CSIRO report on future of critical metals demand in the energy transition

A new report by CSIRO, Australia’s national science agency, has uncovered powerful and counter-intuitive insights into the future supply and demand of critical metals needed to support the transition to a low emissions future.

Trajectories for metals used in electric vehicles (EVs) may be more complicated than what is currently accepted, according to one scenario modelled using the Physical Stocks and Flows Framework (PSFF) tool.

Released today, the report ‘Known Unknowns: the devil in the details of energy metal demand’ uses the bespoke tool to look at three EV battery metals (cobalt, lithium and nickel) under three different EV uptake scenarios.

CSIRO’s Critical Energy Metals Mission-in-development lead, Dr Jerad Ford, said the PSFF tool uses factors not currently accounted for in traditional forecasts to test the demand and supply assumptions.

“We know that demand for many metals will increase substantially as the world transitions to a low carbon economy,” Dr Ford said.

“But unsophisticated models based on current supply levels and basic recycling rates lead to many mischaracterisations of the real opportunities in both metal mining and recycling.

“They ignore the dynamics of materials flows on a global scale and the expected changes in underlying technologies.”

For instance, it is commonly assumed that demand for newly-mined metals like cobalt and nickel will continue to increase for the foreseeable future, as they are essential for high performance lithium-ion batteries used in EVs.

But by accounting for additional factors such as changes in battery chemistry, quicker EV uptake, and higher levels of recycling, the PSFF tool suggests that, even within the same scenario, new cobalt demand may have an extremely short demand window before an extended glut, while nickel peaks early then falls back sharply, and lithium remains stronger for longer before also trailing off in the out years.

“This challenges conventional wisdom that the demand for these battery metals will mirror each other,” Dr Ford said.

The report also looks at the potential for retiring EV batteries to meet the electricity storage requirements of a renewables-based electricity grid.

However, the PSFF is not intended to be used as a prediction tool.

“Even a fully comprehensive PSFF cannot provide completely ‘accurate’ forecasts because there are so many unknowns, interactions, and complexities around the future demand for metals, like the prices of metals and substitution effects,” Dr Ford said.

“A PSFF does, however, enable the development of internally consistent scenarios to explore how ‘views’ on major components of the energy transition will play out and interact with each other.”

The PSFF tool isn’t just limited to battery metals and could be used by leaders wherever major new technologies require new mixes of metals, to input their assumptions about the market to understand the implication for their business.

“This tool allows us to take assumptions about a range of factors to test what supply and demand will look like for different metals under those conditions, empowering Australian businesses to manage risk and stay ahead of the market,” Dr Ford said.

CSIRO senior experimental scientist Dr Jim West built the model and co-authored the report.

“We are currently in the early stages of engaging with external partners, and ready to partner with industry and government to develop bespoke scenarios that reflect partners’ key interests,” Dr West said.

“Our overarching aim is to better develop and share our capability, to help Australian industry make the smartest investments in the lead-up to a low carbon future.”