Critical materials for the energy transition

Dolf Gielen
Director Innovation and Technology
Innovation for Cool Earth Forum (ICEF) 9th Annual Meeting
4-5 October 2022

The problem• Energy transition with today’s technology requires rapid growth of critical materials supply• The resources are available• Rising prices indicate scarcity• However the development of new mines faces opposition▪ Environmental▪ Social▪ Unconventional resources are unclear• Product quality can be a problem• Typical mine development and growth is not commensurate with the foreseen demand growth• Can innovation mitigate demand growth?
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IRENA work to date➢

IRENA Assembly January 2022 provided a mandate for Agency work on critical materials➢

Launch Collaborative Framework Critical Materials February 2022➢➢➢

Around 40 countries participate activelyTo date:▪

Scoping paper – together with ENEL Foundation – October 2021▪

Technical paper critical materials – November 2021▪

Deep dive lithium – February 2022▪

Deep dive rare earth elements – March 2022▪

Chapter 7 World Energy Transitions Outlook 2022 – March 2022▪

Nickel editorial▪

Editorials on critical materials in energy-post , smart-energy and mining review

Upcoming:▪

Deep dive into EV battery manufacturing▪

Deep dive sustainable critical materials supply in Southern Africa – with the World Bank▪

Overview of supply chain of energy-related critical materials and minerals
3Collaborative Framework & working groups
Aim: develop a set of activities to:▪

support a better understanding of the role and market dynamics of criticalmaterials to sustain the energy transition,▪

facilitate discussion among the different groups,▪

Establish a list of experts across Members and stakeholders, and▪

assist in systematizing and disseminating knowledge.

Observatory
Collect data that help
understand scarcity andpotential supply shortages
that may affect theenergy transition in the
coming decade Notably

De-risking supply

Develop and apply
strategies to de-risk supply

ESG & mining
Notably related toinnovation

Develop strategies to raise
acceptance for new
mining projects

related to innovation

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Example: Lithium Market
The price of lithium, often expressed in LCE, has experienced steep changes in recent years.
Since early 2021, prices have seen a 450%-480% increase, with lithium hydroxide prices reaching USD 76/kg andlithium carbonate prices USD 60/kg in September 2022
Lithium Price Index Sep 2019 – Sep 2022

Lithium supply anddemand in 2021
Lithium production reached 0.10
Mt, or ~0.532 Mt LCE, 21% higher
than 2020.
Lithium demand reached 0.09
Mt, 33% higher than 2020.

Lithium supply and demand forecasts
SupplyDemand
Lithium Demand Forecast towards 2030

Future mine capacity and their outputs by 2030

Source: S&P•

Lithium supply is expected to triple by 2025.

•Australia is set to maintain dominance – production isexpected to increase by 139% towards 2025.

•South American production is expected to increase by
200% in the same time period.

•Lithium supply can likely switch to deficit if additional
projects are not added to the pipeline to meet 2030
demand.

•China holding 80% of battery manufacturing capacity

Source: BNEF•

Significant demand uncertainty – BNEF and S&P expect lithium
demand to reach 2 Mt LCE by 2030 (x4), McKinsey expects it tosurpass 3 Mt (x6) by 2030.

•Supply: primary (from mining) and secondary (recycling) → notuntil 2040 (and there at max 40%)

Rapid demand growth this decade:example battery manufacturing
Quadrupling in only 4 years

Source: BNEF
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EV battery cathode material scenarios
Nickel-rich NMC or LFP?
Lithium needed in all of them (7-11% of battery mass), but prices and performance and safety differ
At present price nearly 4000 USD nickel in a car battery

Source: S&P

Mitigating supply risks• Mining sites depend on the resource quality• Processing is concentrated in a few
countries, namely China• China is also the largest consumer of criticalmaterials• Efforts to diversify the supply, processing
close to mining sites• ESG of mining operation still not a given• Need for environmentally and sociallysustainable supply structures• An opportunity to use renewable energy

9Conclusion•

There are enough critical material resources to drive the energy transition•

However, there are risks that need to be mitigated:▪ The ability to increase supply quickly enough to meet growing demand▪ The availability of high-quality products▪ The capacity to diversify mining and processing of materials▪ Diversify supply: increase mining and recycling• Product innovation can alleviate these risks through reducing demand and substituting criticalmaterials with more abundant elements.
• Leveraging existing initiatives and increasing cooperation among governments, academia, and theprivate sector needed to boost innovation10

EV BATTERIES

Thank youfor your attention!
CFMaterials@irena.org

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