The world is witnessing a significant shift towards a carbon-neutral future, driving the need for clean energy and electric transportation. This transition is catapulting the global demand for essential raw materials to unprecedented levels. According to a study by Roland Berger, by 2040, the demand for lithium is projected to skyrocket by 15 times compared to 2020, with nickel following closely at 2.5 times higher demand. Copper, neodymium, and other minerals show a similar trend. However, meeting this escalating demand poses numerous challenges.
The Surge in Demand for Critical Raw Materials
The primary drivers for the exponential rise in demand are the increasing need for batteries in electric vehicles and energy storage systems. Wolfgang Bernhart, a Partner at Roland Berger, highlights that raw materials are not only crucial for batteries but also for solar energy, wind power generation, and expanding electricity networks.
As of 2020, approximately 265 gigawatt hours (GWh) of lithium-ion and sodium-ion battery capacity were required, a figure set to surge to nearly 5,000 GWh by 2030. China emerges as the largest market, with electric mobility commanding the highest demand.
According to the International Energy Agency, fast-growing sectors like solar energy, wind power, electricity networks, and electric mobility are forecasted to account for a significant portion of lithium, nickel, cobalt, copper, and rare earth elements demand by 2040.
Building Resilient Supply Chains
Despite the projected sufficiency of mined supplies of lithium, nickel, and cobalt until 2030 based on current capacity plans, uncertainties loom large. Disruptive technologies and geopolitical risks can alter market dynamics swiftly. The varying scenarios for electric vehicle sales volumes and future demand for battery raw materials highlight the need for resilience in supply chains.
Roland Berger experts advocate for a scenario-based approach to address uncertainties effectively. By creating scenarios based on potential market changes, technological advancements, and political trends, companies can make informed decisions regarding off-take agreements, financial hedging, and investments in technology initiatives. The key goal is to bolster supply chain resilience to navigate risks around critical raw material supplies effectively.
Conclusion
The transition towards clean energy and electric mobility is paving the way for a surge in demand for critical raw materials. To navigate the challenges posed by this escalating demand, companies must proactively enhance the resilience of their supply chains through scenario-based planning and strategic decision-making.
FAQs
1. Which sectors are driving the demand for critical raw materials?
Fast-growing sectors like solar energy, wind power, electricity networks, and electric mobility are forecasted to be the primary drivers of demand for critical raw materials by 2040.
2. How can companies mitigate risks associated with critical raw material supplies?
Companies can enhance supply chain resilience by adopting a scenario-based approach, making informed decisions on off-take agreements, financial hedging, and technology investments.
SOURCE: Roland Berger
