Until 2035, the world will only be able to produce 50% of the lithium needed for the energy transition.

So-called “critical” materials (lithium, cobalt, graphite, rare earths, nickel, etc.) are needed to make carbon-free sources of energy production and storage. Due to a significant increase in supply, the price of these materials dropped significantly in 2023, reducing the average cost of electric batteries by 14%.

• According to the International Energy Agency, falling prices for raw materials and batteries are good news for consumers and the use of renewable energy.
• However, this has also made investments less attractive. Although investment increased by 10% last year compared to 2022, it is still significantly below target.

For example, the Agency estimates that by 2035, only 50% of the world’s lithium needs needed to meet the climate goals set in the Paris Agreement will need to be met, based on existing and future mining and processing projects. Of the six major minerals identified as key to the energy transition, four are expected to suffer from supply shortages: lithium, copper, nickel and cobalt.

• Between now and 2040, a total of $800 billion of investment is needed to meet mineral demand under the Agency’s net-zero emissions (NZE) scenario by 2050.
• Due to its critical role in the production of electric batteries, the demand for lithium is expected to increase 8 times its current level by 2040.
• Over the same period, demand for nickel, cobalt and rare earth elements should double, demand for copper should increase by 50%, and demand for graphite should quadruple.

While lithium is the material most exposed to supply risks, cobalt, graphite, nickel and rare earths are subject to high geopolitical risks due to the concentration of mining resources and supply chain vulnerabilities. By 2030, more than 90% of the graphite used in batteries and 77% of refined rare earth elements will come from China.