In the midst of global transformation and the ongoing energy transition, the spotlight is increasingly shifting towards commodities that will play a substantial role in shaping our future.
While discussions around renewable energy sources, electric vehicles, and sustainability dominate headlines, the unsung heroes of this transformation are minerals. These often-overlooked resources are the backbone of the technology and energy sectors, underpinning the innovations that will define the world of tomorrow. Furthermore, development of advanced batteries for efficient energy storage, which is one of the energy cornerstones, relies heavily on these materials.
To better understand market outlook let’s have a look at some of critical minerals:
Lithium: The “white gold” for lithium-ion batteries production.
Lithium is the lightest metal on the periodic table, with an atomic number of 3. It is so lightweight that it can float on water.
With the growing adoption of electric vehicles and the integration of energy storage systems into the power grid, the demand for lithium has skyrocketed. Countries with abundant lithium reserves, such as Australia and the “Lithium Triangle” (Chile, Bolivia, Argentina), are poised to become major players in the global lithium market.
Leading Australia produces most of its lithium by mining hard rock spodumene, while Chile, China and Argentina produce it from brine. In 2022, total lithium production was estimated at 130’000 MT reaching a new peak.
From import perspective, China dominates the global lithium market, accounting for a staggering 65% of total imports, with Korea and Japan trailing behind at 16% and 10%, respectively.
According to International Energy Agency research, In 2040, global demand on this mineral could be anything from 13 to 40 times higher than today’s level depending on assumptions about the evolution of battery chemistry and new technologies. Moreover, as electric vehicle production increases and energy storage solutions become more widespread, the demand for lithium is expected to outstrip supply, potentially resulting to price volatility.
Cobalt: Another essential ingredient in lithium-ion batteries.
Cobalt takes its name from the German word “kobalt,” which means “goblin” or “evil spirit.” This name was given to it by miners because the metal’s ores often resembled silver, but when smelted, they released toxic arsenic fumes. The blue color of cobalt has been prized for centuries and well-known as “Cobalt blue” in art and design.
The majority of the world’s cobalt supply has historically come from the Democratic Republic of Congo, accounting for 73% of global output in 2022 which volumes to 145’000 MT. Approximately 70% of the world volume production is imported to China.
According to the Cobalt Institute, the DRC’s dominance is projected to decrease to 57% by 2030 as Indonesia ramps up its cobalt production as a byproduct from its rapidly expanding nickel industry. In 2022, Indonesia has been already ranked as the 2nd largest cobalt supplier overtaking Australia and the Philippines.
Besides booming consumption in batteries production, cobalt-based superalloys are used in the aerospace industry, particularly in the production of jet engines, being well-known for their high-temperature strength and resistance to corrosion.
Сoncerns about ethical mining practices and the environmental impact of cobalt extraction have led to increased interest in developing alternative chemistries that reduce or eliminate the need for cobalt. Nevertheless, cobalt remains a valuable resource in the transition to cleaner energy. According to the IEA forecast, cobalt’s demand level could be from 6 to 20 times higher by 2040.
Nickel: Cobalt’s competitor or indispensable sibling element in batteries production?
Nickel is also a key component in the cathodes of lithium-ion batteries. Different types of lithium-ion batteries use varying proportions of nickel to enhance energy density, capacity, and overall performance.
Nickel is one of the few elements found in significant quantities in meteorites. This connection to celestial bodies has led scientists to study nickel to gain insights into the formation of our solar system.
Nickel is primarily mined from two types of ore deposits: laterite and sulfide. Laterite deposits are generally easier to mine but have lower nickel content, while sulfide deposits have higher nickel content but are often deeper and more challenging to extract. There are 2 classes of nickel: Class 1 refers to high-purity nickel, primarily used in battery production, while Class 2, accounting to two-thirds of global production, is used for stainless steel and other applications.
As the EV industry continues to grow, the demand for high-energy-density batteries is increasing. Nickel-rich cathode materials, such as lithium-nickel-manganese-cobalt oxide (NMC) and lithium-nickel-cobalt-aluminum oxide (NCA), are favored for their ability to provide longer driving ranges and better energy efficiency. In addition to EVs, nickel-based batteries are vital for grid energy storage systems, which help stabilize and store excess energy generated from renewable sources like wind and solar. These energy storage systems contribute to the reliability of renewable energy generation.
At the same time, there is a push to reduce the reliance on cobalt in battery production due to ethical and supply chain concerns. Nickel-rich batteries are seen as a way to achieve this reduction in cobalt usage while maintaining battery performance.
Referring to numbers, an estimated total of 3.3 million metric tons of nickel was produced in mines worldwide in 2022, reaching $35 billion market size. Since 2010, annual global nickel production has more than doubled, and by 2040, up to 20 times growth is expected relative to 2020.
Despite that world’s largest nickel producers are Indonesia, Philippines and Russia, Canada (Sudbury, Ontario) is often referred to as the “Nickel Capital of the World”. The region is home to one of the largest and most productive nickel mining areas globally.
In the era of global transformation and energy transition, these commodities are the foundation upon which a sustainable and greener world will be built. While these minerals are indispensable for our future, their extraction and processing present significant environmental and ethical challenges. Sustainable mining practices, recycling initiatives, and responsible sourcing are imperative to minimize the negative impacts on the environment and communities.
As we continue to evolve towards a more sustainable future, we remain committed to diversifying our commodity portfolio and providing tailor-made trade finance solutions to players of these critical commodities.
