Securing the energy transition minerals for a massive scale-up of low-carbon technology represents a major challenge as Western countries are all vying for them and “clean” technologies need much more of them than conventional technologies. A standard electric vehicle (EV), for example, requires six-times the quantity of minerals to be built as a conventional car, and an onshore wind plant needs nine times more mineral resources than a natural gas-fired plant. Global supply chain issues spurring from the COVID pandemic, inflation and demand have created critical minerals supply challenges in the short term, which has had a major impact on the development of “clean” technologies. A major challenge is to get the workers needed, as mining is not considered an attractive employment area for young workers and older workers are retiring. And, as the demand for these transition minerals grows, so does their price, meaning that the transition to net zero will not be cost-free, despite what politicians say.
Shortage of Workers
Companies that mine copper, lithium and other metals, which are a critical part of the supply chain to produce green energy, are struggling to find enough workers to support the transition. Most mining companies in the United States, Australia and Europe indicate that they are having difficulty getting workers, especially for high-skilled jobs such as engineers, exploration geologists and data analysts. Mining companies are perceived as being in a “dirty” industry, and is among the worst-ranked professions for young people to enter. A global survey by consulting firm McKinsey found 70 percent of its 15- to 30-year-old respondents said that they definitely would not or probably would not work in mining. In the United States, the number of 2020 geology and earth-sciences graduates was almost 25 percent less than in 2015, despite the total number of students graduating has increased by 8 percent. In Australia, the total number of mining graduates fell 63 percent in 2020 from 2014. Canada’s mining and mineral-engineering enrollment was down 10 percent in 2020 compared with 2016.
Media, government and NGO campaigns against mining have contributed to misinformation about mining as a career and affected the attraction of talent. The truth is that modern mining is a highly skilled, technically challenging and highly paid endeavor, especially in the United States and other Western countries where environmental standards are higher as are standards for workers.
The declines are raising concerns of a future knowledge gap that could affect extraction as companies are having to mine deposits with lower density of metals, particularly as these companies are also losing experience through retirees. More than half the mine workers in the United States are 45 years or older. According to a McKinsey survey, 86 percent of industry leaders found recruiting and retaining the talent they needed harder. And, nearly three-quarters of those executives said the talent shortage is holding them back from delivering on production targets and strategic objectives. Rio Tinto, a major mining company, warned that the worker shortfall could mean business delays or underperformance.
In the United States, the job vacancy rate for mining and logging was 5.1 percent in March, up from 3.6 percent five years ago, according to Bureau of Labor Statistics. Canada’s mining job vacancy rates have been trending upward since 2015 to a peak last summer of around 4 percent in mining and quarrying jobs and slightly over 6 percent for mining support activities. Likewise, in Australia, mining vacancies rose to 10,600 jobs in February, up from 2,500 in May 2016, the lowest level since 2009, according to the Australian Bureau of Statistics.
Soaring Transition Mineral Prices
For wind turbines the biggest mineral requirement is steel. However, steel is not defined as a “critical” mineral, even though China produces 53 percent of the world’s steel. The “critical” minerals needed to build an offshore wind turbine are chromium, copper, manganese, molybdenum, nickel, rare earth metals and zinc. An offshore wind turbine requires a greater volume and variety of minerals than an onshore turbine. The price of each of these metals increased significantly between January 2020 and March 2023, ranging from a 23 percent price increase for zinc to a 285 percent price increase for molybdenum. The average price increase of these seven metals needed for offshore wind turbines over the period was 93 percent. Because of the “challenging economic environment” facing the wind industry, in 2022, only 78 gigawatts of wind power capacity was added globally–the lowest level in the past three years, according to the Global Wind Energy Council. Further, the price of 1 megawatt of wind capacity has increased by 38 percent in two years, which is the result of increased labor, shipping costs, and raw materials.
For solar PV, the key minerals required are silicon, copper, nickel and zinc. As of March 2023, silicon recorded the highest price increase at 92 percent since January 2020, while the average price increase across these minerals was 55 percent. According to industry group SolarPower Europe, fluctuating mineral prices have had a real-world impact on the price of installing solar PV. The trend was particularly noticeable in late 2021 and early 2022 as soaring solar PV demand came up against lower mineral production volumes initiated during the pandemic.
Electric vehicles typically require minerals including copper and neodymium (a rare earth metal) in their engines, and lithium, nickel, cobalt and manganese in their batteries. The prices of critical minerals required in electric vehicles have increased by an average of 86 percent since January 2020, with the price of lithium in particular soaring by more than 400 percent by the start of 2022, and remaining around 200 percent above its pre-pandemic level. The battery as a share of typical battery electric vehicle production costs is higher than that for the powertrain share of the cost of an internal combustion engine vehicle (circa 45 percent versus 35 percent), magnifying the impact of high battery raw material prices on vehicle cost. It takes 16.5 years on average to move lithium mining projects from discovery to first production, according to IEA.
Countries Are Vying for the Minerals
Despite being endowed with many of the transition minerals in the United States, President Biden is siding with environmentalists by revoking leases at potential mines, delaying permits and classifying plants as endangered. China currently dominates global processing of the critical minerals that are in high demand to make batteries for electric vehicles and for renewable energy storage. Because of Biden’s stance on U.S. mineral mine development, U.S. officials are negotiating a series of agreements with other countries to expand America’s access to critical minerals such as lithium, cobalt, nickel and graphite. It remains unclear, however, which of these partnerships will succeed, or if they will be able to produce the supply of minerals that the United States is projected to need for its energy transition. Leaders of Japan, Europe and other advanced nations agree that the world’s reliance on China for more than 80 percent of processing of these minerals leaves their nations vulnerable to political pressure from China, which has a history of weaponizing supply chains in times of conflict. China’s over 80 percent share is much higher than the world’s dependence upon OPEC for oil, and OPEC consists of 13 countries spread around the globe.
President Biden’s transition to a net zero carbon economy is being held hostage to transition mineral development by his own policies and the soaring prices of minerals due to supply chain issues, inflation and demand. The problem is being exacerbated by worker shortages, particularly in engineering and geologic jobs. China is decades ahead of the United States in these industries and increasing its dominance, as it can undercut costs elsewhere due to inexpensive coal-fired electricity and lax environmental laws that also contain costs that Western companies would have to endure. If Biden continues in his net zero fantasies and mineral mine destruction, Americans will be 4 times as dependent on China than it ever was on the Middle East for oil.