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The green transition will significantly increase demand for key minerals over the coming decades. The impact on energy prices will ultimately depend on how supply adjusts.

The Green Transition relies on certain key minerals, in particular lithium, copper, nickel, cobalt, manganese, and graphite. Assuming that the transition takes place in accordance with the Paris Agreement, demand for these key inputs will almost quadruple by 2040.

The impact on energy prices will depend on how supply adjusts. Ensuring the necessary supply of these “green minerals” is therefore vital.

Russia’s attack on Ukraine illustrated how Geopolitical developments can significantly affect commodity markets and inflation. 

IMF research confirms this and underlines that Geopolitical fragmentation might disrupt the Green Transition by impairing access to green minerals.

The questions are therefore: what are the Geopolitical risks to green minerals supply? What are the political relationships between main consumers and suppliers? And what can be done to contain demand for and secure supplies of green minerals?

What could cause supply disruptions?

The mining of raw minerals is mainly concentrated in developing and emerging market economies in South America and Africa. Supplies of green minerals are currently more concentrated than for other commodities such as oil, even compared to when OPEC was formed. The concentration of mine production makes green minerals particularly susceptible to supply chain disruptions and trade restrictions. In fact, all minerals explored in this blog are currently subject to export restrictions.

So what can be done?

Several actions can be taken to enhance the security of green mineral supplies. First, encouraging private investment in mineral extraction and refining can help to diversify supply risks. By facilitating extraction of reserves and the entry of new producers, this could weaken the power of current market leaders. Second, research into substitute materials for green technologies is producing promising first results, and could reduce future demand for green minerals. Third, these minerals are recyclable. This means that there is a secondary source of supply that is likely to grow in the future as both the stock of recyclable products and investment into recycling technologies increase.