As the world powers ahead toward net-zero goals, the demand for clean energy technologies—like electric vehicles (EVs), wind turbines, and solar panels—is surging. But while we’re cutting our dependence on fossil fuels, we’re rapidly becoming reliant on something else: critical minerals.
This new dependency raises a question with profound geopolitical and economic consequences:
Are critical minerals the new oil?
According to a comprehensive April 2024 white paper from the World Economic Forum, the answer is: not quite—but close enough to warrant urgent attention.
🔋 What Are “Critical Minerals” and Why Do They Matter?
Critical minerals are raw materials essential to the manufacture of clean energy technologies. Six are particularly crucial:
- Copper
- Lithium
- Graphite
- Nickel
- Cobalt
- Rare Earths (like neodymium)
These materials power everything from battery anodes (graphite) to wind turbine magnets (rare earths) and wiring for power grids (copper).
📈 Demand is skyrocketing. For example:
- Lithium demand is projected to rise 10x by 2030 or beyond.
- The cobalt market doubled in size from 2016 to 2022.
- The global mining industry is worth around $2 trillion, but the entire lithium market in 2023 was just $5.7 billion, showing how early this transition still is.
🛢️ Oil vs. Minerals: Same Game, New Rules?
There are parallels—but also major differences between oil and critical minerals:
| Feature | Oil | Critical Minerals |
| Usage | Burned; single-use | Reusable; recyclable |
| Demand profile | Constant; inelastic | Tied to new infrastructure; more elastic |
| Market concentration | ~40% of supply from OPEC | Top 3 producers control 50–90% of many minerals |
| Geopolitical leverage | High | Emerging, but less stable |
🔍 For instance, in 2022:
- The top 3 countries accounted for:
- 90% of rare earth mining
- 70% of cobalt mining
- 80–90% of lithium and graphite processing
- China dominates in processing—especially of rare earths and graphite.
⚠️ Geopolitical Risks: Is China the New OPEC?
China’s grip on mineral processing has already been used strategically:
- In 2010, it restricted rare earth exports to Japan over a maritime dispute.
- In 2023, it strengthened export controls over gallium, germanium, and graphite—materials critical to semiconductors and batteries.
But unlike oil:
- Mineral demand is flexible (think efficiency and substitution).
- Recycling and innovation offer alternative paths.
- Excessive manipulation may backfire by encouraging global diversification.
For example:
- In 2022, global lithium supply grew 20%—mostly from non-Chinese producers.
- New rare earth projects in the U.S. and cobalt mines in Australia are already expanding.
💡 Demand Response: The Untapped Safety Net
When oil prices rise, people have few short-term alternatives. But with minerals:
- Battery designs can shift.
- Recycling can kick in.
- Alternative materials can replace scarce ones.
Examples:
- Switching to lithium iron phosphate (LFP) batteries has reduced demand for cobalt and nickel in EVs.
- Sodium-ion batteries could cut lithium demand by 40% by 2050.
- The Energy Transitions Commission estimates 30% less copper could be used with smarter design and infrastructure planning.
However, recycling isn’t a silver bullet:
- Only ~50% of lithium batteries are recycled globally.
- Even with strong recycling, only ~10% of lithium demand in 2030 could be met this way.
🧠 What Should Governments and Markets Do?
The WEF report calls for “no regrets policies”—actions that are smart under any scenario. These include:
1. Let Markets Work Better
- Establish forward markets (like futures for oil), which don’t exist for many minerals today.
- Improve data transparency (e.g. prices, inventories) through systems like the oil-focused Joint Oil Data Initiative (JODI).
- Account for externalities (e.g. pollution, water use, child labor).
2. Invest in Innovation
- Support R&D in:
- Direct lithium extraction (DLE)
- Battery recycling
- Substitution materials
- Coordinate efforts globally—since innovations are public goods that benefit everyone.
3. Encourage Diversification, Not Isolation
- Avoid full onshoring (too expensive and brittle).
- Instead, promote friendshoring and global supplier diversification (e.g. expanding mining in Africa, Australia, Canada).
- Build coalitions (e.g. U.S.-EU-Japan) to reduce exposure to chokepoints.
🤯 The Big Unknowns
Despite all this planning, some things remain unknowable:
- Will governments go too far in industrial policy?
- Will market signals be clear enough to spur investment?
- Will conflicts over minerals become a new front in global tensions?
The report urges policymakers to focus on resilience over prediction, and adaptability over perfection.
✅ Final Thought: A Clean Energy Future Is Still Possible
The bottom line? Yes, we will depend more on critical minerals.
No, that doesn’t have to be a geopolitical disaster.
With the right combination of:
- Smarter markets,
- Proactive policy,
- And global cooperation,
we can avoid repeating the mistakes of the oil age.
As the authors put it:
“Just as the oil age is not ending for lack of oil, the clean energy era need not falter for lack of lithium or nickel.”
📚 References
- World Economic Forum. (2024). Energy Transition and Geopolitics: Are Critical Minerals the New Oil?
https://www.weforum.org - International Energy Agency (IEA), Critical Minerals Market Review, 2023 – as cited in the WEF report for global mining and processing share data.
- IEA, World Energy Outlook, 2022 – referenced for lithium demand projections (13x to 26x increase by 2050).
- ETC (Energy Transitions Commission), Material and Resource Requirements for the Energy Transition, 2023 – for estimates on copper savings and lithium substitution potential.
- S&P Global, The Future of Copper, 2022 – for challenges around copper supply scalability.
- Nasdaq, Lithium Market 2023 Year-End Review, 2024 – cited for lithium market valuation ($5.7 billion in 2023).
- The Business Research Company, Mining Global Market Report, 2024 – cited for global mining market size (~$2 trillion).
- Gaines, L., et al. Tracking Flows of End-of-Life Battery Materials, Batteries, Vol. 9, No. 7:360, 2023 – for lithium battery recycling rates (~50%) and limits of recycling as a supply solution.
- Terazawa, T. (2023). How Japan Solved Its Rare Earth Dependency, World Economic Forum Agenda Blog – cited for the 2010 China-Japan rare earth dispute.
- Ministry of Commerce of the People’s Republic of China (MOFCOM), Press Release, July 6, 2023 – for 2023 export controls on gallium, germanium, and graphite.
- Barich, A., & Silva, E., Direct Lithium Extraction M&A Surge, S&P Global, January 2024 – on innovation in lithium mining technology.
- IEA, Electric Vehicles, 2022 – for oil displacement estimates (EVs displaced ~0.7 million barrels/day of oil).
- Sabel, C., & Victor, D. (2022). Fixing the Climate – cited for the need for policy experimentation and adaptive governance.
- JODI (Joint Oil Data Initiative), https://www.jodidata.org – referenced as a model for mineral market transparency.
