...copy/pasted from May 15 Globe (and, nice to see that Elmer's latest interviewer wasn't wearing a red cocktail dress)

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Which metals will gain most from a green energy revolution?

Andy Home, London, Reuters, May 14, 2020

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If the world is serious about reducing global warming, it’s going to need a lot of minerals and metals.

More than three billion tonnes will be required by 2050 to deploy sufficient wind, solar and geothermal power, as well as energy storage, to have a chance of limiting warming to 2 degrees Celsius by 2100.

That’s according to the World Bank, which spells out the implications of hitting the base target of the Paris Agreement on climate change.

It says the report is intended to provide policy makers, mineral producers, renewable energy developers, climate negotiators and civil society organizations with a data-driven understanding of how the shift to a cleaner energy system could impact mineral demand.

The report is also, unintentionally, a long-range road map for metals bulls looking to ride the green energy revolution.

Unsurprisingly, graphite, lithium and cobalt are stand-outs with the Bank forecasting potential demand increases of up to 500% from 2018 global production levels.

But the real long-term winners will be more conventional metals such as copper and aluminum.

’High-Impact’ Minerals

Graphite, lithium, nickel and cobalt are all identified by the Bank as “high-impact” minerals.

All are currently intrinsic to energy storage in the form of both electric vehicle (EV) batteries and power grid stabilization in an era of renewable energy generation such as wind and solar power.

The world is going to need a lot more of them with the Bank singling out graphite and lithium as likely to experience the highest demand growth rates relative to 2018 production levels.

However, the demand forecasts come with two big caveats.

The Bank’s report is focused purely on likely usage scenarios but it warns there are significant supply risks for minerals which are overly dependent on single-origin producers such as cobalt (Democratic Republic of Congo) and graphite (China), or which require significant increases in production capacity (lithium).

“Higher levels of demand would lead to higher prices, causing increases in supply but also substitution of other minerals,” the World Bank’s report says.

Battery storage could be particularly sensitive to supply drivers given the number of competing technologies.

While the Bank goes with the consensus view that lithium-ion batteries will dominate the battery sector during the next decade, it notes that a number of rapidly emerging new battery technologies could challenge that dominance post 2030.

Solid-state lithium batteries, for example, would eliminate the need for graphite, while zinc-air batteries would dampen demand for all current EV metal inputs.

“Demand for high-impact minerals is therefore both potentially high and uncertain,” the Bank said. “Relatively small changes in the amount and type of energy storage technologies and subtechnologies deployed could have large implications for the markets of these minerals.”

’Cross-Cutting’ Minerals

Other metals will see big demand increases irrespective of which technology is used to lower emissions.

Such “cross-cutting” minerals include copper, molybdenum and chromium.

“Copper, for example ... is used across all 10 energy technologies covered in the model (and) therefore is the mineral for which the demand will be the least impacted by significant changes in the technology-based mitigation scenarios.”

And that’s not including energy infrastructure such as transmission lines, a demand sector which is explicitly excluded from the report.

Expressed relative to 2018 production of 21 million tonnes, copper usage from new energy sources will grow by “only” 7% but that’s equivalent to almost 30 million tonnes cumulative extra demand through 2050 under a 2 degree warming scenario.

Molybdenum is a much smaller market with production of just 300,000 tonnes in 2018. And even though its average use in a wind turbine is just 0.15% of mineral composition, a surge in both wind and geothermal power generation would translate into cumulative demand growth of 800,000 tonnes over the same period.

’High-Impact and Cross-Cutting’

Only one metal is identified by the Bank as being both “high-impact” and “cross-cutting” in all potential clean power technologies.

Step forward aluminum.

“While aluminum’s overall level of demand from energy technologies is less than 10% of its 2018 production levels, it has the highest production levels compared to all other 16 minerals, with cumulative production reaching 102 million tonnes by 2050,” compared with global output of 60 million tonnes in 2018.

Aluminum is used in most clean-air power technologies but particularly solar, where it accounts for 85% of most photovoltaic (PV) components in the form of the frames that hold the PV panels together.

Solar is already the fastest-growing clean-power technology with growth of 24% between 2017 and 2018 and dramatically falling costs.

That makes it “one of the most attractive technologies for renewable energy investors worldwide,” particularly in developing regions such as Africa. The International Energy Agency’s 2019 World Energy Outlook projects 3,000% growth in solar power across the continent between 2018 and 2040.

More (Clean Energy) Metals

The World Bank takes an in-depth look at whether recycling metals can generate the extra tonnages needed to power a low-carbon future.

Recycling rates vary enormously across the metallic spectrum from 35% in the case of aluminum to virtually zero for lithium due to both technical difficulties in recycling lithium batteries and the fact that it is still too new a material to have accumulated a stock of recyclable material.

However, even if end-of-life recycling rates rise to 100% - which is a very big if - secondary material will not be enough to meet demand through 2050, according to the Bank.

Moreover, many clean-air technologies require a purity of metallic input that cannot be achieved by current recycling capacity.

That means there will still be a need for more primary mined metals, which is good news for both producers and resource-rich countries.

But the minerals extraction business is itself a carbon emitter, even if the cumulative impact of both mining and the operation of new energy technologies is just 6% of the emissions of traditional fossil fuels, the Bank notes.

Aluminum is particularly problematic because it needs a lot of power to transform raw material into finished metal.

“That makes it crucial for more attention to be focused on the entire aluminum supply chain to ensure steady and affordable supply, all the while decarbonising primary aluminum production.”

That is very much work in progress.

But there is no avoiding the conclusion that the green energy revolution is going to be the next mega demand driver for a broad spectrum of metals.

The only big surprise is that aluminum is identified as possibly the biggest winner of all.

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