On Tuesday, S&P Global stated in a report that mining companies face "considerable challenges" to meet the unexpectedly high demand for copper, nickel, and other electric vehicle metals as mandated by U.S. legislation.
The landmark Inflation Reduction Act, which provides tax breaks for electric vehicles, solar panels, and other renewable energy products made from metals mined in the U.S. or countries with free trade agreements with the U.S., has led to a 12% to 15% increase in demand forecasts for various electric vehicle metals since President Joe Biden signed the IRA in August last year, the report said.
The act stipulates that by 2025, metal imports from "countries of concern" such as Russia, North Korea, and Iran will be banned, causing commodity manufacturers and energy traders to scramble to secure supplies.
Dan Yergin, Vice Chairman of S&P Global and co-author of the report, said in an interview that the global energy transition has intensified the pressure on mineral supplies, with the IRA exacerbating this pressure.
The study found that by 2035, metals widely used in electric vehicles and other electronic products will face supply pressure, with demand for lithium, nickel, and cobalt expected to be 23 times higher than in 2021, and copper demand to double during the same period.
S&P's report shows that due to the IRA and other related incentive measures, mining companies have already launched new projects worth at least $400 billion, driving billions of dollars in new mineral demand. Energy historian and CERAWeek annual energy conference host Yergin said the IRA is acting like a magnet for investment, fulfilling its intended purpose.
However, issues related to mining permits have become the biggest obstacle to achieving the IRA's goals. While supplies from Australia and Chile are increasing, nickel and cobalt supplies are unlikely to meet demand.
Last year, S&P warned that the goal of achieving carbon neutrality by 2050 might not be possible due to the inability to meet copper demand, a core goal of the Paris Climate Accord, often referred to as "net zero."
S&P stated in the report that although the recycling rate of metals has continued to increase over the past decade, recycling is unlikely to provide enough raw material to meet the rapidly expanding metal demand and the world's growing needs over the next 10 years.
