A newly released analysis predicts “metals critical to the energy transition will take center stage, with a sustained period of extraordinary demand growth” that can last until 2030, according to United Kingdom-based consultancy Wood Mackenzie.
The U.K.-based firm, which recently acquired metals sector analysis firm Roskill, also predicts a potential “rise of ‘consumption consciousness’” could undermine “the long-term use of primary metal.”
The new report’s author, Simon Morris, says that unlike the early 21st century commodities boom sparked by China’s urbanization and infrastructure spending, this time not all commodities will enjoy a surge in demand or pricing.
Instead, Wood Mackenzie sees an estimated $50 trillion “to be invested [globally] over the next three decades to electrify infrastructure and engineer out the aspects of modern life that most significantly contribute to carbon emissions” as a scenario that means “hydrocarbons will be bystanders.”
While fossil fuels may not be part of the anticipated boom, Morris writes, “The winning commodities from the energy transition are a set of industrial metals that will electrify society.” He later identifies aluminum, copper, nickel, lithium and cobalt as metals that will enjoy high double-digit or even triple-digit growth in annual consumption by 2030.
Under one scenario presented by Wood Mackenzie, the annual demand for those metals would grow by the following percentages by 2030: aluminum, 29 percent; nickel, 65 percent; copper, 85 percent; lithium, 130 percent; and cobalt, 167 percent.
Metals producers, miners, investors and policy makers are faced with needing “dizzying levels of additional metal that will feed the energy transition over the next 20 years – 360 million metric tons (Mt) of aluminum, 90 Mt of copper and 30 Mt of nickel” under one Wood Mackenzie scenario.
A frenzy of mining activity could result in the sector becoming the next environmental bogey man, following in the footsteps of single-use plastic, warns the consultancy. “If metals producers are too successful in drawing attention to how much of their primary (that is, nonrecycled) metal will go into cars, phones, telecoms and energy transition infrastructure, they may find themselves the new target of consumers’ ire,” Morris writes.
He continues, “And if they, with government policy, force manufacturers to reduce their use of primary metals, the super cycle story may lack a ‘happily ever after.’ Taking this one step further, consumers might conceivably switch off more fully from some types of consumption. For instance, if the ‘Uberfication’ of private transport [drives] a switch to pooled rather than individual vehicle ownership, cutting car consumption, metals demand will suffer.”
Investments in the mining and recycling of these metals is likely to continue in the short and medium terms, the consultancy finds. “There is a unique opportunity for the sector to act pre-emptively to ensure supply is available when it is most needed,” Morris concludes.