In its latest World Economic Outlook, the International Monetary Fund (IMF) noted a select few countries, including Australia, stand to benefit from a six-fold increase in the demand for metals, key to fuelling the energy transition over the next decade.
The metals deemed essential for the transition to net zero include copper, nickel, lithium and cobalt, with industries such as low-greenhouse-gas technologies – including renewable energy and electric vehicles – said to require more metals than their fossil-fuel-based counterparts.
“If metal demand ramps up and supply is slow to react, a multi-year price rally may follow – possibly derailing or delaying the energy transition,” the IMF said.
“Results show that prices would reach historical peaks for an unprecedented, sustained period under the Net Zero by 2050 emissions scenario. The prices of cobalt, lithium, and nickel would rise several hundred per cent from 2020 levels,” it continued.
In fact, in the Net Zero by 2050 emissions scenario, the demand boom is predicted to lead to a six-fold increase in the value of metal production – totalling $12.9 trillion over the next two decades for the four energy transition metals alone.
“This would rival the potential value of global oil production in that scenario,” the IMF said.
But the IMF does see potential hurdles, noting that the International Energy Agency’s assessed the current gradual approach to net zero as “insufficient”.
A major part of the concern are policy decisions, which, it believes, could increase the chances that high metal prices would derail or delay the energy transition.
“A credible, globally coordinated climate policy; high environmental, social, labour, and governance standards; and reduced trade barriers and export restrictions would allow markets to operate efficiently, directing investment to sufficiently expand metal supply – thus avoiding unnecessarily increasing the cost of low-carbon technologies and supporting the clean energy transition,” the IMF said.
It recommended the creation of a new international institution focused on metals, that would play a pivotal role in data dissemination and analysis, industry standards, and international cooperation.
