Randgold Resources
4 September 2017

Copper, aluminium, lithium to benefit from transition to low carbon economy

The metals and mining industry will play a key role in the transition to a lower carbon future, as low carbon systems have a more metal intensive composition.

Copper, aluminium, lithium and cobalt demand will be supported by the transition, while policymakers and the mining industry will face the new challenge of balancing the shift to a low carbon future with sustainable metal extraction over the coming years.

This is the view of BMI Research - a unit of the Fitch Group.

The metals and mining industry will play a key role in the global transition to a significantly lower carbon future, based on low carbon electricity generation and energy-efficient technologies as per the 2015 Paris climate target of not exceeding 2 degrees Celsius (2°C) of global warming over this century.

In fact, mineral resourcing and climate change are inextricably linked, not only because mining requires a large amount of energy, but also because climate change can only be tackled with an adequate supply of raw materials to manufacture clean technologies.

The technologies required in the clean energy shift (renewable electricity systems and electric vehicles) are significantly more metal intensive in their composition than that of current traditional fossil fuel-based and high carbon systems .

As such, BMI Research expects minerals and metals like copper, aluminium, lithium and cobalt to see demand supported over the coming years due to their role in low carbon systems.

Electric vehicles and renewable energy systems to buoy copper demand

Copper demand will remain steady over the next decade at least due to the rise of the electric vehicle market and gaining popularity of renewables.

Mitigating transport emissions is a crucial aspect of addressing climate change, and electric vehicles attempt to do just that.

The conventional internal combustion engine used in motor vehicles typically contains about 20 kg of copper compared to 80 kg s used in an electric vehicle.

Additionally, both wind and solar power generation use greater copper per unit of electricity produced than non-renewable energy sources.

For example, coal-fired power stations contain about 2 kg / kW of copper, whereas solar utilises about 5 kg / kW.

Given that wind and solar generation are the two renewable technologies whose use will grow most in the coming decades to meet a low carbon future, we believe copper will be a significant beneficiary.

Aluminium to benefit from lightweight auto trend

To help meet stricter greenhouse gases emission standards, the automotive sector will continue to support aluminium demand with innovations that allow the industry to cut vehicle weight.

Lighter vehicles are more fuel efficient. In that respect, high-end luxury car manufacturers will remain the main users of lighter aluminium in place of steel in the automotive industry, as expensive vehicle pricing covers the higher material cost.

Steel is approximately one-third the price of aluminium per ton despite weighing three times as much.

According to the Aluminium Association, aluminium body structures reduce automotive weight by up to 50% compared to steel body structures, absorb double the amount of crash-induced energy, require less fuel and can achieve up to a 17% reduction in CO2 emissions.

Tata's Range Rover has an all-aluminium body, and Volkswagen's Audi R8 body consists of aluminium and carbon fibre.

Ford reportedly spent US$1.5 billion redesigning two US plants to produce the aluminium F-150 pickup trucks, highlighting the increased cost per vehicle of switching to aluminium.

However, US electric car company Tesla will reportedly not use the all-aluminium construction of previous, high-end models for the new Model 3, opting for cheaper materials to maintain the new car's affordability.

Battery revolution to boost lithium and cobalt demand

The battery revolution will support lithium and cobalt demand in the coming decades. The transition to a low carbon economy creates the demand for high-capacity, reliable battery storage devices.

A lithium-ion battery can charge and discharge power over long and short time-frames, has relatively high energy density and boasts good cycle-efficiency.

The production of lithium-ion batteries will continue to surge, underpinned by demand from various segments including portable electronics, residential and utility-scale electricity storage, and electric and hybrid vehicles.

Subsequently, BMI Research anticipate solid global lithium demand growth over the coming years , driven by the g rowing role of lithium-ion batteries in key markets such as the US, EU and China.

Cobalt is also required in the production of lithium-ion batteries and produced predominantly as a by-product of copper mines in the Democratic Republic of the Congo.

Cobalt prices have increased by over 300% in the last 18 months due to supply fears.

Challenge of balancing a low carbon future with sustainable metal usage to persist

BMI Research believes that supplying clean technologies required for a carbon-cons trained future will create challenges for governments, world organisations and mining companies with regards to simultaneously carrying out the sustainable development of minerals and resources.

Simply put, a green technology future is materially intensive and, if not properly managed, threatens to counteract the efforts and policies of supplying countries to meet climate objectives and related sustainable development goals.

It also carries potentially significant impacts for local ecosystems, water systems, and communities.

Building low carbon energy systems that require vast amounts of metals and other raw materials, which cannot immediately be recycled, ultimately call for a shift to renewable energy to replace one non-renewable resource (fossil fuel) with another (metals and minerals).

Additionally, easily mined ore deposits are quickly declining and although new resources will be found in the deep subsurface or in remote locations, mining these depos its will also consume large amounts of energy.

As such, miners that are pursuing greener corporate strategies will benefit from long -term cos t saving s as global policy trends toward tighter emissions regulations.

Feature image credit: Audi

Share This Article