Which minerals are key for the green transition, and how will their prices evolve?
Mineral demand on the rise:
Clean-energy technologies such as electric vehicles, solar power and wind power tend to be far more mineral-hungry than their fossil fuel rivals. According to the U.S.’ Energy Information Administration (EIA), an electric car needs six times more minerals than a traditional vehicle for instance, while an onshore wind plant requires nine times more minerals than a plant running on gas. As a result, the mineral-intensity of power generation has risen by half since 2010.
The main metals:
So which are the minerals in question? Copper and aluminum will be major beneficiaries of the green transition, as both are widely used in solar, wind, electric vehicles and power grids. Zinc will benefit thanks to its use as corrosion protection in wind turbines, while nickel, lithium and cobalt are important components of lithium-ion batteries. Silicon, manganese, molybdenum and graphite will also see greater demand. To meet the Paris Agreement’s goal of limiting the global temperature rise to less than 2 degrees above pre-industrial levels, copper demand would triple by 2040, while lithium demand would rise 42 times, according to the EIA.
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Our panelists’ forecasts:
The Consensus among our analysts is for prices for the aforementioned commodities to generally average well above their 2010–2020 level over our forecast horizon to 2027. That said, most of the commodities are not seen increasing in price from recent levels, likely on improvements in the supply situation. Cobalt is an exception: our panelists see prices rising by around half by 2027 compared to 2023.
Insights From Our Analyst Network
On copper, Goldman Sachs analysts said:
“Among clean-tech use cases, electric vehicles (EVs) and charging stations should continue to account for the largest share of demand for key metals through 2025. Among the green metals, copper has the widest range of end markets, including EVs, wind and solar power, and energy storage. Green demand should represent nearly half of all additional copper demand through the rest of the decade, placing it at the heart of the metal's supercycle.”
On nickel, EIU analysts said:
“We forecast that the global nickel market will enter a period of modest oversupply in 2023-24. We continue to forecast rapid demand growth from downstream applications—particularly stainless steel production and new energy vehicle (NEV) batteries. Onshore production in Indonesia is set to enter a period of rapid growth, with various traditional nickel-mining companies currently expanding their operations.”