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Oct 22, 2020

$1 trillion needed for energy transition metals

$1 trillion needed for energy transition metals

More than $US1 trillion of investment will be needed in metals such as aluminium, cobalt, copper, nickel and lithium over the next 15 years to meet the growing demands of decarbonisation, according to analysts Wood Mackenzie.

This is almost double the figure invested over the previous 15 years.

“One can argue about both the pace and scale of the energy transition but the criticality of metals to its realisation is without question,” Wood Mackenzie vice-chairman of metals and mining Julian Kettle said.

“Put simply, the energy transition starts and ends with metals. If you want to generate, transmit or store low/no-carbon energy you need aluminium, cobalt, copper, nickel and lithium.

“However, the fundamentals for several metals are poor and deteriorating, with prices for most well below long-term incentive levels.”

Wood Mackenzie vice-chairman of metals and mining Julian Kettle.

If producers could not meet consumers’ needs, they may find ways to innovate and drop such unreliable raw components from their supply chain, he said.

Mr Kettle said also that producers were becoming increasingly carbon conscious, with many setting targets for net zero carbon. “It isn’t just about portfolio balance. The green agenda will have a profound impact on the way these companies extract and refine metals, with lower carbon operations an increasing priority,” he said.

Miners were challenged with positioning themselves for investment in new supply and delivering, while decarbonising and navigating an increasingly complex ESG (Environmental, Social, and Corporate Governance) landscape.

“Miners are adept at juggling conflicting demands. The question is whether they are adept enough to manage this perfect storm of problems and opportunities,” Mr Kettle said.

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