The critical mineral dilemma: are we mining too much or not fast enough?
The boom of critical minerals is taking off – all signs are there.
Metal prices are rising, exploration permit applications are skyrocketing, and investment companies are looking for a great deal on any new battery or critical mineral projects they can get their hands on.
Lithium, rare earths, nickel, copper, alumina – all these minerals and more are absolutely essential to decarbonising and transforming the energy economy, and right now the world just can’t get enough of them.
That begs the question: what are critical minerals? Why are they so critical? Are we in danger of digging too many out of the ground? What opportunity do they represent?
Proactive asked two critical mineral experts questions about the battery metal explosion and whether we are at risk of under-mining or under-mining.
In this article:
What are Critical Minerals?
Dr. Chris Vernon is a senior principal investigator at the CSIRO, leading the Green Mineral Technologies initiative – he is also the local expert on critical minerals.
“Critical minerals are interesting,” Vernon began.
“If you go back to World War I, or even just before, the US had a critical resource list of things like whale oil, iron and bronze.
“An American geologist once said to me, ‘Critical minerals are minerals you want and can’t get,’ I think that’s the simplest explanation.”
In other words, it is minerals vital to the proper functioning and continued security of a country’s economy that are threatened by potential supply chain disruptions – whether economic, political or environmental.
Carl Spandler, an associate professor at the University of Adelaide’s Critical Minerals Research Center, explained that long lead times in mining projects contribute to the problem.
“Supply risk means economic risk. Will we need these specific metals in five years, or ten years from now? Those are the kind of timeframes that companies would want to invest in and build these projects — they take time,” Spandler clarified.
The intertwined association with supply and demand factors also means that each country has its own critical mineral list to meet individual resource, production and supply requirements.
“Currently, the Critical Mineral List in Australia lists at least 26 minerals,” Vernon described.
That’s not even counting individual elements – rare earths have either 15 or 17 individual minerals, depending on how you count them, and there are six platinum group elements, meaning Australia’s extensive list of critical minerals is about half of the naturally occurring elements on Earth.
“The importance of critical minerals right now is that many are needed for the coming energy transformation – some say transition, but I think it will be a little more urgent,” Vernon continued.
“These are the elements that go into solar panels, or a battery, or an EV motor, or a wind turbine, or rectifiers to convert DC to AC, etc. So a very wide range of elements.”
Are we on track to mine too many critical minerals?
Analysts, miners, manufacturers and governments all seem to agree: we are facing a massive supply shortfall for an entire basket of critical minerals; lithium, cobalt, nickel, copper and graphite are the most important of them.
Demand is growing exponentially, as shown in the chart below from the International Energy Agency.
Total Mineral Demand for Clean Energy Technologies by Scenario, 2020-2040:
Left: question in 2020, middle: current policy requirements, right: sustainable development scenario. Source: IEA, Total mineral demand from new EV sales by scenario, 2020-2040, IEA, Paris.
While many companies are already working to fill that gap, as mentioned earlier, it takes an average of 16.5 years to take a mining project from discovery to production.
“Even if we discovered ore deposits today, they will necessarily not come online until 2040,” Spandler said.
“We’ll soon run out of time.”
Discovery and exploration in light blue, build planning in navy blue, and build to production in green. Source: IEA, Global Average Lead Times from Discovery to Production, 2010-2019, IEA, Paris
So are we facing a massive shortage of critical minerals?
“It really depends on what mineral or material you’re looking at,” Vernon pointed out. “Lithium, for example… I laughed a few years ago when someone predicted a supply shortage almost overnight.
“At the time, I looked around Western Australia and said, ‘Well, wait a minute, we can meet the demand of the whole world with our shut down capacity’.
“Obviously that will change as demand increases, but I’m pretty confident we can meet demand with things like lithium. Chile, Argentina, Bolivia, China, they have a lot of lithium.”
As for the other minerals critical to decarbonising, Vernon isn’t so sure.
“I think it’s more the sleeper minerals that we should be concerned about — things like cobalt, maybe not nickel, but we don’t have a lot of battery-grade nickel either,” Vernon admitted.
“Copper is definitely a sleeper for me because electrification means more wires, everything needs copper.
“If you look around the world, the known copper deposits are currently quite low grade and don’t grow on trees.
“Rare earths is another interesting one because most of the supply comes from China – we have a lot of really good future rare earth mines here in Australia, but how many of those are producing and currently coming to market?
“Very little.”
While all data points to a massive shortage of supply, rising mineral prices will certainly encourage more and more companies to invest in and develop mines, and battery chemistry is also constantly being refined, reducing the need for scarce resources .
Could that lead to oversaturation in the coming years, instead of the current vacancy in the supply?
“I think there’s more danger of not meeting demand than of overproducing because we’re seeing a very aggressive move in many countries to go low carbon,” Vernon disagreed.
“If you’re talking about small marginal increases in renewables, that’s not a problem, but if you suddenly want to roll out a few gigawatts, and there are 90 other countries wanting to roll out another 100 gigawatts, everyone wants the same thing.” the same time.
“For example, someone recently told me that if you place an order for a large wind turbine now, you are guaranteed delivery in 2027.
“That doesn’t really seem like a quick rollout to me.
“The danger is that if we don’t mine enough, there just won’t be enough material to produce these things and we’re on a pretty aggressive course to decarbonise.”
What opportunities does a critical mineral tree offer?
Australia is a country blessed by circumstances.
We have abundant mineral resources of almost all critical minerals, the will and expertise to exploit them, and endless amounts of wind and sun.
In 2021 we became the largest producer of lithium and we are in the top five for cobalt, manganese, antimony and rare earths.
We also have the largest recoverable resources of tantalum, zirconium, rutile (naturally occurring titanium) and nickel, and are among the top five for lithium, cobalt, tungsten, vanadium, niobium, antimony and manganese, according to Geoscience Australia.
“The emergence of critical minerals is a huge opportunity. But, depending on which one you’re talking about, the window — now that it’s open — will close pretty quickly,” Vernon said.
“We have a fantastic opportunity, but I don’t think it is the traditional opportunity.
“Traditionally, we’ve been really good at digging things up, making concentrates, sticking them on a ship, or refining them just enough to appeal to someone to buy.
“I think the opportunity right now is to go a little bit further in processing, to aggressively take some of those markets, for example in the US and Europe, Japan, India, South Korea, with a slightly more refined product or even a first level production material to take advantage of the very rapid adoption in those economies.
That would require more downstream processing and manufacturing, something Australia has historically left to countries with lower labor costs.
However, there are other ways to cut costs, Spandler says.
“Part of the reason these materials are considered critical is because of where they are manufactured and where they come from,” he said.
“We should be doing that in Australia. We have the advantage of having huge potential for renewable energy.
“Energy costs are one of the largest additional costs for production. We may be able to produce these products much more cheaply once we start using those sustainable energy systems.
“So I think there’s a really good case for making batteries, for making magnets that we need for electric motors and for wind turbines, etc.
“We have the raw materials here. We could do it ourselves.”
Mining for the future
Australia seems to be on a golden path – endowed with plenty of renewable energy, critical minerals and production know-how, we have the opportunity to become one of the largest producers of green critical minerals in the world.
But what then? Once we have our wind turbines and our electric vehicles and our big grid batteries feeding stored energy back into the system — what will mining look like once the energy transition is complete and we’ve dug up the essential minerals we need?
“I think it’s inevitable that we’re going to build a circular economy,” Vernon stated, “Mining may inevitably start to decline from there. It probably won’t happen in my lifetime, but it will.
“I think mining companies need to prepare and think about the future.”
The European Parliament defines a circular economy as “a model of production and consumption, where existing materials and products are shared, rented, reused, repaired, refurbished and recycled for as long as possible”.
The idea is to keep waste to an absolute minimum. When a product reaches the end of its life, the materials are refurbished, reused and recycled to be used again and again, creating even more value.
“Make no mistake, recycling will be necessary,” Vernon insisted, “do we want to become the country that takes the electric vehicles off our coast and ships them elsewhere for recycling? Please, we don’t want that.
“I also think there’s an aspect of social responsibility that a lot of these companies are recognizing now — if we’re producing the stuff, we don’t want it to end up in the landfill 20 years from now, we want to be a company that brings it back and gives it another life.”
According to the CSIRO, only 10% of Australia’s lithium-ion battery waste was recycled by 2021, with the remainder either ending up in an inland mixed landfill, posing a significant fire and explosion risk, or shipped abroad under strict export conditions for further processing.
Developing and expanding recycling capabilities for critical minerals, and batteries in particular – as companies such as Lithium Australia and Neometals are doing – would be the final step in extracting maximum value from the net-zero supply chain and securing a future without the threat of environmental collapse.
Only time will tell how much of this critical opportunity Australia can seize.