Challenges of demand and price volatility
For investors , predicting mineral demand will be challenging . Demand patterns will shift with the evolution of our energy systems , market innovations and selected different designs for similar technologies . Part of the challenge of mapping supply and demand patterns will be predicting technology choices . If , for example , amorphous becomes the preferred solar technology , demand in minerals will be slower than if the mineral intensive crystalline silicon solar PV installations were to win the battle for the market in that technology . If hydrogen takes off as expected , the need for platinum , iridium and titanium for electrolysers will intensify .
Concentrated minerals such as graphite and cobalt with fewer technological uses may be subject to higher demand uncertainty , particularly if technologies change . For cobalt , demand could increase by up to 30 times depending on the evolution of battery chemistry and climate policies . Minerals with applications across numerous renewable energy technologies , are likely to maintain significant demand .
Current investors looking for opportunities see coal production revenues ten times larger than the energy transition materials . However , continued strength in global climate change policies would result in revenues from energy transition material overtaking coal by 2040 . The significant increase in demand for minerals will have a knock-on effect on the affordability of those minerals .
Plotting the effect of rising mineral prices on demand will be a key element in predicting mineral investment opportunities in the renewable energy transition .
A super cycle for minerals ?
The phenomenal rise in demand for minerals is not slowing and predictions for future usage are staggering . The Benchmark Mineral Intelligence ( BMI ) index of lithium prices climbed 59 percent between April 2020 and May 2021 ; BMI also forecast lithium demand to more than triple between 2020 and 2025 , rising to a million tons and outpacing supply by 200,000 tons . Nickel usage is predicted to grow seven-fold to 240,000 tons in 2023 , a compound annual growth rate ( CAGR ) of 20 percent . Graphite usage has increased 233 percent between 2020 and 2021 . All of this growth is a result of recent increases in electric vehicle production alone .
Are we heading for a super-cycle ? The need for minerals for renewable energy technology and its infrastructure will only become more urgent as we head towards climate change target dates .
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