Minerals – critical elements for energy transition and digitalization

Minerals – critical elements for energy transition and digitalization

23 January 2023Reading time: 2 minutes

Copper, silver and lithium – these and other raw materials will be needed more and more in future because they are a central building block in the technologies of tomorrow. As a result, demand for minerals and metals is set to increase significantly. Companies which extract and process these raw materials could benefit from this trend.

The world is changing. There are more and more electric vehicles on our roads, digitalization is progressing apace and demand for renewable energies is on the rise. But, what do all these themes have in common? Whether it be our mobile phones or our computers, solar panels or electric vehicles – there is a whole range of minerals or metals in all of them – without which they could not function. Demand for all these products is set to rise considerably in future on the back of technological progress, growing global population and wider distribution of electronic equipment. In addition, the increasing urgency for the decarbonization of our world is another important driver.

Renewable energies

To achieve the goals of the Paris climate agreement, the transition to renenwable energies is unavoidable because that is one of the most effective ways to decarbonize the world. This will require significant investment in the infrastructure surrounding, for example, wind or solar energy production. For that reason, energy transition and the related energy technologies are likely quickly to make the minerals and rare metals sector into one of the fastest growing segments.

Prognosis Renewable Energies - Demand of Minerals and Metals

Use of rare minerals and metals has been on the rise over the last few years. The International Energy Agency (IEA) estimates that the energy technologies’ share in the overall demand for copper and rare earths will grow to over 40 percent in the next two years. In the case of nickel, they expect it to be 60-70 percent and for lithium almost 90 percent.

Electric vehicles

E-vehicles currently only account for a relatively small share of the global passenger vehicle market. However, according to the IEA, electric vehicles and battery storage also require the most lithium – and by 2040, are expected to become the largest consumers of nickel.

Over the next few years, around 135 million electric vehicles are expected to come online – and will sustainably decarbonize the transport sector. The demand for batteries and, as a consequence, for minerals and metals is likely to increase considerably as a result.

Electric Vehicles - Demand of Raw Materials

Digitalization

A further driver of demand for rare earths and metals is the significant progress in digitalization. Over the last few years, we have experienced accelerating development which speeded up even further through the recent pandemic.

This trend is likely to continue in future on the back of, not only technological progress, but also the growing global population and the wider distribution of electronic equipment.

These two factors are likely to lead to rising demand for minerals, which represent the basis for the hardware that is the foundation for growing digitalization.

Decarbonization and digitalization go hand-in-hand with enormous requirements for raw materials

A low-carbon future will be very mineral-intensive because clean energy technologies and electric vehicles need more minerals that their fossil-fueled counterparts. Investing in selected companies that are likely to profit from the projected increase in demand for key metals and rare earths could provide investors with attractive opportunities.

Solactive Future Minerals and Mining Index

The Solactive Future Minerals and Mining Index has been designed to offer exactly those opportunities. It comprises companies which operate in the field of mining and/or production of key minerals and metals for energy transition or digitalization.

Future Minerals Index concept

 

02/02/2023 08:11:05

 

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