Rethinking risks from critical minerals

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Senior Director and Principal Analyst

Norwegian phosphate rock was in the news last week, and it’s not because it’s all the rage with the kids: Norwegian junior mining company Norge Mining announced it had found a huge new deposit of phosphate rock. This is a big deal on some level (though the announcement is not greatly substantive) because there’s real concern that we’re running out of phosphorus. Phosphorous is a crucial fertilizer and more; the EU has had phosphate rock on its critical minerals list since 2014. Check out the incredible “peak phosphorus” Wikipedia page for more.

I don’t want to write off fears of a global phosphorus shortage just yet, but the recent announcement is part of a larger pattern in which predicted global crises around resource availability don’t come true. Peak oil is the most famous of these; it did not come true due to the fracking boom in the U.S. combined with the Global North’s flattening demand for oil. We’re now broadly in a supply glut rather than a supply shortage; oil demand is set to peak before availability. This has also played out with rare earths and precious metals: In the postfinancial crisis era, there was a huge concern about the skyrocketing prices for precious metals, particularly platinum, which is very important for automotive catalytic converters and chemical industry processes. There was a huge amount of innovation activity and R&D to develop nonprecious metal catalysts, but then prices normalized and most of the companies developing nonprecious metal catalysts went out of business. Rare earths were a similar story: Shortages largely didn’t come to pass because production grew dramatically (compare U.S. Geologic Survey 2000 and 2023 data) and because companies found ways to work around short-term shortages.

With this in mind, there’s good reason to be skeptical about current predictions of critical materials supply shortages; lithium and copper are commonly cited as potential future bottlenecks for the energy transition. There’s already a huge amount of innovation activity targeting the lithium extraction space (especially in direct lithium extraction and battery recycling). Copper is of course much more established, but getting copper mines built is a real challenge: No one wants a copper mine in their backyard, a fairly understandable position given how environmentally damaging such mines are. Still, there’s plenty of reasons to be optimistic — Chinese building and construction consumes a whopping 30% of copper demand compared to 4% today for cleantech. Although cleantech demand for copper is set to triple by some estimates, a structural change to the pace of construction in China could easily free up a significant amount of copper for the energy transition.

The takeaway here is not to drop everything and just not worry about it; much of the story of these resource shortages being averted is the story of innovation. There are clear opportunities for new technologies in metals separation and recycling (not just lithium), phosphate recovery, and more. We need a little bit more critical thinking about critical resources. Shortages are probably not a long-term risk; the history of rare earths shows that production increases (and production diversification) are possible. There are some medium- term risks: Price spikes in lithium and nickel were big stories in 2020–2021, for example. Geopolitics is also a near-term risk: The U.S. and China have been sparring, with China recently announcing curbs on gallium and germanium to counter U.S. chip restrictions. In this context, innovations that reduce the need for critical materials, better recycling and recovery, and approaches that reduce the impact of extraction can both hedge against near disruption and increase production overall; collectively, they should be the north star for innovation here.

As more countries pursue deep decarbonization strategies, hydrogen will play a critical role in their energy transition. Precious metals and minerals are deeply embedded in renewables and electrification technology, and the hydrogen economy is no different. Learn more about the roll-out of hydrogen production in our white paper, “Critical Minerals for the Hydrogen Economy.”

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