices and minimizing associated social, environmental, and climate footprints. With our partners, the World Bank wants to build a world where governments and companies use renewable energy to power mines, recycle minerals, and leverage innovation to reduce the industry’s footprint. Together with the full range of actors in the supply chain, from extraction at the mine site to end use by the consumer, we can accelerate this transition in a sustainable and responsible way, that protects both people and the planet and fosters growth and development.