Metals can derail the energy transition [RAPORT]

These are the conclusions of the report prepared by the Belgian university KU Leuven on behalf of Eurometaux – an association which brings together the main world producers of non-ferrous metals, including Alcoa, Anglo American, Glencore, Rio Tinto and Vale.

Głogów Copper Smelter. The metal produced by KGHM is one of the key elements of energy transformation / Photo. rug. presses.

Poland is represented in this organization by KGHM, which is a major supplier of copper and silver and also produces, among other things, gold and molybdenum. The authorities of the Polish group have stressed for many years that the group is confident in its future, because the energy transformation will generate a huge demand for copper for the construction of electricity networks, electric cars and wind turbines.

However, the long list of raw materials needed for “green technologies” does not stop at the products that KGHM has in its portfolio. Among them there are also, among others, aluminum, zinc, tin, gallium, indium, iridium, cadmium, cobalt, silicon, lithium, manganese, nickel, lead, palladium, platinum, tellurium, vanadium, scandium and other earth metals rare.

Cars, nets and signs

The authors of the report used to prepare their analyzes two technological scenarios of decarbonisation of the global and European energy sector, developed by the International Energy Agency. The first (STEPS) reflects the current policies and expenditures of each country.

The second is the Sustainable Development Scenario (SDS), which meets the objectives of the Paris Agreement, while ensuring universal access to energy and a significant reduction in air pollution. Developed economies, including the EU, must achieve climate neutrality there by 2050. In the case of China, it will be 2060, and in the other countries – 2070.

As we read in the report, the main driver of demand for non-ferrous metals will be electric cars (50-60% of the total), followed by power grids and photovoltaics (35-45%), and 5% other technologies. Therefore, the EU faces major challenges in securing supply chains for the energy transition.

Over the next three decades, the capacity of renewable energy sources will increase at a double-digit rate. Photo Eurometaux

The report estimates that in 2050, Europe will need 35 times more lithium and 7 to 26 times more rare earths than today. In the case of copper, demand will amount to 1.5 million tons (+35%) and that of nickel to 400 thousand. tonnes (+100 percent).

The difficulties are already visible, among others in the case of photovoltaics, because the production potential of European industry has fallen sharply in the face of the import of cheap and subsidized panels from China. It is necessary to rebuild the production capacities in this sector of renewable energies – in particular in the case of polycrystalline silicon, which Europe produces too little, and which is also sent to China to be transformed there.

We are faced with three decades of rapid development of electrical networks, energy storage batteries, electric cars and electrolyzers for the production of hydrogen. Photo Eurometaux

Another problem concerns permanent magnets for electric car motors and wind turbines, which are hardly produced in Europe. They are mainly imported from China, which has almost become a monopoly in this market. However, in the case of lithium-ion batteries – both for cars and energy storage – over 90%. of global production is in China, Korea and Japan.

Politically problematic metals

The problem is also that the position of key suppliers of raw materials is often occupied by politically unstable countries such as Burma, Congo, Guinea, Sierra Leone and Mozambique. Not to mention countries like Russia, whose EU wants to become independent as soon as possible because of Moscow’s decision to attack Ukraine.

By contrast, the EU economy’s overall degree of dependence on the Chinese supply chain has long since passed a safe level, as evidenced by the global trade turbulence caused by the COVID pandemic. -19.

From 45 to 75 million tonnes – depending on the scenarios – in 2050, the demand for non-ferrous metals in the “green energy” sector will rise. Photo Eurometaux

Therefore, there is a risk that as geopolitical events unfold in different parts of the world, Europe will run out of raw materials needed for energy transformation. This possibility was indicated by Mikael Staffas, CEO of Eurometaux and CEO of the Swedish group Boliden, quoted by the Financial Times at the end of April on the occasion of the presentation of the report.

It is true that even up to 75 percent. the necessary non-ferrous metals could be supplied locally in Europe through recycling, but it will only be possible to reach this capacity after 2040. By then, there could be global shortages of lithium, cobalt, nickel , rare earth metals and copper.

One problem, three solutions

In this situation, Europe has three solutions to the problems it foresees. The first is the development of new mines, which however is not very realistic due to the opposition of local communities to such projects. This has happened even in relatively poor Serbia, where protests have blocked the construction of a private lithium mine.

The second idea is to set up new factories that could process metal-rich ores. The obstacle here, however, is the high price of electricity, which in recent years has led to a 35-45% reduction in European production capacity for aluminium, zinc and silicon.

The third option, on the other hand, is to co-invest or finance new mining projects around the world in exchange for long-term supplies of raw materials.

As Liesbet Gregoir, the report’s lead author, pointed out, attention should be paid to the politics of China. For many years, the Middle Kingdom has been investing overseas in projects to help China cope with supplies it is unable to produce on its own. Perhaps the EU should follow a similar path.

– Europe urgently needs to decide how it will fill the impending metal supply gap. Without a firm strategy, this risks creating a new dependency on unstable suppliers, commented Gregoir.

With the full report entitled “Metals for Clean Energy” is available on the Eurometals website.

Pandemic and war are already damaging RES

Regardless of the predicted problems for renewables related to access to non-ferrous metals, this sector has been experiencing disruptions related to the effects of the pandemic for several quarters, both in Poland and in other EU countries.

Moreover, Russia’s aggression against Ukraine is already underway in the third month, causing further investment-related disruptions. This applies, among other things, to restrictions on steel supplies due to the suspension of supplies from Ukrainian steel mills, as well as sanctions imposed on imports from Russia and Belarus.

As we wrote recently on the WysokieNapiecie.pl portal, the situation in the construction sector was already difficult due to the unprecedented increase in the prices of materials and fuels for many years. The war only intensified these increases and, in Poland, it also caused a mass exodus of Ukrainian workers who left to fight to defend their country.

The text was first published on the website WysokieNapiecie.pl

Tomasz Elzbieciak

Journalist for the Wysokienapiecie.pl website. He specializes in the widely understood area of ​​the construction and infrastructure market: energy, industry and transport. In 2010-2021 he dealt with this topic in the wnp.pl portal and the Nowy Przemysł magazine. Previously, he practiced and interned, among others at PAP and the Katowice branch of Gazeta Wyborcza. He graduated in political science – journalism and social communication at the University of Silesia in Katowice.


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