The current “supercycle” for metals, a key component of the global energy transition, could stall due to the bleak global macroeconomic environment, geopolitical conditions, and lack of investment in new plants.
The Wood Mackenzie study stated that $200 billion worth of new mining projects are needed by 2030, as well as more efficient and innovative ways to recycle existing scrap metals.
Nick Pickens, global research director for mining at Wood Mackenzie, said: “The 7-10 year lead time for new mining projects makes meeting supply and demand requirements difficult.
“In addition to the medium-term uncertainty over demand and metal prices, the situation is creating some serious headwinds for a metals supercycle.”
Pickens added that copper markets will remain volatile as end-users demand the metal to support increased electricity.
“Products such as copper wire rods and electrical foil are widely used in the manufacture of electric vehicles and renewable energy equipment,” Pickens said.
“This means that investment in supporting infrastructure to support end-use copper demand is essential going forward.”
Pickens added that new projects will be needed to meet long-term demand, but scrap copper will also play a pivotal role in the long-term solution because it provides a lower carbon intensity than new copper.
Sue Shao, head of energy transition and battery raw materials at Wood Mackenzie, said the growing demand for battery raw materials has led to increasingly volatile markets.
“Battery raw material prices will remain volatile, but future cycles are becoming more sustainable as markets show signs of maturing,” Xu said.
“The pressure to deliver is enormous even with recycling.”
Weak wholesale commodity prices will contribute to lower profits for mining companies in 2024, according to Wood Mackenzie forecasts.
