Market Size of Key Energy Transition Minerals Doubles in Five Years

The size of the critical minerals market touched $320 billion in 2022


The market for minerals used in electric vehicles, wind turbines, solar panels, and other technologies critical to the clean energy transition has doubled in size over the past five years, the International Energy Agency (IEA) has said.

The record deployment of clean energy technologies such as solar photovoltaics and batteries has led to a significant increase in demand for critical minerals. From 2017 to 2022, demand from the energy sector was the main factor behind a tripling in overall demand for lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel.

In its Critical Minerals Market Review 2023, the IEA said in 2022, the share of clean energy applications in total demand reached 56% for lithium, 40% for cobalt, and 16% for nickel, up from 30% for lithium, 17% for cobalt and 6% for nickel five years ago.

The market size of key energy transition minerals has doubled over the past five years, reaching $320 billion in 2022.

Many critical minerals experienced broad-based price increases in 2021 and early 2022, accompanied by strong volatility, particularly for lithium and nickel. Most prices began to moderate in the latter half of 2022 and into 2023 but remain well above historical averages.

Energy Transition Minerals Price Development Chart

In recent months there has been a steeper decline in the price index in China compared with other regions.

Between January and April 2023, lithium carbonate prices in China dropped by over 60%, whereas those in Europe dropped by only 20%. This was mostly linked to destocking across the battery supply chain. From May 2023, domestic lithium prices in China are showing signs of rebound with growing optimism for a near-term recovery in demand.

Critical Mineral Investments Soar

Investments in critical mineral development rose 30% last year, following a 20% increase in 2021. Among the different minerals, lithium saw the sharpest increase in investment, a jump of 50%, followed by copper and nickel.

The IEA report noted that despite headwinds in the venture capital sector, critical minerals startups raised a record $1.6 billion in 2022. This 160% year-on-year increase took the critical minerals category to 4% of all venture capital (VC) funding for clean energy. The first quarter of 2023 has been strong for critical minerals, despite a severe downturn in other VC segments, such as digital startups.

Battery recycling was the largest recipient of VC funding, followed by lithium extraction and refining technologies. Companies based in the United States raised most of the funds, at 45% of the total, between 2018 and 2022. Canadian and Chinese startups are active in battery recycling and lithium refining, while European startups have been raising money for rare earth elements, battery reuse, and battery material supply.

“At a pivotal moment for clean energy transitions worldwide, we are encouraged by the rapid growth in the market for critical minerals, which are crucial for the world to achieve its energy and climate goals,” said IEA Executive Director Fatih Birol.

According to the IEA’s analysis, if all planned critical mineral projects worldwide are realized, supply could be sufficient to support the national climate pledges announced by governments. More projects would, however, be needed by 2030 to limit global warming to 1.5 °C.

Policy Initiatives

The IEA report said there has been a proliferation of policy initiatives by countries over the past few years to secure access to critical minerals, including measures such as the European Union’s battery regulation and Critical Raw Materials Act, the United States’s Inflation Reduction Act, and Australia’s Critical Minerals Strategy and Canada’s Critical Minerals Strategy.

The IEA has identified nearly 200 policies and regulations from 25 countries and regions worldwide, with over 100 of these enacted in just the past few years. There is growing recognition that policy intervention is needed to ensure adequate and sustainable mineral supplies to meet the energy transition needs.

In June, India unveiled its first-ever report on “Critical Minerals for India,” identifying a list of 30 critical minerals, comprising lithium, cobalt, nickel, graphite, cadmium, silicon, indium, and tellurium used in renewables.