Chinese Firms Doubled Their Investments In Critical Minerals: IEA Report

A latest report by the International Energy Agency (IEA) claimed that companies in China doubled their investments in critical minerals in 2022. The report, released today, talked about the global landscape of demand and supply of critical minerals like Lithium, Cobalt and Nickel, among others.

In its maiden report on the issue, titled “Critical Minerals Market Review 2023”, the global agency said that between 2017 to 2022, there had been a tremendous increase in demand for these critical minerals. It said that with the thrust from renewable energy and Electric Vehicles, the demand for critical minerals like Lithium, Cobalt and Nickel rose multiple times.

“From 2017 to 2022, demand from the energy sector was the main factor behind a tripling in overall demand for Lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel. In 2022, the share of clean energy applications in total demand reached 56% for Lithium, 40% for cobalt and 16% for nickel, up from 30% for Lithium, 17% for cobalt and 6% for nickel five years ago,” the report said. 

It said that global investments in critical minerals development recorded a growth of 30 percent in 2022, against a growth of 20 percent in 2021. It said that companies dealing with Lithium development recorded a 50 percent increase in spending. However, Chinese firms involved in the sector almost doubled their investments in 2022.

“Companies specialising in lithium development recorded a 50% increase in spending, followed by those focusing on copper and nickel. Companies based in the People’s Republic of China (hereafter, “China”) nearly doubled their investment spending in 2022,” the report said. 

The report said that China, the largest metal refining hub, heavily relies on imports of large volumes of raw materials. But, the report said that critical minerals supply is also a concern for China too. It said that China relies almost entirely on the Democratic Republic of the Congo for mined cobalt. So it seems the South Asian country China is therefore seeking ways to diversify its raw material supply portfolio.

“The country has been actively investing in mining assets in Africa and Latin America and started investing in overseas refining and downstream facilities, with an aim to secure strategic access to raw materials. Between 2018 and the first half of 2021, Chinese companies invested USD 4.3 billion to acquire lithium assets, twice the amount invested by companies from the United States, Australia and Canada combined during the same period,” the report said.

The report, however, also talked about several other issues. It said that some resource-rich countries like Indonesia, Namibia, and Zimbabwe had introduced some curbs on the export of unprocessed minerals too. “Globally, export restrictions on critical raw materials have seen a fivefold increase since 2009,” the report said. 

India and Critical minerals

The report also said that EVs which have led to good growth for critical minerals like Lithium are not growing uniformly across the world. “Electric car sales are generally low outside the three major markets, but there are promising signs in some emerging markets such as India and Indonesia,” the report said. 

These critical minerals are often used in production of batteries for Electric Vehicles and also in the production of different equipment used in solar and wind power production too. This is in addition to its usage in many other forms of power and other appliances globally. As far as India is concerned, it is heavily dependent on the imports of Lithium and Cobalt which are crucial elements for majority of the Lithium-ion batteries that Indian EVs use to play on its roads. Although India has found some reserves of Lithium in Rajasthan and Jammu & Kashmir in its explorations, its commercialization extraction is set to take several years after several feasibility studies, in case such studies indicate the feasibility of extraction Lithium. India recently also notified its list of critical minerals.

IEA report shows the rise of demand of critical minerals. Source: IEA