Minerals and Materials Challenges for Our Energy Future(s): Dateline 2024

Summary: Not One, But Many Possible Futures

Framing Energy, Minerals, and Materials

In 2019, Rice University’s globally recognized Baker Institute for Public Policy expanded the research focus of its Center for Energy Studies (CES) to include mining, nonfuel minerals, and broader materials considerations. The Energy, Minerals, and Materials program within CES fosters data-intensive research to provide a comprehensive understanding of the breadth of concerns — and opportunities — embedded in materials supply chains. There are many, and they are complex.

Our effort embraces the debates of the day while also anticipating future developments in materials and their supply chains. Importantly, we cover both inorganic, nonfuel minerals and the materials derived from them, as well as organic, carbon-based materials. Synthetic organic materials represent an enormous and dominant part of global materials markets that societies worldwide will continue to rely upon for years to come. Carbon-based materials and their chemical precursors are embedded in the traditional hydrocarbon value chains that have long been core to CES research.

Within CES and across Rice University, we are exploring the potential of advanced materials, such as carbon nanotube fibers (CNTFs) and advanced composites, to replace or reduce the need for many minerals and metals. These advanced materials offer new possibilities for performance gains and solutions for supply chain security and sustainability.

This inaugural report consolidates key insights from several years of scoping, exploring, discussing, and networking through CES roundtables and external events aimed at developing a better understanding of the material requirements for “energy transitions.” This report also aligns with the core principles of CES: 1) energy transitions will vary significantly across regions and countries; 2) supply chains matter; 3) energy transitions require materials transitions; 4) sustainability is multifaceted; and 5) innovation and growth will shape the future of energy and economies.  

The following questions drive our research on minerals and materials supply chains:

• How will supply chain realities play out across competing end uses? What tensions might arise between producers and consumers?
• As pressures to demonstrate sustainability — broadly defined — continue to unfold, how will they impinge on the ability of extractive industries to respond to demand signals?
• What will be the effect of ever more complicated geopolitical and trade alignments?
• How will budget constraints ultimately dictate what businesses and governments can reasonably do?
• And finally, what will materials transitions for energy transitions even look like?

The Current Policy and Political Landscape

As of June 2024, the Bipartisan Infrastructure Deal (BIL), Inflation Reduction Act (IRA), and CHIPS and Science Act are all in place, albeit with tax rules still evolving.  The Environmental Protection Agency’s (EPA) clean vehicle rule has also been finalized but still faces potential court challenges.  Other initiatives are being pitched in a volatile U.S. election year, characterized by heated debates over government budgets and debt. International relations also remain tense, particularly as many other countries experience their own contentious elections.  

The United States’ relationship with China is a significant factor to consider. To a large extent, recent trade actions taken against China are a reaction to its dominant position in minerals and metals supply chains.  The stringent tariffs imposed on Chinese goods are creating a complex political landscape for energy and materials that is likely to affect allied countries and influence fiscal and monetary policies to some extent.

Numerous “new green energy deals” emerged in the United States and globally, with a particular focus on improving post-COVID and post-2008 recession economies. The United States has noticeably shifted toward an industrial policy with $303 billion allocated for energy transition investments in 2023. This commitment sits within an estimated global total of roughly $1.8 trillion, nearly half of which is financed by debt, including approximately 17% in government debt. Electrified transport constitutes 36% of this investment, while wind and solar power account for 35%.  

All of these developments, and more, are placing minerals and materials in the limelight as policymakers, producers, customers (i.e., large, commercial and industrial buyers of bulk materials), consumers (i.e., individual buyers of final goods), and voters become increasingly aware of supply chain realities.

In their wake, a crucial question arises: Will policymakers and their backers really do whatever it takes to boost supply chains and strengthen the foundational industries essential for these initiatives, particularly domestically?

Producers across the minerals and materials landscape expect increased demand and considerable price appreciation due to these policies. Substantial taxpayer-backed commitments to “de-risk” green investments in energy technologies and key inputs, such as semiconductors (often considered a class of advanced material), come with promises of domestic content, new jobs, and economic development. While these promises seem to be “real” in light of assertive spending commitments, they represent only a fraction of what will be needed to achieve “net zero” decarbonization goals. But are these promises genuine? Do we want to develop energy technology manufacturing and project origination domestically while leaving the problems of supply sourcing in someone else’s backyard? And what are we trying to source, and for what purposes?

Minerals and Materials Challenges

The minerals and mining industries, the main focus of this report, face definitive challenges with respect to supply chains. Even without industrial policy and energy transition stimulus, these challenges would eventually influence the delivery and cost of metals and other inorganic materials for key end-use markets and applications. The challenges identified in this report are central to extractive industries and affect supply-demand dynamics for forward pricing. This report does not exhaustively cover all challenges but rather highlights key concerns regarding preparedness — or the lack thereof — among decision-makers, policymakers, customers, consumers, and voters. Without a comprehensive understanding of these challenges, it will be impossible to craft and implement effective responses and strategies.

Below is a summary of the key challenges covered in this report.

• Minerals occurrences. While the Earth is rich in elements, they do not occur in mineral form in equal abundance or quality. And although technology cannot alter the underlying geology, it can stretch the boundaries of commercial recoverability. However, political boundaries and trade patterns overlie the Earth’s mineral estate, and these realities cannot be ignored.
• Commercialization. The wide variabilities in mineral concentration and purity have implications for commercialization. These considerable variabilities dictate — as they always have — whether ventures can meet economic targets. As needs evolve for elements crucial to advanced technologies and materials, commercialization is further complicated by demand for coproducts of major metals introducing complex supply chain interactions.
• Maturity of assets. Mines are built to last decades or more. However, the age of the current mining and minerals processing fleet is a particular concern. As mining progresses, ore grades decline — similar to the maturation and decline of oil and gas fields. Maturity ultimately results in increased operating costs. The aging of the worldwide mining asset base also reflects the challenges in securing new investments and developing new projects. Older facilities are viewed as less favorable for “upgrades,” such as investments in environmental, social, and governance (ESG) projects, although there are ongoing efforts to capture incremental supply and key by-products from mined waste. The maturity of assets also raises the question of replacement, further straining future supply curves.
• Project cycle times. If attention has been galvanized by anything when it comes to ambitions for minerals and metals — as well as the status of the mining industry — it is the length of time that it takes to reach “paid metal” from new investment. An uncomfortable fact is that already long cycle times appear to be getting longer. This is particularly relevant for the U.S. and European mining industries, where realizing new projects is already challenging. The prolonged cycle times highlight the unlevel playing field in global minerals supply chains, where those who control supply are able to exert significant influence over markets and economies.
• China’s dominant market shares. China’s role as both materials supplier and “factory to the world” stems from its rapid industrialization and substantial domestic resource base that supports its manufacturing. Another contributor is China’s surge in outbound investment as its need for raw materials surpasses its own supply capabilities. The accomplishments of Chinese industry and businesses are substantial, contributing to prosperity for both Chinese citizens and the world at large. However, heightened trade and security conflicts in the “new minerals world order” threaten to disrupt established views on energy, the environment, and even the post-World War II global order.
• Competitiveness. The primary concern in the “new minerals world order” is whether the United States and other major Western economies can regain “mojo” in mining and minerals processing to support domestic initiatives. Much of current energy policymaking is centered on energy transition technologies and businesses, with promises and incentives for domestic content. However, the decline in U.S. mining and processing competitiveness since the mid-1980s has been severe. It is worth considering whether leveraging the strength of the U.S. oil and gas industries and creatively deploying existing infrastructure footprints might better enhance domestic competitiveness.
• Sustainability in the mining industry. Transitioning from fossil fuels to metals-centric alternative energy technologies (“green” energy technologies) has intensified scrutiny of metals and minerals supply and value chains. In countries with established regulatory oversight, there is a level of confidence that new mines, mills, smelters, and refineries will achieve permissions based on sound planning and engineering. That confidence can extend to ongoing operations that have consistently demonstrated compliance. However, whereas regulatory requirements and devotion to safety once defined sustainability, this is no longer the case. Now, embracing green energy and materials means adopting “just and affordable” energy futures — largely supported by taxpayers. Ensuring that truly “green materials” are affordable and satisfy diverse expectations regarding environmental justice is a substantial challenge, further complicated by the maturing global mining fleet.
• Markets. Metals have a longer history of formal trading compared to oil, but metals trading remains far smaller despite recent growth. The sheer size of the global oil industry — in both physical and financial terms — and the much larger volumes of oil (and total hydrocarbons) traded daily enable effective price risk management. While oil markets are not without disruptions, smaller and less liquid metals markets are more susceptible to influence and occasional manipulation. Dominant players in smaller markets can exert outsized effects. More importantly, metals markets today lack transparency and clear price signals.
• Old and new insecurities. The politics around natural resource endowments have always been fraught. A range of factors — including pressures for access, geopolitical competition, sustainability aspirations, fluctuating markets and prices, and more — are combining to add complexities that will test governance skills. The assumption that moving away from legacy fuels would ease insecurities has proven false. Instead, not only is the shift to metals-dependent energy technologies heightening existing insecurities, it is also creating new ones.

Any single one of these mining and minerals challenges would be enough to contend with on its own. Together, they create a complex landscape with conflicting timelines and many uncertainties. Combined with other factors — including overall cost, public acceptance of energy transition projects, and workforce issues — the result is an almost infinite range of possible energy futures contingent upon materials evolution. Governments, businesses, and a growing web of stakeholder groups are positioning themselves to influence the search for solutions and options. Few, if any, of these possible outcomes will significantly impact greenhouse gas (GHG) emissions, as most agendas are driven by different priorities.

These observations and conclusions do not imply that success in mining and minerals is unattainable or that breakthroughs are impossible. Rather, they acknowledge that, based on available data and an understanding of the myriad commodities and business fundamentals, the path will be much longer and more arduous than typically presented to public audiences.

Much of the political debate around materials challenges is embedded in the conventional wisdom that the use of fossil fuels must end. “Ending fossil fuels” affects deliverability of materials from hydrocarbons value chains and more. The belief that the only suitable replacements are metals-centric green energy technologies — such as wind, solar, and batteries for power grids and electrified mobility — introduces substantial risk and uncertainty for materials supply chains.

Similarly, concerns about the fragility of minerals and materials supply chains are often rooted in competitiveness, or the (perceived) lack thereof. For the United States and Europe, concerns about competitiveness revolve around manufacturing finished goods, such as wind and solar equipment, battery electric vehicles (BEVs), and high-end electronics and microelectronics, which have implications for defense applications. A higher comfort level with China’s role as a dominant supplier, at least for civilian applications, could ease these tensions. That said, fostering more creative conversations about China and shifting global power dynamics is increasingly difficult.

Much less attention is paid to the demand side of the energy and materials equation, but this is starting to change as supply-side barriers and costs become more apparent. Realizations are growing that new digital technologies, initially appealing for their efficiency, are enormous energy hogs. Apart from the growing attention given to materials requirements for alternative energy technologies — particularly electrochemical (battery) energy storage, which is a substantial “materials sink” — it is crucial to recognize that humans need minerals for biological and economic life. We utilize minerals, and the metals and chemicals derived from them, in every industrial sector, for agriculture, and across a host of consumer products and services.

Demand sensitivities will inevitably surface if efforts to accelerate green energy encounter fixed material supply limits. The inflationary pressures experienced by households in the United States and globally since May 2020 are partly attributable to government policies initially aimed at responding to COVID-19 and subsequently at stimulating economic recovery, including the rollout of green energy initiatives across most industrialized countries. As expectations grew for massive investments in wind, solar, batteries, and BEVs, metals prices followed suit. Cost increases have become embedded in vehicles of all types, appliances, housing construction, medical equipment, and a great deal more, including defense industry products, despite lackluster sales, new sources of supply, and other factors depressing commodities markets.

While defense constitutes a relatively small portion of global materials consumption, materials supply chain security remains a firm line in the sand for defense. Advances in materials and technologies have long moved back and forth between civilian and defense uses, as ripples from innovations broaden. Many technologies in the alternative energy mix are also valuable for defense. Military bases are under pressure to adopt “clean” energy sources, and service branches are shifting to “clean” fuels and electric transport. Field units and personnel need mobile power, and with rapidly evolving weapons systems — from drones to satellites — advanced materials are needed for batteries and components. Pandemic supply chain disruptions, new geopolitical tensions, and increased conflicts have heightened strategic and tactical-situational awareness of materials supply security for defense industries. Concerns about defense readiness are particularly influenced by China’s significant role in global supply chains. Materials security for defense can benefit from improved domestic supply chains, but the timeframe for such development is uncertain, meaning defense industries cannot rely on domestic supply and may push for other measures. The U.S. Department of Defense’s use of the Defense Production Act to stimulate strategic minerals investments has gained widespread attention as a possible solution, though its broader applicability remains in question.

Innovations and Pathways Forward

The old adage, “optionality is great if you can pay for it,” certainly holds true for materials challenges. Numerous ideas exist for innovating minerals and metals extraction. Many projects target lower-grade resources that require more intensive processing with distinct trade-offs. In part, this reflects realities in the global resource base and access to exploitable resources. Not all ideas are new. For example, “in situ” mining has long been proposed as a possibility for fuels (e.g., uranium and oil shale) and even essential metals. Capturing remaining products embedded in mined waste is a high and increasing priority but involves significant technical and environmental considerations.

Mining and processing are also targets for digitization and automation (e.g., artificial intelligence/AI) just like any other economic sector. The hope is that digital technologies can speed exploration and enhance mining and processing efficiencies. As noted earlier, technology does not alter the Earth’s underlying geology, but it can stretch the boundaries of commercial recoverability. For the ultimate geology game changers, frontiers such as the oceans and space attract plenty of interest.

If we cannot, or will not, extract the necessary raw materials needed for our energy futures, where does optionality lie? Most often the focus is on “re-X” — reusing, repairing, remanufacturing, repurposing, refurbishing, or recycling — to reduce the need for raw materials and improve “sustainability from a systems perspective.”   In particular, recycling is seen as a key solution for minerals and metals, with the consensus being that metals-dependent energy futures are unattainable without it. However, recycling is an industrial activity with its own requirements and sustainability trade-offs. Recyclers are as vulnerable to swings in commodities prices as primary suppliers. Recycling cannot provide nearly the volumes of material needed for the scale of green energy tech in the time frames envisioned, and opinions are that we are decades from that point. A distinct problem is the recycling of complex, advanced films and composites, especially those built using additive manufacturing. Consequently, designing for re-X, sustainability, and the whole system has gained popularity.  These approaches, however, face the challenge of long lead times due to inertia in current supply chain, manufacturing, and consumption patterns. Recovery of metals with minimal recycling for redeployment to other uses is clearly attractive. The tonnes of copper embedded in waste telecoms cables has been called one of the largest copper mining opportunities. Waste from battery manufacturing is another often-mentioned low hanging fruit.

An alternative approach is substitution, an age-old solution to persistent dilemmas. Whenever possible, we substitute materials based on performance and safety considerations, often in response to acquisition costs. For example, aluminum is often used in place of copper for electrical conductivity. Plastics have been substituted for metals for decades to reduce weight and cost and improve performance. Could advanced materials serve as substitutes for other materials and help us leapfrog challenges associated with metals? Can the mining industry help to lead the charge? New alloys have long progressed materials frontiers. As noted earlier, carbon-based materials are prevalent across sectors, segments, and end-use applications. CNTFs could unlock new possibilities for applications that require electrical and thermal conductivity and tensile strength. Advanced composites, some with metals content, will compete heavily with traditional metals and existing composites. Yet their development will entail deep knowledge of metals properties and metallurgical engineering. A great desire exists to increase the use of biomaterials for products ranging from consumer and medical-grade plastics to high-end composites in durable goods. Currently, bioplastics represent about 1% of plastics in use and, like biofuels, involve trade-offs in land, water, and energy balances.  Pursuit of new high-performance composites will require n active oil and gas industry and a strong value chain.

We continue to push the boundaries of materials and expand processes like additive manufacturing to innovate and commercialize advanced metal alloys, ceramics, and new composites. An important concept, which we have previously argued, is that governments should prioritize materials in policymaking before attempting to select technology “winners.”   This approach may seem limiting, but it avoids capital destruction, leaving both taxpayers and private investors better off. Prioritizing materials is crucial given the substantial capital already committed to green energy, with much more needed to reach typical “net zero” GHG targets. This is further amplified by efforts to bolster other essential industries, such as materials-dependent semiconductors.

Throughout the history of U.S. energy and industrial policymaking, we have often faced materials limitations. Over the past 50 years, developers have encountered challenges due to supply, cost, quality, and performance constraints. These issues were relevant during the Carter-era Synfuels Corporation initiative, the launch of civilian nuclear power, various waves of hydrogen enthusiasm, early attempts to deploy carbon capture at scale, and initial battery chemistry experiments aimed at attaining performance equivalent to gasoline and diesel vehicles.

The wind industry provides a snapshot of what progress could look like. For example, the 8-ton stainless steel turbine blades used in early 1980s wind energy designs in Medicine Bow, Wyoming, gave way to fiberglass and today’s sophisticated thermoplastics.  These innovations reduced weight and enabled much larger rotor diameters, firmly establishing carbon-based materials in wind energy and other sectors. The need for better, more durable carbon fiber composites to extend the life of wind power and other equipment is widely recognized. CNTFs are particularly well suited to surpass current carbon fiber in turbine blades and displace metals in conductive wiring, cable, and other fabricated parts. As a result, hydrocarbon value chains —the significant source of carbon for materials — are as critical to our energy futures, if not more so, as mining and nonfuel minerals.  The integrity, soundness, and preservation of both fuel and nonfuel minerals supplies are necessary for success.

Considering the many complexities and challenges in sourcing minerals and materials to secure our energy future, we are left with one of many lessons in energy and materials transitions: It may not be at all what people expect.

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