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Rare earth elements.

Global demand for critical minerals could increase by up to six times by 2040, according to an International Energy Agency (IEA) report.

The report – titled, ‘The Role of Critical Minerals in Clean Energy Transitions’ – detailed the need to invest in critical minerals before a lack of action causes both emission levels and mineral prices to skyrocket.

Executive director of the IEA Fatih Birol said the future state of the industry is in the hands of world leaders.

“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions,” Birol said.

“The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action. By acting now and acting together, they can significantly reduce the risks of price volatility and supply disruptions.”

The report stated that present day coal production is currently 10 times higher than energy transition minerals such as copper, lithium, nickel, cobalt and rare earth minerals.

Despite this, it could be expected that these positions could be reversed by 2040, if climate-driven scenarios are adhered to.

Birol said that the world’s top three producers control more than three-quarters of global output, indicating that a global focus on critical minerals has not been reached.

“Today’s supply and investment plans for many critical minerals fall well short of what is needed to support an accelerated deployment of solar panels, wind turbines and electric vehicles. Many minerals come from a small number of producers,” Birol said.

“Because no single country will be able to solve these issues alone, strengthened international cooperation is essential.”

A similar report from Fitch Solutions focused solely on lithium demand found that “significant investment in lithium developments will prove necessary in order to prevent a supply deficit within the decade.”

“Chinese spot prices for battery-grade lithium carbonate and lithium hydroxide have witnessed a rally since the end of last year due to tighter supply.”

This finding came off the back of Chinese lithium carbonate prices rising in 2020 for the first time in three years.

“We expect lithium hydroxide to overtake lithium carbonate usage in the longer term, benefitting from increased supply from hard-rock mining projects,” the report also stated.

“An increased focus on sustainability in the entire value chain is a possible threat to lithium carbonate demand and thus prices down the line.”