©2024, IEEJ. All rights reserved.

The 9 th IEEJ/APERC International Energy Symposium, Tokyo Japan, 19 April 2024

How to manage the risk of critical minerals supply?

The Institute of Energy Economics, Japan
Ichiro Kutani
Senior Research Director
Energy Security Unit
Please visit us.
https://eneken.ieej.or.jp/en/

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Where do risks come from?

1

Geographical concentration of resources2

Geographical concentration of midstream processes

3

An immature global market

4

Potential for disruptive technological developments1

Geographical concentration
 Reserves, production, and refining of many critical minerals are unevenly distributed to specificcountries.

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Country-wise share of reserves in selected minerals

United States
CanadaMexicoBrazilPeru
Chile
Argentina
Cuba
Australia
Indonesia
Philippines
Viet NamChina
Kazakhstan
RussiaZimbabwe
DR Congo
South Africa
OthersCu(copper)
5%
1%
6%
0%
9%
23%
0%
0%
11%
3%
0%
0%
3%
2%
1%
0%
4%
0%
33%

Co(cobalt)
1%
3%
0%
0%
0%
0%
0%
7%
18%
8%
3%
0%
1%
0%
3%
0%
46%
0%
9%

Source: IEEJ (2023), Outlook 2023

Ni(nickel)
0%
2%0%
17%
0%
0%
0%
0%
22%
22%
5%
0%
3%
0%
8%
0%
0%
0%
21%

Li
V
(vanadium)(lithium)
3%
0%
0%
0%
0%
0%
0%
1%
0%
0%
42%
0%
10%
0%
0%
0%
26%
25%
0%
0%
0%
0%
0%
0%
7%
40%
0%
0%
0%
21%
1%
0%
0%
0%
0%
15%
11%
0%

PGM
(platinumREO(rare earth)group)
1%
2%
0%
1%
0%
0%
0%
18%
0%
0%
0%
0%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
0%
18%
0%
37%
0%
0%
6%
18%
2%
0%
0%
0%
90%
1%
0%
4%

Share of nickel ore and primary nickel production
by country (2019)

Ore production
Americas
EuropeJapan
China
Indonesia
Philippines
Other Asia
Oceania
RussiaAfricaOthers

11%
2%
0%
4%
35%
13%
8%
6%
9%
2%
10%

Primary
nickelproduction
12%
17%
8%
34%
16%
0%
3%
8%
0%
3%0%
2

Cost of minerals production
 As mineral extraction and smelting are energy-intensive and environmentally damaging
processes, it is not easy to find competitive new sources of supply.
Labor and land cost.

Costs of electricity and water.

Costs of environmental measures.
Water use for selected minerals

Labor cost in selected cities
8,000

USD/month

0.9

7,000

0.8

6,000

0.7

5,000

0.6

4,000

0.5

3,000

0.4

2,000

0.3

1,0000.20IEEJ © 2024

m3/kg

Salary-worker
Osaka

Shenzhen

Jakarta

Salary-engineer
Santiago de Chile

Phoenix

SydneySource: JETRO, Survey of investment costs in selected cities in 2022 or 2023

0.10Bauxite

Iron

CobaltCopperNickelREE

Source: IEA, Sustainable and responsible development of minerals

Lithium3An immature market The market size of minerals is small
compared to that of energy.
Smaller number of market participants.

Smaller transaction amount.

Export value of selected commodities (2021)

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 As a result, market liquidity is notlarge enough to provide a security ofsupply/demand function.

Source: IRENA (2023)

4

Potential for disruptive technological developments
 The development of decarbonization technologies is ongoing.
 Therefore, the demand for, as well as the definition of, critical minerals could change in the future.
 This makes investment difficult.
Evolution of sales share of EV batteries by cathode chemistryPeriodic table and battery potential
GroupPeriod

Nickel-metal hydride
battery
Lithium-ion battery
Sodium-ion battery
Potassium-ion battery

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Lanthanide

NCA = Nickel-Cobalt- Aluminum, NMC = Nickel-Manganese-Cobalt
LFP = lithium ion phosphate
Source: IEA (2023), Critical minerals market review 2023

ActinidesSource: Create from the periodic table from Science Stock and other sources.

5

Future can change significantly
 In its 2022 analysis, the IEEJ highlighted the possibility of future lithium supply shortages.
 However, this situation could change significantly with future technological developments.
What happens if;
New production sites come on stream?

Recycling technology is commercialized in scale?

Lithium-ion batteries are no longer mainstream?
Supply-demand outlook of Lithium

Comparison of cumulative demand and reserves (+ recycled supply)

1.8
1.6

Demand [AdvancedTechnologies]

1.4

Mt

1.2

Supply [AdvancedTechnologies]

1.0

Demand [Reference]

0.8
0.6

Supply [Reference]

0.4

Demand, of which: Noncarbon neutral uses

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0.20.02022

2030

Source: IEEJ (2022), Outlook 2023

2040

2050

Reserves + supply
from recycling
Demand05Wind, solar PV
Stationary fuel cells
Replacement in-vehicle battery
Non-carbon neutral uses
ChileArgentina
United States
Recycling

1015Mt202530

Other power generation
VehiclesWater electrolysis
Australia
China
Others6

The experience of Japan in 2010
 Japan has taken measures to reduce the risk of critical mineral supplies.

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Comprehensive Rare Earth Measures (October 2010)

Development of technologies toreduce/alternate materials(12B Yen)

・Accelerated development of tech. to use alternative materials (6 ores)
・Progress in joint international research (International clean energy technology
cooperation)

Strengthen recycling of rare earth(3B Yen)・Development of recycling technology
・Promote capital investment

Enhance resilience of industries
against rare earth supply shock(39B Yen)

Support for investment needed to improve resilience to rare earth supply risks.
・Introduction of equipment to reduce consumption.
・Introduction of new processes that do not use rare earths.
・Increase concentration of domestic industries with high-level rare earth use.

Secure mining concessions,development, and supply (46B Yen)

Secure concessions and develop sources other than China・JOGMEC investment, risk money supply
・Stronger relations with supplier states

Source: Ministry of Economy, Trade and Industry

7

How to manage the risks?
Short to mid-termLong-term

 Inventories help to mitigate shocks.

 Support the development of new capacityof mineral supply.

 Ensure free trade of minerals.
 Improve market transparency.
Supply, demand, inventory, price data

Share the market prospects.

 Support the development of recycling
technologies and its business models.
Need careful assessment of their energy/GHG efficiency andeconomic viability.

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 Support the development of technologies toconserve and alternate the minerals.

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Thank you !

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