Great strides have been made in the past decades to clean up the action of the industry, but disasters continue to happen. Vale, the Brazilian mining giant, has presided over two tailings dam failures in the past six years, with another now imminent. Rio Tinto’s destruction of two ancient sacred rock shelters in Western Australia’s Pilbara region as part of an iron ore mine expansion was also breathtaking in its seemingly casual disregard for standards. modern corporate responsibility. Despite all efforts, this is not an industry that will ever achieve the holier status than you of Tesla or Ørsted, the world’s largest electric car and offshore wind companies, respectively.
But here’s the irony; We will need the FTSE Four from Glencore, BHP, Anglo American and Rio Tinto more than ever if the energy transition necessary to achieve the net zero goals is to be achieved. And so will Tesla, Ørsted and other supposedly clean energy companies. The activists who shout “do something” at every available opportunity seem utterly irreconcilable, if not oblivious, that the desired progress requires a massive increase in global production of key metals.
They may be outcasts, but the four FTSE miners are going to be at the heart of this increase in demand. If we think about the metals most needed to power the energy transition – copper, nickel, cobalt and lithium – then each of these companies is a top five producer in one or more of them. It’s not just these metals. Wind turbines use huge amounts of steel, which in turn requires iron ore and coking coal. Alternative green steel is still a long way off.
According to recent research by the International Monetary Fund, the total value of metal production will need to be more than quadrupled for the period 2021 to 2040, rivaling the total value of current crude oil production, in order to reach zero. net by Target 2050. This in turn will cause metal prices to soar to unprecedented levels.
If we look at the long-term history of commodity prices, we see a huge reduction in real terms even as global demand soared. This is both because of the discovery of abundant new sources of supply and because of dramatic improvements in mining and transportation technologies. But this long-term pattern is interrupted by so-called supercycles that coincide with extended periods of industrialization and infrastructure spending.
The most recent of these supercycles was sparked by unusually rapid Chinese development. But that may sound bland when compared to the energy revolution that is to come. It’s not so much a looming supercycle as it is a mega-cycle, the equivalent of all countries going through the industrial revolution at the same time.
IMF modeling suggests that a rapid energy transition would require a 40-fold increase in lithium consumption for electric cars and renewables, while consumption of graphite, cobalt and nickel for these purposes could increase by 40 times. about 20 to 25 times.
A typical electric vehicle battery, for example, requires around 8 kg (18 lbs) of lithium, 35 kg of nickel, 20 kg of manganese, and 14 kg of cobalt, while charging stations require substantial amounts of copper. For green energy, solar panels use large amounts of copper, silicon, silver and zinc, while wind turbines require iron ore, copper and aluminum.