The development of several sustainable technologies, including electric vehicles, solar panels and wind turbines, is heavily dependent on supplies of relatively scarce minerals such as lithium, cobalt and the group of so-called rare-earth minerals. While the earth’s crust most probably holds sufficient quantities of these minerals, concerns over mining and processing capacity are growing and so is societal resistance against the societal and environmental impact of these processes. Moreover, given their (uneven) distribution across the globe, these minerals are of increasing strategic importance.
Every technology stack is ultimately dependent on the availability of natural resources to build its foundational material layer. This is true for the digital stack, which relies heavily on silicon, as well as for the energy and mobility stacks, which will come to rely more and more on lithium, cobalt and other, more “exotic”, materials. That is, the ongoing transition in these systems implies a radical rearrangement of the entire value chain and this very much includes the sourcing of raw material in particular; from fossil fuels to a wide range of relatively new and scarce minerals.
Meeting the material needs of these new stacks poses challenges in terms of sheer availability and volatile prices due to basic commodity cycle dynamics. Demand for these metals is obviously growing rapidly, while existing production capacity is not always adequate. This occasionally leads to soaring prices (e.g. in early 2018, cobalt was three times more expensive than today), but in the longer term, supply will match demand and prices need not go up. Even more so, as the Umicore example illustrates, even in times of great demand for cobalt, overproduction may occur as well. Nevertheless, battery (and car) manufacturers are scrambling to secure long–term supplies in order to produce sufficient EVs to meet the emissions standards governments have imposed on them.
Merely getting their hands on sufficient quantities of raw material is not the only concern for these companies. Societies today are more concerned about the impact of their production and consumption systems than ever before. This is especially true for technologies that are presented as sustainable alternatives to conventional technologies; their environmental and sustainable impact will be scrutinized heavily, if only by climate skeptics and others who seek to discredit these solutions in favor of our existing technology stacks. To make matters worse, few countries are willing to mine for these minerals because of the environmental harm done by the mining and refining process
(i.e. a ruined landscape and large quantities of chemical waste). As a result, much of mining takes place in countries where institutions are relatively weak and little to nothing is done to reduce environmental harm and improve labor conditions. In other words, the sought-after minerals may not be in short supply per se, the amount of socially acceptable minerals is likely to become all the more scarce.
Finally, there’s a clear geopolitical dimension to the quest for minerals for sustainable technologies. Geological formations that hold minable quantities and concentrations of these materials are limited to specific areas (often, but not exclusively, in the global south). This obviously renders these reserves into strategic assets and this is especially true for the lithium and cobalt. China has actively sought, and succeeded, to become a monopolist (Deng Xiaoping used to compare rare-earths to crude oil), by keeping prices low, and is now able to turn its rare-earths into a strategic asset (e.g. in its negotiations on tariffs with the U.S.). This will only work to some extent though, as other countries will take environmental damage for granted and start mining their own reserves. The greatest concern for bulk consumers, including the U.S., is to maintain steady prices. American investments in shale oil and gas have allowed them to play a major role in the global oil and gas trade and the U.S. is likely to try and do the same for the these “new” strategic resources. It could very well be that the invasion of, and longer-than-expected presence in, Afghanistan was and is also driven by the fact that Afghanistan holds an estimated 1-3 trillion USD in rare-earths, lithium and copper, over which the U.S. seeks to exert some level of control.
In sum, it seems unlikely that fundamental scarcity will put a brake on the production and adoption of renewable technologies, but it could very well play a role in determining which technologies, businesses and nations come out on top the global sustainability transition.