19 Feb 2024, 13:31
Benjamin Wehrmann

Global demand growth could trigger lasting higher prices for energy transition minerals – BlackRock


Growing demand for minerals needed in renewable power installations, electric vehicles and other green technologies could trigger a lasting price increase for many resources, such as cobalt, copper or nickel, Evy Hambro of investment company BlackRock told newspaper Handelsblatt in an interview. “The energy transition will make our economy much more resource-intensive,” Hambro said. Given the long lead time of many mineral extraction projects, the portfolio manager said it is questionable whether supply and globally rising demand could be balanced soon, arguing this could lead to a so-called supercycle of lasting price rises for materials that cannot easily be replaced. Moreover, using oil or gas in resource extraction could add to the already significant carbon footprint of mining activities, he argued.

The availability of required raw materials would too often still be regarded as “a matter of course,” even if a strong dependence on single suppliers, such as China, made secure long-term access questionable. While China itself imports many of the critical resources, its influence is largely based on “the middle of the supply chain,” by processing raw materials into intermediary products, Hambro said. Western governments, especially the U.S., had begun to challenge this dominance by investing in their own processing capacities, he added.

The raw material needs of the energy transition for building millions of renewable power installations, introducing battery-electric vehicles, and laying thousands of kilometres of new powerlines are expected to result in fierce competition for some materials. Besides growing the number of possible suppliers and improving domestic processing capacities, better recycling methods for raw materials already available in the economic cycle has been identified as key measure for better supply safeguarding. Several major EU economies, including France, Germany and Italy, have announced steps to better coordinate their critical raw material supply, including the creation of state-controlled joint purchases of resources needed in European economies.   

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Sören Amelang

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