Despite weaker prices for battery materials, the energy transition remains very much on track, according to Benchmark Mineral Intelligence.
Speaking at the Tribeca Future Facing Commodities Conference in Singapore, Benchmark head of strategic initiatives Michael Finch said a massive amount of raw materials would be required for the energy transition.
Last year, 13.8 million electric vehicles and plug-in EVs were sold, up 31% year-on-year, which Finch described as a “fantastic” number.
The world surpassed the 1 terawatt hour mark last year in terms of batteries produced and is projected to reach 1.3Twh this year.
Last year China installed 293 gigawatts of solar and wind capacity, up 50% YoY.
“These numbers are massive and not representative of the doom and gloom we’ve been hearing,” Finch said.
“These numbers are extreme and I think anyone in any industry would be happy to hear them.”
However, the prices of all key battery metals dropped in 2023, including lithium, which dropped by more than 80%.
“If you’d only been in the industry a year, it’s not a pretty picture,” Finch said.
Finch pointed out that lithium carbonate equivalent prices were still sitting above the five-year average.
“It’s not actually as bad as people are making out,” he said.
EV sales are set to grow at a compound annual growth rate of 14% out to 2040, wind capacity is set to grow by 7-10 times and solar is projected to grow 13-15 times.
Benchmark forecasts that US$4-5 trillion of investment would be required for the energy transition each year.
“To unlock all of this, we’re going to see to see a 4-10 times increase in supply across different minerals,” Finch said.
Benchmark estimates to plug the gap, US$582 billion of investment will be required by 2030, of which US$237.5 billion would be required on the mining side.
“Of the US$200 billion that’s left to be committed, 75% is on the upstream side, so lithium, nickel, cobalt, graphite, copper, aluminium,” Finch said.
“So that’s where the investment needs to go, especially given mine lag times – 15 years on average.”
Benchmark forecasts 74 additional mines would be needed in lithium, 62 in cobalt and 72 in nickel.
“The faster we accept new supply won’t come at a lower cost, the faster we will unlock much-needed capital,” Finch said.
“High incentive prices are needed to ensure diversified and sustainable supply and new supply will have to come from a higher-cost source of production.”
As a result of higher incentive prices, Benchmark believes a floor price in battery metals has been reached.
The firm expects battery metal prices to remain range-bound this year or start to move higher.