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Critical Minerals Subject to Geopolitical Risks

The supply chains of critical minerals are vulnerable to “a range of geopolitical risks”, according to an International Renewable Energy Agency (IRENA) report, which has called for collaborative strategies to sustain the energy transition. The report has noted that the mining and processing of critical minerals is “geographically concentrated”, meaning that external shocks, resource nationalism, export restrictions, mineral cartels, instability, and market manipulation are all potential risks that could cause supply disruption and shortages. “The significant increase in critical materials gives the international community an opportunity to diversify supply chains and make them more sustainable,” said Francesco La Camera, IRENA’s Director General. “The risk of supply chain disruptions is less about energy security and more about the potential slowdown of the transition, which must be avoided. On the road to COP28, my message is to urgently strengthen collaboration on critical materials to minimise the geopolitical risks of concentrated supply chains and accelerate the deployment of renewables to limit rising temperatures to 1.5°C.” The International Energy Agency (IEA) has also published its first annual review of the critical minerals market, noting that record deployment of clean energy technologies is propelling huge demand for minerals, including lithium, cobalt and nickel, with the critical minerals market reaching US$320 billion in 2022. Alongside the review, the IEA has unveiled the Critical Minerals Data Explorer, which will allow users to access and navigate the IEA’s data and projections for critical minerals. IEA Executive Director Fatih Birol said: “At a pivotal moment for clean energy transitions worldwide, we are encouraged by the rapid growth in the market for critical minerals, which are crucial for the world to achieve its energy and climate goals. Even so, major challenges remain. Much more needs to be done to ensure supply chains for critical minerals are secure and sustainable. The IEA will continue its early leadership in this space with cutting-edge research and analysis – and by bringing together governments, companies and other stakeholders to drive progress, notably at our Critical Minerals and Clean Energy Summit on 28 September.” 

 

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