Net Zero Energy Transition Sparks Industrial Metals Shortages
New technologies are set to transform the demand for industrial metals like copper and nickel. According to Coface, by 2035, clean technologies will account for 35% of global demand for these metals.
Copper is facing a deficit of up to 17%, while nickel shortages could reach 35%. This mismatch between supply and demand is largely due to the lengthy process of bringing mineral exploration projects online. Less than 1% of such projects become operational mines, and even then it takes around 20 years.
The majority of supplies are imported from Asia, with Indonesia accounting for 67% of global nickel ore production and China holding more than 50% of the world's refining capacity for several metals. This geographical reliance raises concerns about a stable industry in the face of geopolitical tensions.
Simon Lacoume, metals sector economist at Coface, warns that 'industrial metals are entering a new phase.' The energy transition is creating significant new demand while supply is becoming increasingly unresponsive. This combination could put sustained pressure on copper, nickel, and aluminium prices, potentially ushering in a new bull market for metal prices.
The IEA estimates that clean technologies could account for 35% of global demand for copper and nickel by 2035. Nickel appears to be the most affected metal due to its use in batteries and electric mobility. In a Net Zero scenario, nickel could face a shortfall of around 6.5 million tons by 2035, while aluminium could see a shortage of 5-15 million tons.