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Analysis

More Mining Is Needed for a Decarbonized World

By Paloma Duran | Thu, 05/27/2021 - 10:23

As much as some people deride the mining industry as environmentally unfriendly, the reality is that the sector is playing an integral role in greening the world. It is a role that will only gain in prominence in the transition to a low-carbon environment given the demand for certain minerals in green technologies. The fact is, to go green, the world needs mining. “If the world is serious about reducing global warming, it is going to need a lot of minerals and metals. More than three billion tons will be required by 2050 to deploy sufficient wind, solar and geothermal power, as well as energy storage, to have a chance of limiting warming to 2°C by 2100,” reported Reuters.

Although clean technologies use a variety of different components, they all share a common characteristic: higher material intensity against fossil fuel-based electricity generation. This means that the use of renewable energy will drive the demand for minerals as they are better at producing and storing electricity. According to the World Bank, mineral demand for clean technologies is expected to continue rising until 2050. Wood Mackenzie says the mining industry must invest US$1.7 trillion over the next 15 years to be able to supply enough metals for this green shift.

Among the new uses for mined minerals are the production of EVs and structures or components used to generate electricity, such as photovoltaic cells, magnets or motors in wind turbines. For some minerals, especially those used for storage technologies like lithium, demand is expected to increase by 500 percent by 2050. Other minerals, such as copper, are not expected to see such a large increase but their demand will continue to increase over time. Other factors that are expected to bolster mineral demand are power generation and energy storage needs, particularly when political decisions come into play and innovation. Despite the many opportunities that will emerge for mining from this green shift, there are also some risks. First and foremost, environmental and social challenges need to be addressed to ensure that increased demand does not affect the responsible practices that have been implemented in the sector.

A report by Fitch Solutions forecasts that silver, copper, nickel, aluminum, lithium and cobalt will be among the commodities that will be boosted in the next 20 years due to their use for green and digital transitions. While some minerals like copper, nickel and aluminum have well-established industries, other segments like lithium and cobalt are expected to strengthen and mature as demand increases. A report by Fitch Solutions forecasts that the commodities that will be boosted in the next 20 years due to their use for green and digital transitions include silver, copper, nickel, aluminum, lithium and cobalt. Fitch Solutions explained that some minerals like copper, nickel and aluminum have well established industries, while lithium and cobalt industries are expected to strengthen and mature as demand increases.

 Silver

The key role silver plays in the green revolution is well-known. It is already making an important contribution to the development of sustainable technologies within the automotive and energy sectors and in 5G broadband networks. A Market Trend Report from the Silver Institute (SI) highlighted that silver has the highest electrical and thermal conductivity of all metals, making it an essential metal for the green revolution. The metal is widely used in photovoltaic (PV) cells. “Silver is truly a green metal and it is playing a vital role in the decarbonization of societies. Mexico is the largest silver producer and as a result, the country will play a fundamental role in the decarbonization of the industry and world, said Michael DiRienzo, Executive Director of SI.

Between 2021 and 2030, PV manufacturers are expected to consume 888Moz of silver, 51.5Moz more than the total production of the world's silver mines in 2019, according to Forbes. Other technologies like 5G will also drive demand for silver to produce semiconductor chips, cabling, microelectromechanical (MEMS) and Internet of Things systems, among others. According to data from the Precious Metals Commodity Management, in 2019, these goods used around 7.5Moz of silver. For 2025, this is expected to increase to 16Moz, probably reaching 23Moz by 2030.

Lithium

Lithium has become an alternative to how the world uses energy and a crucial resource for the transition to renewable energy. Its demand has been driven primarily by the automotive sector to produce EVs, as the cost of lithium-ion batteries is lower. In addition, lithium-ion batteries are being used to accumulate and restore energy from renewable plants, as they have better characteristics, including higher energy density and charge and discharge efficiency, allowing them to perform better.

A Nature article reported that “demand for automotive applications is estimated to grow by more than 30 percent per year until 2030. Major battery manufacturers are committed to invest more than US$50 billion over the next five years to increase lithium-ion battery production capacity, which is expected to exceed 1.2TWh by 2030,” the article notes. While analysts differ on how fast demand will grow, they all agree that it will increase on a year-on-year basis. There are competitors like nickel and zinc but it is almost a fact that lithium-ion batteries will dominate the market during the next decade.

Despite the critical role of lithium in achieving decarbonization goals, its sustainability has been questioned. If poorly managed, there could be negative environmental impacts, such as water pollution and scarcity. For this reason, many countries and companies have proposed frameworks for its responsible production and use.

 Cobalt

Cobalt has gained more attention due to its key role in developing low-carbon energies, such as solar, wind and biogas. For solar energy, cobalt is used in rechargeable batteries. Lithium-ion batteries are becoming the favorite resource for storage systems and cobalt plays an important role in the cathode of these batteries. In wind power, a magnetic field is needed to generate electricity. By using permanent magnets (made with cobalt) in the generator, turbines can run slower but still produce a good amount of power.

The metal also has an important role in renewable biogas technology. Biogas is an energy carrier and is used as a renewable replacement for natural gas. Adding small amounts of cobalt sulfate, chloride, carbonate or acetate can improve the production of biogas.

According to Benchmark Mineral Intelligence, the battery industry will demand more than 100,000 tons of cobalt by 2025. Furthermore, 57 percent of the world’s demand will come from this sector by the end of 2021, which is expected to increase to 72 percent in the next five years.

Copper

Copper is considered one of the best heat and electricity conductors and as a result, it is used to generate energy from solar, hydro, thermal and wind technologies. Copper can reduce CO2 emissions and improve the efficiency rate of generators. In addition, it is one of the best renewable resources as it is 100 percent recyclable, without affecting its performance.

For solar heating applications, copper’s characteristics of high heat conductivity, resistance to aqueous corrosion, strength and longevity offer many advantages. For wind energy, the metal is mainly used in the coil windings of the stator and rotor portions of the generator, in the high-voltage power cable conductors, transformer coils and earthing. Additionally, copper is used in PV solar cells in their wiring, grounding, inverter, transformers and cell tapes.

According to Goldman Sachs Commodities Strategist Nick Snowdown, copper is “the new oil.”

“Copper is now the strategically most important resource in the commodity complex. If we want to meet the Paris climate targets, we must do so by using more renewable energy. Copper will be the most important commodity because it is the most profitable conductive metal. It is used to capture, store and transport electricity,” Snowdown said in a podcast.  

Nickel

According to the Nickel Institute, the metal is helping to produce technologies that mitigate climate change and contribute to sustainable energy. Nickel-based alloys and nickel-containing stainless steel are playing a key role in solar thermal plants, which have improved heat transfer and thermal storage technology. Nickel also has a range of applications where it significantly reduces the generation of greenhouse gases. Examples include EVs, where the metal provides a better cathode material in lithium-ion batteries, and nickel-containing stainless steel that improves corrosion resistance and extends the product’s useful life.

A study from the University of Leiden predicted different technological scenarios to achieve the 80 percent greenhouse gas reduction target by 2050 and it concluded that nickel is vital for the shift to a low-carbon world.

Aluminum

As the world strives for a more sustainable and efficient future, aluminum is expected to play an important role as its lightweight, strong and recyclable characteristics can reduce costs and carbon emissions. Research indicates that solar panel efficiency can be improved by 22 percent by using embedded aluminum poles. Aluminum can reflect 95 percent of solar energy, reducing the cost of cooling buildings. In addition, aluminum-air batteries can power an electric vehicle for up to 1,000 miles consuming aluminum as fuel.

Aluminum can also be 100 percent recycled and 1 ton can save 9 tons of CO2 emissions. European Aluminum has forecast that total CO2 emissions from its production will decline by around 60-70 percent by 2050 compared to 2014 records. Global aluminum demand is expected to increase by 50 percent by 2050 due to its strategic applications in normal and green technologies.

Gold

The yellow metal is unique as it can be used for many purposes; it is a financial asset, luxury metal and an essential component for industrial and technological applications. Gold as an industrial metal plays an important role in green technologies. “While gold is not specifically classified as a 'climate smart' strategic mineral by the World Bank, and has not been identified as a critical raw material by major producers of green technologies, the range of scientific and technological applications suggests that it plays an important role in technological advances to mitigate climate change,” said Isabelle Ramdoo, Deputy Director of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development.

Gold is a transition metal because it has a unique characteristic capable of joining with other elements, increasing its capabilities. “Gold nanoparticles are important inputs to enhance hydrogen fuel cell performance and can be used to improve PV panels, hence creating more and cleaner energy sources,” said Ramdoo. 

The global economy is expected to enter a new commodity super-cycle as the green revolution strengthened during the COVID-19 pandemic. Green metals prices have recently hit record highs and are expected to continue to rise as green initiatives are further promoted. Mark Lewis, Chief Sustainability Strategist at BNP Paribas Asset Management, told The Guardian, that the next three decades will create a super-cycle in investments, especially in clean energy infrastructure, transportation, and “everything else that is required to make the green transition possible.”

What About Mexico?

Currently, Mexico ranks among the Top 10 countries in the production of 17 minerals. According to CAMIMEX, Mexico ranks first in silver production, eighth in copper and ninth in gold, which puts it in line to benefit from this green boom. Moreover, the country also has a major lithium project from Ganfeng Lithium and Bacanora Lithium that is expected to start operations in 2023.

Mexico not only has the important task of taking advantage of the large amounts of green metals that it has in its territory but also of ensuring that production remains responsible. Sergio Almazán Esqueda, President of the Association of Engineers, Metallurgists and Geologists of Mines of Mexico (AIMMG), says the industry has the resources and the capacity to become a global mining power and a leading example of responsible mining. “The world needs the help of the mining sector to achieve its sustainable goals. The sector has been promoting a structure more oriented to sustainable development, taking care of the environment and people,” said Almazán.

The data used in this article was sourced from:  
Reuters, Mining.com, World Bank, Deloitte, World Gold Council, Silver Institute, BBC, Nature, MBN, Copper Alliance, Nickel Institute, IFP, European A
Paloma Duran Paloma Duran Junior Journalist and Industry Analyst