The US and EU are playing catch up with China in meeting demand for critical minerals such as lithium and cobalt, to reach net zero targets, GlobalData senior thematic analyst Isabel Al-Dhahir said in a podcast.
Al-Dhahir said that counties could struggle to meet targets to phase out motor cars due to an anticipated production shortfall, in a GlobalData webinar on 20th July, 2023 called ‘the importance of critical minerals in the energy transition technologies’.
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China has historically dominated the processing and refinement of critical minerals, with the country processing and refining 75% of cobalt and 60% of lithium, processes that are core parts of electric vehicle (EV) battery manufacturing, Al-Dhahir explained.
According to Washington-based thinktank The Brookings Institution, 78% of the world’s cell manufacturing capacity for EV batteries is held by China.
The consumption of critical materials is on the rise with demand expected to quadruple by 2040, in which global action would limit the global temperature rise to well below 2°C, according to The Brookings Institution.
The need to transition to low-carbon energy sources includes bans on the use of moto vehicles, which the EU has pledged it will phase out by 2025. The need to meet this target is set to cause a huge demand in EV sales.
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By GlobalDataAccording to GlobalData’s thematic research, EV production will increase significantly in the next couple of years. EVs are expected to account for more than 50% of light vehicle production by 2035, with an estimated yearly output topping 50 million EVs.
Dhahir mentions that the EU and the US are finally waking up to the anticipated production shortfall of raw minerals.
The EU has been partnering with the Democratic Republic of Congo, where it plans to acquire its battery mineral supply.
In March 2023, the EU Comission proposed the Critical Raw Materials Act that will seek to ensure secure access to a sustainable supply for critical materials.
The US 2022 Inflation Act, which aims to reduce carbon emissions by roughly 40% by 2030, could also help reduce mineral dependency on China.
