Metals for mobility: How mining can meet electric vehicle demand and support the energy transition

Decarbonizing all modes of transport is one of the key challenges facing the world because the sector represents roughly 20% of all global emissions. While electrification is probably not the best option to decarbonize planes or ships, it’s the easiest and most viable choice for road transport, which includes all passenger and commercial vehicles.

The adoption of electric vehicles (EVs) has already been happening at an accelerated pace worldwide, led by China. On average, EV sales have grown 45% annually over the past three years and will continue to expand at a double-digit pace of 15% over the next 10 years. This is due to the development of advanced battery technology, the fast expansion of recharging infrastructure and tax subsidies.

There is a very promising field for the continued development of new battery chemistries such as solid electrolyte and sodium-based anodes. But these emerging technologies will only be adopted at scale in second or even third generation car models 10-15 years from now.

In the meantime, as demand for EVs continues to grow in regions with high levels of suburban commuting such as the US, Canada and South America, longer-range batteries will be in demand. These typically use more nickel and so demand for that metal is expected to increase from 500 ktpa (thousand tonnes per annum) to 1.8 mtpa (million tonnes per annum) over the next 10 years, according to an estimate by mining company Vale using industry figures from Rho Motion and Benchmark Minerals.

Demand for other metals will also increase as the EV market develops. EV makers tend to use copper for electrification, rather than aluminum, due to better conductivity and safety. According to Vale’s estimates, while the demand for copper for all other means of transport will grow at a modest 0.5% annually over the next 10 years, demand for copper for EVs will expand at a double-digit rate of 10.5% per year over the same period.

Steel will continue to be the material of choice for car bodies and other structural elements due to its better mechanical resistance, malleability, weldability and paintability. Several technological advancements have also produced tailored blanks (customized sheets used in automotive manufacturing) and lighter alloys.

While recycled (also known as secondary) metals could help to meet the needs of the EV boom, there are challenges that could sustain demand for primary metals over the next 10-15 years.

Steel is one of the most recycled materials worldwide. In the US, for example, recycled steel already represents roughly 70% of the domestic supply. But for recycling to be more competitive than primary metal, four main market conditions must be present:

Japan, for instance, has the first and second conditions, but has historically lacked the third – access to cheap energy. China has developed a vast steel industry based mainly on primary sources because it lacked virtually all four elements during most of its period of industrial expansion over the past 20 years.

The recycling of battery raw materials is also contingent on the increase of the scrap pool and access to competitive clean energy. While collection could be facilitated through closed loops of consumption, some materials will be more attractive to recycle – nickel-bearing cathodes, for example – due to their higher economic value.

But all of this will pale in comparison to the surge in demand for these metals, which will remain ahead of recycling rates for at least another 10-15 years. As such, primary sources will continue to be crucial to the electrification of transport around the world.

This ongoing reliance on primary sources means the mining sector must strive to improve its social and environmental performance – even as an industry that’s essentially non-renewable because it exploits finite resources. Surrounding communities and society at large are aware of the importance of mining and its contribution to the economy – from transport to housing, capital goods and home appliances, as well as jobs – but many rightfully demand more compliance around safety, environmental impact and shared value.

And new mines may seem more expensive as a result of such demands but, in reality, there is no mining in the 21st century without these features. It's far better to have a thriving mine now, than an elusive, less costly mine in the distant future.

Above all, however, this is the right thing to do. And three main levers must be pulled to supply all the critical minerals needed for clean mobility. First, consumers such as EV manufacturers must be aware of the provenance of the metals they use and boycott those that don’t adhere to the highest possible standards. Value chain traceability will help with this, especially as tracking technology evolves.

Second, policymakers must strive to level the playing field by imposing tariffs on products sourced from non-compliant regions, instead of relying on elusive “green premiums”. The EU’s Carbon Border Adjustment Mechanism, for example, aims to ensure the carbon price of the region's imports equals the carbon price of domestic production.

Third, once these conditions are met, shareholders must make investment decisions based on a thorough understanding of the risks of investing in mining companies with less environmentally friendly assets. They must take into account the time-value tradeoffs of switching to mines with lower carbon footprints and the long-term viability of new projects from the angle of all stakeholders.

Over the longer term, aligning all miners with the highest possible standards will be the ultimate solution to developing clean, zero-carbon transport.