BoA article - P.13 Jun 2022 09:16
Shortages of key metals will prevent countries from meeting net-zero emissions goals by 2050 as not enough focus is being paid to the current financing in the resource sector, according to Bank of America.
The net-zero emissions goals set to be achieved by no later than 2050 are in jeopardy because of the dearth of key 'metals important for future technologies' (MIFTs). And it all comes down to financing the mining projects for the energy transition.
"The world is only slowly waking up to this threat. And China being the biggest producer of many critical resources exacerbates supply risk for the Western world. The market focus often is mainstream copper and nickel, but we identify 27 MIFTs used in electric vehicles (EVs), renewables and energy storage," said Bank of America commodity strategists Michael Widmer and Francisco Blanch.
The 27 MIFTs identified by the BofA included lithium, cobalt, nickel, manganese, aluminum, iridium, molybdenum, copper, and more. Use cases listed were everything from powering electric vehicles, wind applications, and energy storage.
One solution to this is more investment. And that means at least doubling mining's capital expenditures.
"Based on the current resource endowment and market balances, we don't expect the 1.5°C global warming target to be achieved by 2050: 1.7-1.8°C looks likely. One solution to resolving shortages and constraints, as ever, lies in investment," Widmer and Blanch said. "To prevent metal shortages and achieve Net Zero, mining CAPEX needs to nearly double."
The mining industry needs to spend $81 billion annually to 2030, and that is just to avoid shortages to achieve net zero. "It is worth noting that this CAPEX requirement does not even include any demand growth from traditional consumers," the report said. "Operators are underspending massively, suggesting that CAPEX may need to almost double to $160 billion pa for the world to hit Net Zero by 2050."
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