Critical Mineral Demand Soars Through 2040 Amid Supply Gaps

The International Energy Agency (IEA) has released a report highlighting the growing demand for critical minerals, particularly copper and lithium, to support the expansion of electric vehicles, battery storage, renewable energy, and electricity networks.

According to the IEA, meeting future demand will require more than $750 billion in investment in mining and refining between now and 2040 under the Stated Policies Scenario (STEPS). Copper is expected to account for the largest share of investment at about $310 billion, followed by nickel at $280 billion.

The report projects that lithium demand will more than triple by 2040 under STEPS, while graphite demand is expected to double and nickel demand to increase by 65 percent. Rare earth demand is projected to rise by around 50 percent, while copper demand is set to grow by more than 25 percent.

Despite a growing pipeline of mining projects, the agency said supply gaps for copper and lithium could remain through 2035. A gap also emerges for cobalt, largely due to the export quota introduced by the Democratic Republic of the Congo, while nickel's supply outlook has tightened somewhat compared with last year.

The IEA warned that bottlenecks may emerge even as new mining capacity comes online due to the imbalance in refining and downstream processing. China currently accounts for just under 50 percent of global copper refining, 70 percent of lithium refining, 75 percent of cobalt refining, 85 percent of magnet rare-earth separation, and more than 90 percent of battery-grade graphite production.

The report noted that recycling is expected to become an increasingly important source of supply. Under STEPS, secondary supply could roughly double its share, with average recycling rates rising from around 10 percent currently to nearly 20 percent by 2040.