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The global shift to clean energy is going to drive an unprecedented boom for critical minerals, according to the International Energy Agency (IEA), raising questions of supply and the overall environmental cost

(AF) Until the mid-2010s, the energy sector represented a small part of total demand for most minerals, the IEA noted in a new report. However, as energy transitions gather pace, clean energy technologies are becoming the fastest-growing segment of demand. The rise of low-carbon power generation to meet climate goals would mean a tripling of mineral demand from this sector by 2040.

“The shift to a clean energy system is set to drive a huge increase in the requirements for these minerals, meaning that the energy sector is emerging as a major force in mineral markets,” the agency said in the report, “The Role of Critical Minerals in Clean Energy Transitions”.

In a scenario that meets the Paris Agreement goals, clean energy technologies’ share of total demand rises significantly over the next two decades to more than 40% for copper and rare earth elements, 60- 70% for nickel and cobalt, and almost 90% for lithium.

Electric vehicles (EVs) and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040.

In climate-driven scenarios, mineral demand for use in EVs and battery storage is a major force, growing at least 30 times to 2040. Lithium sees the fastest growth, with demand growing by over 40 times in the SDS by 2040, followed by graphite, cobalt and nickel (around 20-25 times).

The expansion of electricity networks means that copper demand for power lines more than doubles over the same period.

SIX KEY TAKEAWAYS

The IEA report makes six major recommendations:

• Ensure adequate investment in diversified sources
• Promote technology innovation at all points along the value chain
• Scale up recycling; Policies can play a pivotal role in preparing
• Enhance supply chain resilience and market transparency
• Mainstream higher environmental, social and governance
• Strengthen international collaboration between producers

The prospect of a rapid increase in demand for critical minerals – well above anything seen previously in most cases – raises huge questions about the availability and reliability of supply. In the past, strains on the supply-demand balance for different minerals have prompted additional investment and measures to moderate or substitute demand.

But these responses have come with time lags and have been accompanied by considerable price volatility. Similar episodes in the future could delay clean energy transitions and push up their cost. Given the urgency of reducing emissions, this is a possibility that the world can ill afford.

In addition, concerns about price volatility and security of supply do not disappear in an electrified, renewables-rich energy system, the agency said.

“Today’s international energy security mechanisms are designed to provide insurance against the risks of disruptions or price spikes in supplies of hydrocarbons, particularly oil.”

PACE OF TRANSITION

The IEA estimates that  the goals of the Paris Agreement (climate stabilisation at “well below 2°C global temperature rise”, as in the IEA Sustainable Development Scenario [SDS]) would mean a quadrupling of mineral requirements for clean energy technologies by 2040.

“An even faster transition, to hit net-zero globally by 2050, would require six times more mineral inputs in 2040 than today,” the IEA says.

While hydropower, biomass and nuclear make only minor contributions given their comparatively low mineral requirements, wind and solar require lots of inputs given their infrastructure-heavy design.  The rapid growth of hydrogen as an energy carrier underpins major growth in demand for nickel and zirconium for electrolysers, and for platinum-group metals for fuel cells.

Future technologies remain unknown. Cobalt demand could be anything from 6 to 30 times higher than today’s levels depending on assumptions about the evolution of battery chemistry and climate policies. Likewise rare earth elements may see three to seven times higher demand in 2040 than today.

The prospect of mineral-driven energy transformation has already excited investors. Australian minerals explorers have raised the most cash in nearly a decade as investors rush into gold as well as lithium and copper explorers expected to boom in the global energy transition.

ENTHUSIASTIC INVESTORS

A recent report by BDO, the accounting and consulting group, showed that Australian-listed explorers raised A$2.37 billion ($1.81 billion) in the March 2021 quarter, the most since 2013, and almost double the figure in March 2020.

“There’s no doubt about where the money’s going and why it’s going there,” Sherif Andrawes, BDO’s head of global natural resources, says, noting that the flood of funding towards battery minerals and clean energy companies is in line with growing environment social and governance (ESG) initiatives, including rising EV adoption and lower carbon emission targets.

Among companies that raised more than $10 million over the quarter were 10 gold companies, nine lithium companies, four uranium companies, four rare earth metals companies and four graphite companies. The remaining companies covered 14 different sectors, most notably copper-gold, copper and oil and gas, BDO said.

Fossil fuel companies have been forced to join the transition, with the IEA expecting them to increase climate-friendly investments to at least 4% of their capital spending in 2021, up from just 1% last year. The figure underscores both the rapid pace that investment is tilting toward low-carbon sources as well as the scale of the challenge.

The IEA said earlier this year that the world needs to stop development of new oil and gas fields as well as coal mines to limit global temperature increases.

ONE SIDE OF THE COIN

“Much greater resources have to be mobilised and directed to clean energy technologies to put the world on track to reach net-zero emissions by 2050,” said Fatih Birol, IEA’s executive director. “The rebound in energy investment is a welcome sign, and I’m encouraged to see more of it flowing toward renewables.”

Some critics say the IEA’s goals are laudable but that new investment is not the complete answer.

“Generating clean energy is only one side of the coin, we must also reduce the energy we waste and use what we produce more efficiently,” Jonathan Maxwell, CEO of Sustainable Development Capital, a private equity group, says. “After all, the cleanest energy is always the energy we don’t use.”

In addition, many minerals operations carry a high environmental cost. “Production and processing of mineral resources gives rise to a variety of environmental and social issues that, if poorly managed, can harm local communities and disrupt supply,” the IEA notes.

Consumers and investors are increasingly calling for companies to source minerals that are sustainably and responsibly produced.

“Without broad and sustained efforts to improve environmental and social performance, it may be challenging for consumers to exclude minerals produced with poor standards as higher-performing supply chains may not be sufficient to meet demand,” the report says.

CLIMATE RISKS

Mining assets are exposed to growing climate risks, the IEA acknowledges.

More than 50% of today’s lithium and copper production is concentrated in areas with high water stress levels, while several major production regions such as Australia, China, and Africa are also subject to extreme heat or flooding, which pose greater challenges in ensuring reliable and sustainable supplies.

Higher prices as a result of tight supply could have a major impact on the level of grid investment, the IEA says. “Our analysis of the near-term outlook for supply presents a mixed picture.”

Some minerals such as mined lithium and cobalt are expected to be in surplus in the near term, while lithium chemical products, battery-grade nickel and key rare earth elements such as neodymium and dysprosium might face tight supply in the years ahead.

“However, today’s supply and investment plans are geared to a world of more gradual, insufficient action on climate change,” the IEA says. “They are not ready to support accelerated energy transitions.”

Asian Financials 

Despite a sage in Covid-19 cases across the globe and the shutdown in major production centres, rough diamonds demand is continuing to grow, signalling a solid recovery for the industry a gemstones, diamonds and mineral trading company has said.

Anerudo Mapuranga

According to Naurish Diamonds and Gold, a company with more than 30 years of experience in gemstones, Diamonds and mineral trading the continual growth and demand of rough diamonds show that the best time to invest in the diamond sector is now.

“This seems like the best time to invest in diamonds.” the company said through its Twitter handle.

According to President Emmerson Dambudzo Mnangagwa’s vision for the mining industry to become a US$12 Billion sector by 2023, diamonds are expected to fetch US$1 Billion annually by 2023.

However, the country has only three operating diamond mining firms struggling to reach half a billion in revenue. One of the diamond operating mines Murowa diamonds reportedly running out of diamonds and depleting high-grade gems.

World largest diamond producer, Russia’s Alrosa is still carrying out exploration to find out the viability and richness of the diamond resource in the country.

The country should serious consider investing in the diamond industry if the US$12 billion mark is to be achieved by 2023.

The rewards of successful exploration and development can be large if a mineral deposit is discovered, evaluated, and developed into a mine. For a mining company, successful exploration and development lead to increased profits. this means the country needs to consider investing in exploration through issuing more EPOs if the country is to achieve the projected US$12 Billion mining sector and the US$1 Billion for diamonds.

The government has issued a six-month ultimatum to all granite mining companies to come up with a beneficiation plan or risk losing their trading licences.

There are several mining companies extracting granite in Mutoko district in Mashonaland East and Mt Darwin district in Mashonaland Central Province.

The mining companies, however, are exporting granite in its raw form.

Minerals Marketing Corporation of Zimbabwe (MMCZ) general manager, Tongai Muzenda told Business Times that granite miners were seized with the matter as they scramble to save their operations as the government is seriously considering banning exports of unbeneficiated granite.

It is understood that the Presidium has since instructed the Ministry of Industry and Commerce to work on regulations banning exports of unprocessed granite.

Muzenda said MMCZ was also exerting pressure on granite miners to beneficiate their product before exporting as the government’s minerals marketing arm targets maximum foreign currency earnings from granite sales.

“Each and every producer must come up with a beneficiation plan. Most of them have already provided plans. Some are still looking for funding while others have already secured the required funds to set up beneficiation facilities,” Muzenda said.

He added: “Some are complaining that they are failing to secure land to set up the facilities. Government has come in and informed us that they will stop issuing licences on raw export of granite. All of them were given a six months ultimatum to come up with a plan.”

Granite contributes about 1.6% of Zimbabwe’s total exports.

According to official data obtained from MMCZ, 98% of the mined granite is exported to Italy, South Africa, Germany, Spain, United Kingdom, China, Japan, Malaysia, Singapore, Argentina, the United States, and Canada

In general, a 1-square-meter (10.8-square-foot) slab of raw granite that is 8 millimetres thick (31 inches) sells for US$50 to US$60. It is usually more expensive to buy black granite that is processed and polished in Zimbabwe than to buy slabs that are processed and polished elsewhere because the equipment used elsewhere is more efficient, according to experts.

In 2018, Finance and Economic Development Minister Mthuli Ncube instituted a 5% tax on the sale of all raw granite, to encourage local beneficiation and value addition.

However, some buyers are said to be wary of black granite that comes in any form that is not raw as some sellers have a tendency of using artificial hardeners which leads to cracking of the stone over time.

According to the Global Press Journal, mostly Mutoko granite was used in the construction of the US$82m Royal Danish Library in Copenhagen, Denmark, which measures 21 500m2.

The stone was reportedly supplied by an Italian company at a cost of US$9.12m in 2009 but the local authority got less than US$45 000 in tax royalties.

Business Times

The Government is crafting a strategy to improve gemstones production in the country as Zimbabwe seeks to benefit more from its mineral resources, a Cabinet minister has said.

“In July, we will be laying out a gemstones development plan expected to improve gemstones production in Zimbabwe,” Mines and Mining Development Minister, Winston Chitando.

Sandawana Mine in Mberengwa District, Midlands Province, used to be a big producer of gemstones such as emeralds in Zimbabwe but ceased operations in 2012.

It is estimated that there are also about 36 semi-precious minerals that include goshenite, alexandrite, chrysoberyl, iolite, emeralds and tourmaline, which are largely found in Karoi, Hurungwe, Mutoko, Mt Darwin, Zvishavane, Mutare, Rusape, and Odzi.

Analysts say the minerals could significantly help heal the frail economy, if harnessed productively.

The Government through the Minerals Marketing Corporation (MMCZ) has since liberalised gemstones trading by allowing individuals and corporates to participate in the buying and selling of the semi-precious stones as agents of the MMCZ.

A legal framework to empower small-scale miners to extract and trade in semi-precious gemstones was put in place in 2019, a move meant to boost the gemstones output.

However,  MMCZ  general manager, Tongai Muzenda, in December last year, expressed disquiet following revelations that  international buyers and local players  established a cartel which was conniving to bleed the government of millions of dollars.

Muzenda said there was rampant theft and illegal export of the country’s gemstones.

Consequently, the smuggling has jolted the government into action.

There are now plans to regulate the sector by issuing licenses to firms and small-scale buyers for purchasing gemstones.

Muzenda said the value of the country’s gemstone resources is estimated to be valued at US$20bn and the gemstones have the capability to overtake diamonds in revenue generation, if proper management was put in place.

MMCZ noted that some firms and individuals were mining and trading the gemstones without going through the normal processes that will ensure the country benefits.

MMCZ has now invited individuals and corporates to be considered as MMCZ sub-agents.

“Interested Zimbabwean citizens (individuals and corporates) are invited to submit expression of interest to be considered and licenced as MMCZ sub-agents to purchase coloured gemstones around the country and selling same through the corporation as per MMCZ Act, Chapter 21:04,” MMCZ said in a notice this week.

Business Times

POLICE in Chinhoyi have arrested two men for allegedly beating to death, a suspected gold panner early Tuesday morning.

Mashonaland West police spokesperson, Inspector Margaret Chitove confirmed  the death of John Fundo (25) of 2011 Destiny suburb, Chinhoyi.

Said Chitove; “On 15 June at around 0630 hours, residents of Ruvimbo Phase 2 discovered a man who was having difficulty in breathing in an unfinished house at Stand Number 9378 Ruvimbo Phase 2.

“An informant contacted Chemagamba police and together with CID (Criminal Investigations Department) officers attended the scene and found the man already dead.”

The now deceased had three deep wounds on the head and bruises all over his body.

Police then carried out preliminary investigations in the area, which established that at around 3 am the same morning, four men, including the arrested pair of Mashove and Matoro, who all reside at 8526 Ruvimbo Phase 1, were seen bashing the now deceased.

The motive of the murder remains unclear with some sources claiming Fundo was killed by his colleagues in a row over proceeds from illegal gold mining activities.

A manhunt has since been launched to account for the other two murder suspects whose identities were not released.

Police appealed to the public to observe the sanctity of life and desist from meting out instant justice on suspected criminals, but to hand them over to law enforcement agents for the law to take its course.

“We continue to urge members of the public to value human life and not to take the law into their own hands as they will end up committing crimes themselves,” said Chitove.

NewZimbabwe