Mathew Dzingai | Opinion | Critical Minerals and Clean Energy Transitions: Supply Challenges, China's Dominance, and Africa's Potential

1.???? Introduction

The transition to clean energy technologies is dependent on critical minerals such as lithium, nickel, cobalt, manganese, graphite, and rare earth elements. The supply of these minerals is crucial for the energy transition, and their demand is set to become the fastest-growing segment of demand for most minerals. The assured supply of critical minerals and the resiliency of their supply chains are essential to economic prosperity. The prospect of a rapid rise in demand for critical minerals poses huge questions about the availability and reliability of supply. Investors are scouting for companies that mine the metals needed in new energy technologies, but some mining projects key to the transition may face strong and increasing opposition from Native Americans for threatening sacred areas or traditional ways of life. The International Energy Agency (IEA) is paying close attention to the issue of critical minerals and their role in energy transitions, and it is putting together a concrete work program to strengthen its activities on market monitoring, technology innovation, supply chain resilience, recycling, environmental and social standards, and international collaboration.

2.???? China's Dominance in Critical Minerals

China dominates global critical mineral supply chains, accounting for 60% of worldwide production and 85% of processing capacity [1]. China's reach is quietly growing behind minerals critical to a wide range of products that will shape the future. Facing more restrictive foreign investment policies in developed markets, Chinese firms are pursuing such key minerals as lithium and cobalt in other locations. S&P Global believes China will continue to build its influence over these minerals and the industries that rely on them as it works with governments keen on foreign investments across the developing world [2]. Although many countries are increasingly aware of these minerals’ importance, Chinese firms have been the most active in these pursuits. Emerging markets across Africa and Latin America are their next stops. While these ventures may bring benefits, they may also raise investment and execution risks for related sectors as more firms enter these new markets.

3.???? Africa's Potential in Critical Minerals

?The growing international attention to developing Africa’s critical minerals could help lead to a more prosperous and stable continent. Many African countries have high hopes for what their mineral resources can do for their countries’ development trajectory. Indeed, some senior U.S. policymakers have spoken in bold terms as to the role Western-backed mining could have in transforming African economies [1]. The Democratic Republic of Congo (DRC) supplies 70% of the world’s cobalt, and Chinese entities own or have stakes in mining companies in the DRC [1]. Furthermore, more than half of the world’s current production of lithium and copper is concentrated in regions with high water stress levels, including regions such as Africa, where water scarcity is a major concern [6].

?4.???? The Role of Critical Minerals in Clean Energy Transitions

?The IEA has identified critical minerals such as copper, lithium, nickel, cobalt, and rare earth elements as crucial to battery performance, longevity, and energy density [4]. The IEA has also reported that clean energy technologies require a wide range of minerals and metals, and their share of total demand is set to become the fastest-growing segment of demand for most minerals [4]. The assured supply of critical minerals and the resiliency of their supply chains are essential to the economic prosperity and national defense of the United States. The U.S. government has updated its list of minerals that are designated as critical to the economy and national defense, and the U.S. generally relies on imports for many of these 50 critical minerals [3].

The IEA is putting together a concrete work program to strengthen its activities on market monitoring, technology innovation, supply chain resilience, recycling, environmental and social standards, and international collaboration [1]

?5.???? Investing in Critical Minerals

?Investors are scouting for companies that mine the metals needed in new energy technologies. However, some mining projects key to the transition may face strong and increasing opposition from Native Americans for threatening sacred areas or traditional ways of life. Many of the remaining untapped deposits of the metals critically needed for U.S. energy to transition from fossil fuels are located either near or within areas of cultural and environmental importance to Native Americans. Mining companies have already faced opposition to mine development in many of these areas, reflecting the heightened risk to companies and investors arising from these conflicting priorities [1].

The IEA is paying close attention to the issue of critical minerals and their role in energy transitions, and it is putting together a concrete work program to strengthen its activities on market monitoring, technology innovation, supply chain resilience, recycling, environmental and social standards, and international collaboration [1]

?6.???? Conclusion

?The transition to clean energy technologies is dependent on critical minerals such as lithium, nickel, cobalt, manganese, graphite, and rare earth elements. The supply of these minerals is crucial for the energy transition, and their demand is set to become the fastest-growing segment of demand for most minerals. The assured supply of critical minerals and the resiliency of their supply chains are essential to economic prosperity. The IEA is paying close attention to the issue of critical minerals and their role in energy transitions, and it is putting together a concrete work program to strengthen its activities on market monitoring, technology innovation, supply chain resilience, recycling, environmental and social standards, and international collaboration. Investors are scouting for companies that mine the metals needed in new energy technologies, but some mining projects key to the transition may face strong and increasing opposition from Native Americans for threatening sacred areas or traditional ways of life.?

7.???? References

1.???? Challenging China's Grip on Critical Minerals Can Be a Boon for Africa's Future. United States Institute of Peace. https://www.usip.org/publications/2023/06/challenging-chinas-grip-critical-minerals-can-be-boon-africas-future ( June 7, 2023)

2.???? China's global reach grows behind critical minerals. S&P Global. https://www.spglobal.com/en/research-insights/featured/special-editorial/china-s-global-reach-grows-behind-critical-minerals (August 24, 2023).

3.???? Challenges and Opportunities in Global Supply Chains: The Role of Critical Minerals. National Defense University Press. https://ndupress.ndu.edu/Media/News/News-Article-View/Article/3512099/challenges-and-opportunities-in-global-supply-chains-the-role-of-critical-miner/ (September 7, 2023)

4.???? Critical Minerals – Topics - IEA. International Energy Agency. https://www.iea.org/topics/critical-minerals (September 19, 2023).

5.???? Executive summary – The Role of Critical Minerals in Clean Energy Transitions – Analysis - IEA. International Energy Agency. https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/executive-summary (September 19, 2023)

6.???? Critical Minerals Market Review (2023). International Energy Agency. https://iea.blob.core.windows.net/assets/afc35261-41b2-47d4-86d6-d5d77fc259be/CriticalMineralsMarketReview2023.pdf