Critical metals exploration and energy transition – A perspective

Abstract

The critical metals theme is well established, with long-run demand-side growth driven by cleaner energy and new technology applications. Delivering the energy transition comes with a parallel requirement to discover and then develop new sources of critical metals supply. Constraints on new supply start with the exploration process, where land access, and satisfying administrative, legislative and stakeholder requirements have become more challenging, uncertain, slower, and costly in recent years. The consequences of higher exploration access costs, and extended timelines, favour major mining companies over junior explorers, where the majors have sustainable cash flows. Greater uncertainties in land access globally favours established mining jurisdictions with a track record of resolving competing land use issues, over and above more frontier jurisdictions that lack both a track record and streamlined processes to facilitate multiple new resource developments.

Technical constraints to discover and develop adequate new sources of supply also vary between critical metals. Whilst accurate forecasts of the timing of new supply is difficult, including the identification of discovery and development constraints, and the relative resource depletion between markets, paradoxically, it is the newer, niche, critical metals markets that may prove less difficult to expand supply versus the larger critical metals markets. The reasons are twofold: Firstly, that absolute tonnage requirements for new critical metals supply are lower in the emerging markets (e.g., lithium, vanadium, niobium) than for larger markets (e.g., copper). As such, fewer new discoveries and mine developments are required to fulfill anticipated market growth requirements in the smaller critical metals markets. Secondly, that the exploration search-space within established mining jurisdictions for the emerging critical metals markets is immature, allowing for new Tier-1 discoveries to emerge early. In contrast, within the major critical metals markets such as copper, the exploration search-space in established mining jurisdictions is mature, resulting in lower exploration efficiency and fewer, deeper, new Tier-1 discoveries. The consequence is that discovery-led bottlenecks to future metals supply for the energy transition may be fewer in the niche critical metals markets than for mainstream metals markets, that also have new energy applications vital to the clean energy transition.

Given that the mining history and production of many critical metals is recent, the recycling of critical metals does not present a solution to satisfying new demand: exploration and discovery are pivotal. By discovering the critical metals for low-carbon and “renewable” energy technologies, mineral exploration has a key role to play in facilitating the green energy transition.