The increasing demand for clean energy technologies is reshaping the geopolitical landscape, with copper and rare earth elements at the forefront. These materials are essential for various applications, including electric vehicles, wind turbines, solar cells, and energy storage systems.
The Economic Survey highlights that the global shift towards renewable energy sources is intensifying the demand for critical minerals like copper, lithium, cobalt, nickel, graphite and rare earth elements. This surge in demand is driven by the exponential growth of green energy technologies. For example, electric cars require six times the mineral inputs of conventional cars, and onshore wind plants need nine times more mineral resources than gas-fired plants. A single EV battery can require as much as 200kg of critical minerals.
Copper is a key component in electric vehicle wiring and battery systems, transport electrification, smart grid investment and the rollout of AI-related data infrastructure. Demand for copper in EVs is expected to increase significantly, rising from approximately 0.2 million tonnes in 2020 to an estimated 2.5 million tonnes in 2030 and 3.4 million tonnes in 2035. This represents a substantial increase from less than 0.01% of global supply in 2020 to 7% by 2030 and 11% by 2035. The artificial intelligence, telecom and defense sectors are also contributing to voracious appetite for high-end electronics, on top of the ongoing clean energy transition.
Rare earth elements are vital for manufacturing permanent magnets used in wind turbines and electric motors. They are also used in lasers, sensors and semiconductors needed for a long list of technologies driving a future, high-performance economy – from AI data centers, EVs and autonomous driving, to robotics, drones, and factory automation.
However, the supply of these critical minerals is geographically concentrated, leading to concerns about potential supply disruptions. For example, a significant portion of cobalt imports originate from the Democratic Republic of Congo, while Indonesia accounts for a substantial share of nickel exports. China holds a dominant position in graphite extraction and processing, as well as in the refining of copper and rare earths. In fact, China is set to produce 57% of the world's refined copper by 2025. This concentration of resources and processing infrastructure raises concerns about the security and stability of the supply chain.
To address these challenges, the Economic Survey emphasizes the importance of diversifying supply sources, increasing investment in mining projects, and developing innovative technologies for mineral processing and recycling. It also highlights the need for international collaboration and targeted policy initiatives to ensure a sustainable and resilient supply chain for critical minerals. Geopolitical risks can be mitigated through enhanced investment in research and development, which would expedite the creation of alternative solutions, boost efficiency, and expand recycling and repurposing options.
Furthermore, the report suggests exploring alternative materials and improving material efficiency to reduce reliance on critical minerals. Innovation has resulted in an increased use of substitute materials for those considered critical, such as neodymium, copper, and lithium. Recycling and reuse of products to reclaim scarce materials is also key. Europe recycles a significant percentage of the world's silver and copper, highlighting the importance of reuse and circular economy initiatives. Recovering rare earth elements from coal mine pollution is also being explored.
In conclusion, the increasing demand for copper and rare earth elements, driven by the clean energy transition, is creating a new geopolitical landscape. Diversifying supply sources, promoting technological innovation, and fostering international cooperation are crucial steps to ensure a secure and sustainable supply of these critical minerals for a clean energy future.
