Digging for cobalt [image credit: mining.com]
When was that, you may ask. Anyway, whoever thinks there was such a time is about to find out it’s becoming a memory only, according to this article. For one thing, the required mining has been exposed as lacking investor appeal due to its environmental footprint, so to speak. Also, demand is likely to accelerate and the mining industry could well struggle to keep pace.
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Supply chain disruptions, rising raw materials costs, and geopolitical tensions have jolted the price of solar panels, wind turbines, and EV batteries, and some analysts now think that the era of cheap renewable energy is over, says OilPrice.com.
The continual decline in production cost for wind, solar, and EV batteries was touted as the driver of their growing adoption and ultimate takeover of the global grid.
Up until two years ago, there was no other scenario on the table—even though inflation was as much a reality then as it is now.
Only now, it has become a lot more pronounced.
At a recent metals and mining conference in Riyadh, several attendees noted that the mining industry had fallen out of favor with lenders because it was deemed as damaging for the environment as oil and gas.
Yet now, it is becoming abundantly clear that without the mining industry, there can literally be no energy transition. Solar panels, wind turbines, transmission lines, and EVs all depend on metals and minerals in sufficient quantities.
These quantities, however, are already problematic. During the pandemic, supply chain disruptions—one of the most popular phrases of the pandemic, it would seem—wreaked havoc across industries that resulted in various raw material shortages, notably in metals and minerals and polysilicon.
Shortages typically lead to higher prices, and this is exactly what happened here as well. As a result, the cost of solar panels, wind turbines, and EV batteries started climbing—a development that virtually no renewable energy forecaster had anticipated.
Bloomberg reported this month that solar panel prices had surged by more than 50 percent in the past 12 months alone. The price of wind turbines is up 13 percent and battery prices are rising for the first time ever, the report noted.
Of course, all this could be dismissed as a temporary glitch because of those pesky supply chain disruptions; once those are dealt with, prices should return to normal.
Unfortunately, this argument does not hold water because the demand projections for all those metals and minerals called critical precisely because the energy transition hinges on them are invariably bullish.
Put another way, the world will need a huge amount of copper, lithium, nickel, manganese, and cobalt, among others, to continue with the energy transition. And they are not coming fast.
That lending problem for the mining industry as well as oversupply in some segments of the metals market led to lower investments in new mines in recent years.
That added to an already existing problem of falling ore grades: now, a miner needs to dig out a lot more ore to find the same amount of copper, for instance, than they had to 20 years ago.
Full article here.
via Tallbloke’s Talkshop
January 26, 2022 at 01:04PM
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