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From lithium to nickel to copper, the energy transition is driving a surge in mineral and metal demand. But while there’s growing recognition of the mineral supply challenge, there remains a disconnect between the scale of demand and what will be required to meet it.
With the explosive growth of global EV sales — more than 3.3 million vehicles sold in 2021, four times the number in 2019 — doubts about EV demand are long gone. With the switch to EVs accelerating, building the required mineral supply chains for lithium-ion batteries is taking on new urgency.
Let’s be clear: A shortage of battery metals such as lithium, cobalt, nickel and copper could thwart Ohio’s goal to rebuild its economy around EV and battery production — a potentially great source of jobs and revenue and a key aim of the state’s manufacturing industry.
The International Energy Agency said in a recent study that reaching global net zero emissions by 2050 will require expanding production of battery minerals and metals from 7 million tons per year to 42 million by 2040 — a six-fold increase. And that surge will require opening hundreds of new mines.
For example, demand for lithium, the most important battery metal, is expected to grow by as much as 40 times over 2020 levels, requiring scores of new mines by 2040.
Even if there’s aggressive adoption of battery recycling and reuse of metals, Benchmark Minerals Intelligence, a leading consultancy on the battery supply chain, projects the need for more than 300 new mines by 2035.
Benchmark expects demand for lithium-ion batteries to grow six-fold by 2032, placing enormous pressure on material supply chains that simply do not exist at scale today.
An enormous amount of work needs to happen and happen extraordinarily quickly. Failure to strengthen the supply chains will threaten EV and renewable energy deployment. Strained supply chains, coupled with soaring demand for raw materials, has triggered a huge jump in the price of battery metals. The price of lithium has soared more than 600% this year and that price surge is affecting battery prices and pushing up the cost of EVs. Tesla, for example, has raised the price of its vehicles more than 20% since last year.
Achieving price parity with gasoline-powered cars is critical to gaining the level of EV adoption needed to meet emissions reduction targets. But if the price of EVs continues to rise due to metal supply constraints — instead of falling as it should be — hitting those targets will become increasingly difficult.
The United States is behind many other manufacturing countries in getting its materials supply chains in order. While there have been promising steps taken to correct the problem — including use of the Defense Production Act, along with significant incentives for domestic minerals production and sourcing requirements tied to extension and expansion of EV buyer tax credits — some of the biggest hurdles to ramping up domestic mining still exist.
Currently, the U.S. has a single operating lithium mine and a single nickel mine. There’s no domestic cobalt production or a graphite mine. U.S. mineral import reliance has doubled in little more than two decades with ever-growing reliance on mineral supply chains dominated by China and other belligerent countries.
Yet the U.S. has vast mineral resources. There are promising lithium projects in Nevada, California, Arkansas and North Carolina. Nickel and cobalt exploration is under way in Minnesota and Idaho and potentially significant graphite resources have been found in Alabama and Alaska. The biggest hurdle has been — and continues to be — obtaining a mining permit. It often takes a decade or more to get approval for a new mine — and frequently permits are denied for reasons that defy logic. That must change and change quickly if the U.S. is to build the material supply chains needed to support the energy transition.
With help from Congress, scaled up domestic mineral production could become a climate solution — not a problem. Legislation is now pending to address energy infrastructure permitting, including permitting of the nation’s mining projects. Passing that bill and reducing the duplication and delays in permitting is critical to ensuring we can build the modern industrial base needed to responsibly and securely manufacture the products needed to win the climate battle and provide the energy jobs of tomorrow. Hundreds of new mines must open in the next decade so that mineral supply chains become available for the energy transition. This is the kind of mobilization that is needed to deal with climate change.
Chase holds B.S., M.S., and Ph.D. degrees in Petroleum and Natural Gas Engineering from Penn State and is a registered professional engineer in Ohio. He served as professor and chair of the Department of Petroleum Engineering and Geology at Marietta College from 1978 to 2015.
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