Energy & Mining

Rare Earth Minerals and Energy Transition in 2024

As green energy technology continues to progress—largely relying on battery technology—will critical minerals essential to battery production become the most important commodities?

Image credit: Shutterstock / BELL KA PANG

The world’s ongoing energy transition would not have been possible without advances in battery technology.

Every one of the more than ten million electric vehicles (EVs) sold globally in 2023 was equipped with a high-capacity battery.

Such batteries are also used widely in solar power solutions to store electricity for use at night.

So naturally demand for batteries has gone up.

Specifically, the demand for lithium ion (Li-ion) batteries—which currently power almost everything—will experience a fivefold increase by the year 2030, from 0.7 terawatt-hours (TWh) of capacity to over 3.5 TWh.

The main raw material for the manufacturing of Li-ion batteries is lithium oxide, hence the mineral’s rise to stardom in recent years.

There are alternatives available, of course: nickel-cadmium (NiCd), lithium iron phosphate (LiFePO4), and the so-called solid-state batteries.

But either alternative requires large amounts of rare mineral to produce.

Even in high-capacity lithium-based batteries, some nickel, cobalt, and manganese are required in addition to lithium.

Benedikt Sobotka, CEO of Eurasian Resources Group (ERG) and co-chair of Global Battery Alliance, put it this way in a recent interview with TBY:

“Batteries are key to unlocking the energy transition, and in order to realize the green energy transition, the mining and key minerals industry must rise to the challenge of delivering on the biggest purchase order in our history—the supply of key transition metals.”

The new petroleum
Image credit: Shutterstock / Freedom_wanted

Critical minerals such as lithium are similar to oil in the sense that the energy security of the world relies on their continued mining and supply.

Just as the supply of oil relied on a fraternity of supplier nations in the 20th century, now countries with large reserves of rare minerals are finding themselves in a similarly fortunate situation.

Chile and Australia are currently the leading suppliers of lithium globally, accounting for some 75% of global exports.

More countries, meanwhile, are keen to be part of the new order in the global energy sector.

The oil-rich Kingdom of Saudi Arabia, for example, wants to remain ahead of the curve in the ongoing energy transition.

“The main Vision for 2030 underscores the establishment of the mining sector as the third pillar of the Saudi economy, following the precedence of the oil and gas industry and the chemical industry,” said Abdullah Bin Mufter Al-Shamrani, CEO of Saudi Geological Survey (SGS) to TBY.

“Supported by our comprehensive data analysis, which has identified approximately 5,600 mineral sites, we have estimated the collective value of these resources at around USD1.3 trillion,” added Al-Shamrani.

Competition among lithium producers
Image credit: Shutterstock / Claudio Briones

Given the growing market for lithium, other countries with proven reserves are trying to claim their share of the market from Chile and Australia.

One of Europe’s largest deposits of lithium lies under the hills of the Barroso region in the north of Portugal.

This has divided the community into those in favor of lithium mining to boost the region’s economy and those worried about the impact on the environment.

Across the Atlantic, Mexico has over 1.7 million tons of lithium and a rich domestic history of mining. Many among Mexico’s business community are in favor of the country becoming an EV and battery powerhouse. “Although the upstream segment—including the mining and extraction of lithium—was nationalized in 2022, foreign companies can invest in the processing of lithium and battery production,” according to a report by TBY.

In 2023, Mexican authorities gave the green light to Tesla Inc to begin the construction of its “Gigafactory 6” in Nuevo León, Mexico.

With an investment of USD10-15 billion between 2023 and 2025, the massive plant is expected to roll out EVs, complete with in-house manufactured batteries.

Green concerns
Image credit: Shutterstock / Andrzej Rostek

With the rise of lithium and other critical minerals as new raw materials needed to support the energy industry, concerns remain over the eco-friendliness of all this.

Lithium, for instance, is often extracted from open-pit mines with large scale mining operations, which are not necessarily green.

However, much awareness has been raised about the environmental impact of lithium mining in Latin America, following the 2018 protests in Chile over messy mining contracts and the subsequent nationalization of lithium reserves in 2023.

In an almost serendipitous manner, artificial intelligence (AI) could be coming to our aid. It was reported in the early 2024 that scientists in California have developed a new chemical formulation with the help of generative AI which could reduce the need for lithium by up to 70%.

The synergy between AI and renewables is unlikely to stop here, and we will surely here more about this throughout 2024.