Miners face 'considerable challenges' meeting demand from US climate law -study

Northern Dynasty Minerals

15/08/2023 05:01

By Ernest Scheyder
       Aug 15 (Reuters) - The mining industry faces
"considerable challenges" meeting larger-than-expected demand
for copper, nickel and other electric vehicle metals fueled by a
U.S. climate law, S&P Global said in a report on Tuesday, ahead
of the legislation's one-year anniversary.
    The landmark U.S. Inflation Reduction Act offers tax breaks
for EVs, solar panels and other renewable energy products made
from metals extracted in the United States or countries with
U.S. free trade deals. Metals from "foreign entities of concern"
including China, Russia, North Korea and Iran will be banned in
2025. That has sparked a race among manufacturers to lock down
supply.
    Demand forecasts for various EV metals have increased 12% to
15% since U.S. President Joe Biden signed the IRA last August,
the report said.
    "The energy transition is really heating up the pressures on
mineral supplies, and the IRA is adding a lot to those
challenges," Dan Yergin, S&P Global's vice chairman and a
co-author of the report, said in an interview.
    By 2035, demand for lithium, nickel and cobalt is expected
to be 23 times higher than in 2021, with copper demand doubling
over the same period, the study found. All of the metals are
widely used in EVs and other electronics.
    The report found that companies have launched at least $400
billion worth of new projects because of IRA-linked incentives,
fueling billions of dollars of new minerals demand.
    "The IRA is working as intended, as a magnet for
investment," said Yergin, the energy historian and host of the
annual CERAWeek energy conference.
    However, mine permitting issues are hampering the IRA's
aims, the report found. Only lithium is expected to be available
to U.S. industries in significant quantities due to rising
Australian and Chilean supplies, it noted.
    Nickel and cobalt supplies are unlikely to satisfy demand,
the report found.
    "Expediting reform, while making sure the environmental and
community aspects remain an important part of the topic, has to
be considered," said S&P Global's Mohsen Bonakdarpour, who
co-wrote the report.
    Recycling, the report found, is unlikely to provide enough
raw metals over the next 10 years to match the expected growth
in global demand.
    S&P warned last year that efforts to reach carbon neutrality
by 2050 - the central aim of the Paris Climate Accords often
described as "net zero" - are likely to fall short as copper
supply fails to match demand.
    Washington is likely to expand minerals partnerships as it
relies more on imports, the report found. One such deal was
signed with Japan in March.
    "The global trade in minerals will increasingly reflect the
competition between the U.S. and China, as well as Europe, for
those supplies," Yergin said. "Mineral supply is going to be
increasingly entangled with geopolitics."

 (Reporting by Ernest Scheyder; Editing by Richard Chang)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))