The market remains vulnerable to volatile prices, supply chain snarls and geopolitical tensions despite soaring demand.
The market for minerals such as lithium, cobalt, nickel and copper doubled between 2017 and 2022, fuelled by the record deployment of clean technologies such as solar panels and electric car batteries, the IEA said on Tuesday.
Lithium, nickel and cobalt are crucial to battery performance, longevity and energy density. Copper is a cornerstone for all electricity-related technologies.
An energy system powered by clean energy technologies requires more minerals to build solar plants, wind farms and electric vehicles compared with their fossil fuel-based counterparts. A shift to a clean energy system has therefore caused a considerable increase in the requirements for these minerals.
“Rapid growth in demand is providing new opportunities for the industry,” the Paris-based agency said in its first annual IEA Critical Minerals Market Review.
“But a combination of volatile price movements, supply chain bottlenecks and geopolitical concerns has created a potent mix of risks for secure and rapid energy transitions,” it added.
The IEA, which advises developed nations on energy policies, said the “affordability and speed of energy transitions” will depend on the availability of critical mineral supplies.
Prices rose in 2021, and early 2022 as the COVID-19 pandemic resulted in bottlenecks across supply chains and Russia’s invasion of Ukraine caused major disruptions to commodity markets.
Most prices then evened out in the latter half of 2022 and into 2023, but they remain well above historical averages, the IEA said.
“As things stand, 2023 could be a crucial year for clean energy technology prices,” the report said.
“Whether and how quickly they resume a downward trajectory will depend on the speed of innovation and on the stability of mineral markets that witnessed significant volatility in 2022 after two years of pandemic-related supply chain disruptions followed by the onset of global geopolitical uncertainty.”