United States Faces New Challenges Meeting Increased Demand for Critical Minerals One Year After Historic Inflation Reduction Act, S&P Global Study Finds
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Total energy transition-related demand post-IRA for lithium, nickel and cobalt will be 23 times higher in 2035 than it was in 2021; Demand for copper will be twice as high, study finds
The new study finds that
Demand for copper will be
Adding the post-IRA demand increases on top of demand growth that was already expected prior to the IRA becoming law means that total combined energy transition-related demand for lithium, nickel and cobalt will be 23 times higher in 2035 than it was in 2021. Total demand for copper will be twice as high, the study finds.
The study, entitled Inflation Reduction Act: Impact on North America Metals and Minerals Market utilizes a detailed bottom-up, technology-by-technology approach to project demand for the four metals from major energy transition applications, including power generation, transmission and distribution and end-markets, such as electric vehicles. The study then compares project demand post-IRA to available supply, given IRA rules around sourcing in terms of country of origin for production and processing.
While post-IRA demand is expected to be materially higher, securing enough supply under the law's sourcing requirements faces considerable challenges, the study says. To qualify for IRA tax credits, processing and/or extraction of critical minerals used must be in
"This new comprehensive analysis shows that the Inflation Reduction Act is indeed transformative on the demand side," said Daniel Yergin, Vice Chairman, S&P Global. "However, challenges remain in securing supply of critical minerals needed to meet growing demand and achieve its goal of accelerating the energy transition."
Of the four materials analyzed in the study, only lithium is likely to be sufficiently supplied to
Cobalt and nickel are both unlikely to be sourced at levels high enough to meet demand.
While there is enough cobalt produced in FTA countries to meet the IRA domestic sourcing requirement,
Nickel is the most challenged in terms of supply, the study says. There does not appear to be enough nickel supply in FTA countries to meet demand under the IRA requirements—even if all primary nickel production in FTA countries was exported to
While copper is not subject to sourcing requirements under the IRA, ensuring access to enough supply to meet
For example,
The increasing reliance of
Copper represents a particular opportunity in
"Timely and transparent permitting is a fundamental operational challenge to supplying metals for the energy transition, particularly in developed markets such as
About the Study:
Inflation Reduction Act: Impact on North America Metals and Minerals Market is a S&P Global multi-client study that offers an independent and objective assessment of the Inflation Reduction Act on the North American metals and minerals markets. The analysis and metrics developed during the course of this research represent the independent analysis and views of S&P Global. Subscribers to the report include BHP Mineral Services Ltd.; Freeport McMoRan Inc.; Northern Dynasty Minerals Ltd.; Rio Tinto Corp.; Taseko Mines Ltd.; and Vale Canada Ltd. The analysis draws upon the combined expertise of S&P Global's Commodity Insights, Market Intelligence and Mobility divisions.
The study is available at https://cdn.ihsmarkit.com/www/prot/pdf/0823/Impact-IRA-Metals-Minerals-Report-FINAL-August2023.pdf
Media Contacts:
Jeff Marn +1-202-463-8213, Jeff.marn@spglobal.com
About S&P Global
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SOURCE S&P Global
FAQ
What is driving the demand for critical minerals and copper?
What is the projected increase in demand for lithium, cobalt, nickel, and copper by 2035?
How much higher will the total energy transition-related demand for lithium, nickel, and cobalt be in 2035 compared to 2021?
What is the role of copper in the energy transition?
What are the challenges in securing enough supply to meet the demand?
Which materials are likely to be sufficiently supplied to the United States?
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