Main Materials: Steel, coal, gold, copper, and aluminum dominate the global metals and mining industry.
Energy Transition Impact:
Accelerates demand for materials integral to low-carbon technologies.
Shifts demand profile towards energy transition materials.
Reduces reliance on thermal coal.
Economic Impacts
Revenue Growth: The materials industry has grown by 6% per annum since 2000.
Recent Trends:
Revenue increased by $2.4 trillion (2020-2023).
Metals and mining grew by $1.7 trillion.
Healthy balance sheets, with net debt over EBITDA ratios of 1.3.
2024 Outlook: Challenges expected due to slow economic growth and transition towards low-carbon technologies.
Key Materials and Supply Dynamics
Primary Materials: Steel, thermal coal, copper, gold, and aluminum account for 80% of industry revenues.
Supply Trends:
Faster-than-expected ramp-up in lithium and nickel supply.
Copper supply lags due to project delays.
Technological and Demand Shifts
OEM Shifts: Moving away from NMC to LFP battery technologies.
Demand Projections: Strong demand growth expected for lithium and copper.
Supply-Demand Balance: Shortages anticipated for REEs, lithium, sulfur, uranium, iridium, and copper.
Capital and Infrastructure Needs
Investments Required:
$5.4 trillion capex needed by 2035.
270 gigawatts of power required to meet demand.
Labor: 340,000 new jobs needed; 1.25 million coal jobs at risk.
Pricing and Market Trends
Price Adjustments:
Copper prices need a 20% increase to incentivize supply.
Lithium and nickel prices have seen significant drops.
Barriers like permitting delays impact project execution.
Environmental Impact and Consumer Trends
Emissions: Estimated to decrease by 15% by 2035, driven by:
Grid decarbonization.
Improved material circularity.
Efficiency improvements.
Consumer Willingness to Pay: Less than 15% willing to pay a 10% premium for low-carbon materials.
Regulatory Influence: EU ETS and CBAM could push for greener material sourcing and innovation in emissions reduction.
Conclusion
The industry faces both challenges and opportunities in adapting to the energy transition, with significant potential for innovation and new business models.