A Clean Energy Strategy
CMR’s strategy is to focus on metals including copper, nickel, manganese, cobalt, lithium and rare earths. Those commodities recognised as being part of the drive to widespread electrification alongside the switch to renewable energy.
In terms of additional tonnage required, and overall importance, copper is the main metal. Annual copper demand is circa 26 million tonnes, mainly from construction (wiring and piping), electronics and transportation. However, the extra copper required for renewable power and end-use electrification of transport is expected to transform this demand. According to McKinsey & Company estimates, copper demand will increase to 36.6 million tonnes by 2031, mostly due to global electrification.
Source: IEA '21; Minerals used in EVs compared to conventional cars; License: CC BY 4.0
EV and Battery Storage
Exponential electric car growth
With some institutions forecasting a quadrupling of demand for certain minerals over the next 15 years, it is widely recognised that electric vehicles (EVs) and battery storage systems are a major driver of this growth, accounting for about half of the increased mineral demand. The IEA estimates that the world needs 2 billion electric vehicles as part of achieving net zero; in 2023 there are approximately 40 million (battery electric vehicles and plug in hybrids) on the road.
Copper, aluminium and battery metals
The term “battery metals” encompasses materials used in lithium-ion batteries, such as lithium, nickel, manganese, cobalt, phosphorus and graphite, all of which are needed in significant quantities. Battery electric vehicles (i.e fully electric, not hybrids or plug in hybrids) also require up to 85 kg of copper compared to <25 kg required in traditional ICE vehicles and significantly more aluminium. Although copper and aluminium are not seen as battery metals, they are certainly electric vehicle metals and a large part of the Clean Energy transition.
In addition to up to 15 kg of lithium, EVs also require rare earth elements like neodymium, praseodymium, dysprosium, and terbium, which are essential for permanent motors. Additionally, as EV manufacturers look to increase driving ranges between charging, the steel composition of vehicles will reduce in favour of lighter-weight aluminium.
Clean Energy Revolution
Greatest commodity revolution since oil & gas
Clean Energy technologies generate energy from renewable, zero-emission sources such as wind, solar, hydro, geothermal and nuclear. While they are crucial to the world’s journey to net zero emissions, they also account for significantly higher metals consumption than traditional technologies. The energy sector’s historical reliance on hydrocarbons is giving way to a new era driven by climate goals, and with the Clean Energy sector emerging as a significant consumer of base metals and critical metals and minerals.
A permanent change
This transition has permanently altered the supply and demand dynamics for many commodities. According to the International Energy Agency (IEA), clean energy technologies are poised to constitute the fastest-expanding sector of mineral demand. By 2040, in the IEA’s Sustainable Development Scenario (which assumes the Paris Agreement targets are met) the share of total metal demand from clean energy is projected to increase by 40% for copper and rare earth elements (REEs), 60-70% for nickel and cobalt, and although from a small base, nearly 90% for lithium.
Regulatory and Strategic Drivers
The metals and minerals required for the clean energy transition has led to a global race to secure supply. This challenge is made harder by geopolitics, with a significant proportion of these minerals found in emerging and frontier market jurisdictions including countries in Africa, Asia and South America.
China’s dominance
After several decades of focused investment, China has gained a marked advantage over Western nations, controlling a significant proportion of the world’s upstream development and midstream processing of vital commodities such as lithium, cobalt, rare earth elements and nickel. Governments around the world are only recently introducing various protectionist initiatives to secure future supply and incentivise the development of regional supply chains.
Inflation Reduction Act
Perhaps the most well-known recent policy is the US Inflation Reduction Act, announced in 2022 to promote investment and considered the most significant climate legislation in US history. It sets restrictive targets and offers tax credits incentivising US OEMs (automakers) to source battery-critical mineral content either domestically or from US free-trade partners such as Morocco.
The map below shows some of the government policies and corporate transactions of recent years in the Clean Energy space. As governments look to protect their economies and corporates look to capitalise from the Clean Energy theme.
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Clean Energy Technologies
While technology can’t solve the problem on its own, a rapid increase in clean energy technologies will be essential if society is to reach anywhere near net-zero emissions.
Wind & solar
Both wind turbines and solar panels need a diverse range of minerals. Wind turbines require a multitude of metals to function efficiently, with copper, rare earth magnets and even zinc being extremely important. Solar power relies on silica, copper, silver, aluminium and sometimes tin alongside less common substances such as gallium, arsenic, cadmium and tellurium for thin-film PV applications. As with most clean technologies, copper is the common denominator as the preferred electricity conductor for both wind and solar.
Nuclear
Nuclear power is the second-largest source of low-carbon power, after hydropower, accounting for about 10% of global electricity generation in 2020. It offers a zero-emission, clean energy source. According to the Nuclear Energy Institute, the US avoided over 471 million metric tons of CO2 emissions in 2020 through using nuclear energy, surpassing the combined results of all other clean energy sources in the US.
Nuclear energy also has a minimal land footprint, requiring less space than wind farms and solar plants to generate equivalent power. The waste produced is comparatively small, and advanced reactor designs might even utilise used fuel. The NICE Future Initiative, a global effort under the Clean Energy Ministerial, aims to integrate nuclear into advanced clean energy systems for the future.
SOURCE: IEA 2023; Minerals used in clean energy technologies compared to other power generation sources; License: CC BY 4.0
Information Section
wires & cables
structure
coating
magnets
Source: Company
Nickel
Cathode active material
Manganese
Cathode active material
Cobalt
Cathode active material
Lithium
Cathode active material & electrolyte
Copper
Current collectors & conductor
Aluminium
Battery pack & casing
Manganese
Steels incl. AHSS
Aluminium
Chassis, pillars, wheels
Copper
Conduction
Rare earths
2x rotors
Copper
2x stators
Source: Company
* Battery metal content estimates based on an NMC 622 chemistry, 160g lithium per kWh and 84.7kWh capacity. Includes cells, modules and pack
Notes: NMC 811 and 622 batteries have the following lithium oxide formulae:
(1) LiNi0.8Co0.1Mn0.1O2
(2) LiNi0.6Co0.2Mn0.2O2
A typical 811 cathode active material contains approximately 20% lithium alongside 80% transition metals Ni, Mn and Co in the following ratio: 80.4% 9.1% 10% with the balance in impurities