Global warming, climate change, all these things are just a dream come true for politicians. I deal with evidence and not with frightening computer models because the seeker after truth does not put his faith in any consensus. The road to the truth is long and hard, but this is the road we must follow. People who describe the unprecedented comfort and ease of modern life as a climate disaster, in my opinion have no idea what a real problem is.
According to the Epoch Times, China controls about 90% of global capacity for the processing, smelting, and separation of these materials, as well as for the manufacturing of magnetic materials. While the United States, Australia, Brazil, India, and parts of Africa are establishing new mines, most of their concentrates still have to be shipped to Chinese refineries, where the country processes them with cheap coal power and lax environmental and other standards.
China remains the dominant refined mineral supplier, both in terms of country of origin and overseas Chinese corporate-owned supply, as China has spent decades developing the industry.
According to the Epoch Times, China controls about 90% of global capacity for the processing, smelting, and separation of these materials, as well as for the manufacturing of magnetic materials.
While the United States, Australia, Brazil, India, and parts of Africa are establishing new mines, most of their concentrates still have to be shipped to Chinese refineries, where the country processes them with cheap coal power and lax environmental and other standards.
China’s dominance with regard to refined critical mineral supply is expected to continue through the end of the decade. It is expected to have a market share of over 80% in both rare earths and synthetic graphite.
Despite the Trump Administration’s focus on onshoring critical mineral refining and processing, the United States is expected to gain only relatively small market shares in the natural and synthetic graphite and rare earth markets. Canada and Finland will each account for 6% of the refined cobalt production.
The Epoch Times explains that China knows it has the leverage and has used it recently during a trade war with the United States by restricting exports of rare earths, germanium, and other critical materials in 2025.
In 2010, China cut off rare earth exports to Japan for about two months during a territorial dispute. China has again restricted exports of rare earths and rare-earth magnets to Japan to punish it for Prime Minister Sanae Takaichi’s remarks late last year suggesting the country could become involved in a conflict over Taiwan.
China’s new rules for 2026 are restricting exports of tungsten and antimony, widely used in defense and advanced technologies. It is also limiting the export of silver in the same way it has restricted rare earths, as noted below.
Via Semafor, although China dominates refined copper processing, global output is expected to become increasingly diversified, with about 55% of refined production forecast to come from outside China by 2030.
Copper underpins modern economies, used in everything from consumer electronics and household appliances to electric vehicle batteries, artificial intelligence data centers, military drones, and construction and wiring.
Supply is tightening as new mines are slow and costly to develop, while existing operations face rising costs as ore grades deteriorate.
The market is already undersupplied, a problem compounded in 2025 when several of the world’s largest mines were temporarily shut by mudslides, earthquakes, and tunnel collapses.
Analysts warn the supply gap could widen to as much as 10 million metric tons — roughly a quarter of projected demand — by 2040, keeping prices elevated. To ease shortages, governments will need to accelerate mine development, expand recycling, and broker new trade arrangements between producers, processors, and end users; the Trump administration has moved to encourage more U.S. mining, but results will take years to materialize.
Indonesia is expected to remain the world’s dominant nickel refiner, accounting for 71% of global refined nickel production, but around 80% of Indonesian refined nickel production is currently owned by Chinese companies. Similarly, Chinese companies have invested heavily in upstream cobalt assets in the Democratic Republic of Congo.
Rare Earths
China holds nearly half of the world’s reserves, followed by Brazil. As reported by OilPrice, China has 44 million metric tons, about 48% of the world’s total of 91.9 million metric tons. Brazil has 21 million metric tons (23%), with large ionic clay and hard-rock deposits that have just begun development. Together, the top six countries account for roughly four-fifths of known reserves. (See graph below.)
OilPrice explains that the United States has just 1.9 million metric tons of rare earth reserves (2%), underscoring its reliance on trade and midstream processing to secure supply. In recent months, the Trump administration has sought to reduce U.S. dependence on Chinese materials by funding domestic mining projects, streamlining permits, and partnering with allies to diversify supply chains. In October, President Trump and President Xi Jinping agreed to reduce tariffs in exchange for China maintaining the flow of rare earth exports.
China, a top supplier of refined silver, began to enforce new export limits on the metal to ensure ample supplies for Chinese companies. Silver is used in manufacturing, especially by the automotive, aerospace, and defense sectors. Silver was recently added to the U.S. critical mineral list and may face new supply constraints due to these export restrictions that took effect in January.
According to the American Action Forum, “Chinese silver producers and distributors had to apply for permission to export in October based on export performance between 2022 and 2024. For new applicants, the domestic production threshold to receive approval was 80 tons, which effectively puts large, state-owned enterprises at the forefront of China’s silver exports.
Out of 50 applications, six were rejected, which will further concentrate the market and raise global price-risk premiums as companies look to de-risk supply chains.” China was one of the world’s largest producers of silver in 2024, and has the fourth largest reserves.
Analysis
China dominates the processing of critical minerals and shows no sign of relinquishing this control anytime soon.
The Trump administration is attempting to combat this control through trade policy, announcing via executive order “that it is necessary and appropriate to enter into negotiations with trading partners to adjust the imports of [processed critical minerals and their derivative products] so that such imports will not threaten to impair the national security of the United States.”
Unfortunately, the Trump administration’s conclusion ignores the fact that permitting and regulatory issues are the main cause of the U.S.’s lackluster mineral processing industry. A lack of mineral processing facilities is a downstream effect of the fact that it takes 29 years to open a mine in the U.S.
Record-setting copper prices have sparked turmoil for wind and solar farm developers who face rising costs to build green energy projects.
Commodity analysts have warned that the cost of manufacturing renewable technologies – which rely heavily on copper – will surge after the industrial metal hit a record high on the London Metal Exchange.
The price rose as high as $11,200 (£8,500) a ton on Wednesday, extending its gains so far this year to more than 27pc. It is on track for its best year since 2017.
Although prices fell from their peak on Thursday – dipping to $11,183 a ton – they still remain elevated by historical standards.
Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB, said: “It will add costs to all [things] connected to electricity and not the least all things connected to renewable energy, power systems, transformers, EVs (electric vehicles).”
He said many attendees at the bank’s copper conference last month admitted the surging price “does not support the development of major new greenfield projects”.
Wind farms, solar panels and electric vehicles all rely heavily on copper cabling to connect to the national grid. Wind farms, for example, use it for vital cables and transformers to transfer power.
This election year, several critical issues dominate voter concerns. Illegal immigration across unsecured borders by migrants, criminals, sex traffickers, and terrorists. Anti-police policies reduced prosecution of criminals and rising crime. Unprecedented prices for food, clothing, housing, and other necessities.
This election year, several critical issues dominate voter concerns. Illegal immigration across unsecured borders by migrants, criminals, sex traffickers, and terrorists. Anti-police policies reduced prosecution of criminals and rising crime. Unprecedented prices for food, clothing, housing, and other necessities.
Parental roles in education and sex changes for children. Threats to our republic and democracy from unelected, unaccountable bureaucrats who use their powers to persecute, prosecute, silence, and even imprison opponents and control our lives.
Also crucial control overenergy – the lifeblood of our civilization, jobs, health, and prosperity.
Will America shut down coal, gas, and nuclear electricity generation before it has sufficient reliable replacements? Will we have electricity when we need it, or only when it’s available, especially after we’re forced to convert gasoline cars and gas stoves, furnaces, and water heaters to electric models?
What will families pay for that electricity and everything we eat, drink, build, and use? Where will we get plastics, paints, pharmaceuticals, and thousands of other products made from oil and gas they want to lock in the ground? What will happen to our jobs, health, living standards – and personal choices about where we live, what we eat, what car we can drive and how far, whether we can fly places for vacation?
We’re told a great energy and economic transformation is underway – and is essential to prevent a “climate crisis.” In reality, the crisis exists in computer models, headlines, and politicized science but not in actual temperature and weather records.
In reality, there is no energy transformation. In 2023, wind and solar power generated 2.7% of the world’s primary energy; 81.5% came from fossil fuels. Between 1965 and 2023, North America and Europe cut their fossil fuel consumption almost in half, but over the same period, the rest of the world consumed seven times more than those two regions reduced their use. Emissions went up even more because China, India and other developing countries require minimal pollution controls on power plants and vehicles.
In reality, a transition to an all-electric economy with no fossil fuels means millions of acres of America’s wild, scenic, and agricultural lands would be covered with wind turbines, solar panels, transmission lines, and warehouses filled with batteries that can spontaneously erupt in flames.
In reality, we don’t know whether there are enough accessible metal and mineral deposits on Planet Earth to extract all the raw materials required to manufacture the turbines, panels, batteries, transmission lines, electric vehicles, transformers, and other equipment the energy transformation would require – just for the United States, much less for the entire world.
We don’t know how many billions of tons of rock would have to be mined, processed, and disposed of; how many millions of acres would be impacted; how many millions of tons of toxic air and water pollution would be emitted; what human rights would be violated to get those metals and minerals.
One of the most basic and vital metals for the energy transformation is copper. Average worldwide ore concentrations (0.04%) mean miners would have to remove some 40,000,000 tons of overlying rock and extract, crush, and process nearly 25,000,000 tons of ore to get 110,000 tons of copper – enough for just the first 30,000 megawatts of President Biden’s offshore wind plan.
Worse, mining is essentially banned in the United States – and the Biden Administration has vetoed world-class mines that could have met US needs for copper (and other metals) for decades to come. And the problem isn’t just President Biden or the Biden Administration. It’s governors like Gavin Newsom and Gretchen Whitmer, and countless activists and mostly Democrat politicians who support these policies.
A 2022 International Energy Agency report examines the need for essential metals and minerals in energy transitions. Onshore wind installations, the report says, require nine times more materials than combined-cycle gas-generating plants to produce the same amount of electricity. Offshore wind installations require fourteen times more. (These IEA numbers do not include materials for transmission lines or backup power for windless-sunless periods.)
The IEA says its projections are “highly dependent” on how quickly and stringently the world actually tries to reach zero greenhouse gas emissions in power generation and all energy uses, on which wind, solar, battery, and other technologies dominate, and on whether countries also try to utilize low-carbon (natural gas) or no-carbon (batteries) equipment in mining, materials processing, manufacturing and transporting wind turbines, solar panels, batteries, vehicles, and other technologies.
However, the IEA calculates demand for aluminum, copper, cobalt, graphite, iron, nickel, lithium, rare earths, concrete, and other “green” energy materials is expected to skyrocket by 5, 20, 40, 50 or more times current global requirements by 2040.
The Agency says numerous “challenges” to actually acquiring those materials include actually finding producible deposits, plus land use, water scarcity and pollution, air pollution, toxic mining waste management, corruption and bribery, worker and nearby resident health and safety, and child labor.
Meeting these challenges, the IEA says, will require “systematic approaches,” the “development of institutions and the rule of law,” “inclusive legal frameworks,” “responsible” and “robust” pollution and waste management frameworks, “sustainable practices,” “international coordination,” “capacity building and knowledge sharing,” greater “transparency” and, ultimately, “international minerals governance.”
These actions will all help foster “sustainable and responsible supply chains that contribute to a low-carbon economy” worldwide, the IEA assures us.
But will these wishful terms survive collisions with the real world? Developing nations view coal, oil, and gas as their key to jobs, modernity, and prosperity. China, Russia, and their allies perceive the West’s fixation on climate change and green energy as opportunities to control US and EU supply chains, geo-political options, and military-economic capabilities.
The biggest wind energy project in the USA will soon blanket 1,600 square miles (1.25 times Delaware) of New Mexico to generate 3,500 MW about 30% of the year. The Palo Verde nuclear plant in Arizona generates 4,200 MW from 6 square miles, almost 24/7/365.
How can we head this economy-and-environment-killing craziness off at the pass?
Wise decisions at the ballot box are essential, of course. But state and local governments should enact laws requiring that utilities explain how they will generate wind and solar replacement power on windless winter nights before they shut down a single coal, gas, or nuclear power plant – or get approval for a single wind or solar project. (Those are just a few of the actions they can take.)
They should also demand full details on where raw materials will come from, and at what dollar, human rights and environmental costs – to state and local communities … and our planet.
America’s jobs, health, living standards, and right to choose our homes, cars, and food depend on it.
Copper cannot be mined quickly enough to keep up with current policies requiring the transition to electric vehicles (EVs), according to a University of Michigan study.
Copper cannot be mined quickly enough to keep up with current policies requiring the transition to electric vehicles (EVs), according to a University of Michigan study.
Copper is fundamental to electricity generation, distribution and storage. According to GlobalData, there are more than 709 copper mines in operation globally, with the largest being the Escondida mine in Chile, which produced an estimated 882,100 tonnes of copper in 2023.
This may sound like a lot but with electrification ramping up globally it is not. The Michigan study, Copper mining and vehicle electrification, has focused on the copper required just for the production of EVs over the coming years.
Many countries across the world are putting forward policies for EVs. For instance, in the US the Inflation Reduction Act, signed into law in 2022, calls for 100% of cars manufactured by 2035 to be electric.
However, an EV requires three to five times more copper than petrol or diesel cars, not to mention the copper required for upgrades to the electricity grid.
“A normal Honda Accord needs about 40 pounds of copper. The same battery electric Honda Accord needs almost 200 pounds of copper,” said Adam Simon, professor of earth and environmental studies at the University of Michigan.
“We show in the paper that the amount of copper needed is essentially impossible for mining companies to produce.”
The researchers examined 120 years of global data from copper production dating back to 1900. They then modelled how much copper is likely to be produced for the rest of the century and how much copper the US electricity infrastructure and fleet of cars would need to upgrade to renewable energy.
The study found that renewable energy’s copper needs would outstrip what copper mines can produce at the current rate. Between 2018 and 2050, the world will need to mine 115% more copper than has been mined in all of human history up until 2018 just to meet current copper needs without considering the green energy transition.
To meet the copper needs of electrifying the global vehicle fleet, as many as six new large copper mines must be brought online annually over the next several decades. About 40% of the production from new mines will be required for EV-related grid upgrades.
The research concluded that instead of fully electrifying the entire US fleet of vehicles, they should focus on manufacturing hybrid vehicles.
“We know, for example, that a Toyota Prius actually has a slightly better impact on climate than a Tesla. Instead of producing 20 million EVs in the US and, globally, 100 million battery EVs each year, would it be more feasible to focus on building 20 million hybrid vehicles?”
Apart from EVs, copper is, of course, vital in other sectors: for instance, building infrastructure in the developing world such as an electricity grid for the approximately one billion people who don’t yet have access to electricity.
“What we will end up with is tension between how much copper we need to build infrastructure in less developed countries versus how much copper we need for the energy transition,” warned Simon.
“We are hoping this study gets picked up by policymakers who should consider copper as the limiting factor for the energy transition, and to think about how copper is allocated.”
In the relentless pursuit of a greener future, copper stands as a critical element, central to the envisioned transition to renewable energy and electrification. However, recent insights bring to light a formidable obstacle: the rate of copper extraction is insufficient to meet the ambitious targets set by current U.S. policies. This blog post highlights this dilemma, as explained by the International Energy Forum’s (IEF) report, and examines the broader implications for energy policy and economic stability.
In the relentless pursuit of a greener future, copper stands as a critical element, central to the envisioned transition to renewable energy and electrification. However, recent insights bring to light a formidable obstacle: the rate of copper extraction is insufficient to meet the ambitious targets set by current U.S. policies. This blog post highlights this dilemma, as explained by the International Energy Forum’s (IEF) report, and examines the broader implications for energy policy and economic stability.
The Copper Conundrum
Copper is indispensable in the manufacture of electric vehicles (EVs) and the development of renewable energy infrastructure. The IEF report starkly presents the challenge:
“Electric vehicles (EVs) require substantially more copper and other metals than conventional internal combustion engine (ICE) vehicles. For example, manufacture of an ICE automobile requires 24 kg of copper whereas manufacture of an EV requires 60 kg”.
This statement alone encapsulates the monumental demand for copper driven by the push towards electrification. With policies mandating that 100% of cars manufactured be electric by 2035, the strain on copper supply becomes even more evident. The report quantifies this demand further:
“To meet business-as-usual trends, 115% more copper must be mined in the next 30 years than has been mined historically until now. To electrify the global vehicle fleet requires bringing into production 55% more new mines than would otherwise be needed”.
Such figures underscore the vast amounts of copper necessary to achieve these electrification goals. The current mining capacity, however, does not align with this escalating demand.
Mining Realities and Economic Implications
The extraction and processing of copper are time-consuming and capital-intensive activities. Current production rates and available mining technology suggest that ramping up copper output to the required levels within the stipulated timelines is not feasible. The study’s findings suggest a significant shortfall in meeting the raw material needs for the electrification agenda:
“Under today’s policy settings for copper mining, it is highly unlikely that there will be sufficient additional new mines to achieve 100% EV by 2035. Policymakers might consider changing the vehicle electrification goal from 100% EV to 100% hybrid manufacture by 2035″.
This revelation invites critical scrutiny of the underlying assumptions in policy frameworks that advocate for rapid and large-scale transitions to renewable energy. It also raises pertinent questions about the economic feasibility and long-term sustainability of such policies.
The Questionable Premise of a Green Future
The push for a green future is often presented as an inevitable and necessary path. However, this ideology-driven agenda lacks a solid foundation. The transition to renewable energy, while portrayed as essential, is fraught with practical challenges and economic burdens that are frequently overlooked or underestimated.
“Many have expressed concern that the lack of critical mineral resources may not allow full electrification of the global vehicle transportation fleet, and the vehicle electrification resource demand is just a small part of that needed for the transition”.
The pursuit of sustainability has become a catchphrase devoid of critical examination. The supposed benefits of a green future are speculative at best, hinging on the unproven assumption that these efforts will significantly impact climate change. In contrast, the immediate and tangible costs—economic, social, and environmental—are substantial and often ignored.
Broader Policy and Strategic Considerations
Given the intrinsic link between copper supply and the any successful implementation of electrification policies, a reassessment of strategy is warranted. Policymakers need to consider several factors if they are going to go down this road:
Diversification of Material Sources: Investing in research to find alternative materials that can either replace copper or reduce its use in key applications.
Enhanced Recycling Programs: Implementing robust recycling systems to reclaim copper from obsolete electronics and other products, thereby easing the demand on primary copper mining.
International Cooperation: Engaging in strategic partnerships with countries rich in copper resources to ensure a stable supply chain.
Technological Innovation: Encouraging innovations in mining and processing technologies to increase the efficiency and output of copper extraction.
Environmental and Social Impact
The race to mine more copper also carries significant environmental and social costs. Increased mining activities can lead to environmental degradation, including deforestation, soil erosion, and contamination of water resources. Additionally, the social implications for communities in mining regions—often marked by displacement and health issues—must not be overlooked. Thus, a balance must be struck between meeting material needs and maintaining environmental and social standards.
Conclusion
The reality presented by the IEF report serves as a sobering reminder of the complexities inherent in transitioning to a greener economy. This situation highlights an ironic unforced error of poor planning and idealistic policy, driven by an optimistic yet impractical vision without fully considering the supply constraints of critical materials like copper. Moreover, the very premise of striving for a green future and sustainable development is itself an unfounded ideological pursuit, lacking in practical justification and burdened with significant costs.
As we navigate these challenges, it is imperative to maintain a balanced perspective, recognizing the need for realistic timelines and diversified approaches. The discourse around the frenetic, ill-conceived, and ideological fantasy of “climate policy” must evolve to incorporate these hard truths, ensuring that the path to so-called sustainability is both feasible and responsible—or reconsidered entirely in light of its dubious foundations.
Greenpeace International activists paint the word ‘RISK!’ on the starboard side of Normand Energy, a vessel chartered by the Belgian company Global Sea Mineral Resources (GSR).
The Rainbow Warrior is bearing witness to equipment tests carried out by GSR using the Patania II nodule collector, at approximately 4500 metres deep in the Clarion Clipperton Zone. The mining company is aiming to commercially extract minerals from the seabed in the future.
The Greenpeace ship is in the Clarion Clipperton Zone in the Pacific to bear witness to the deep sea mining industry. Part of the ongoing ‘Protect the Oceans’ campaign.
Environmentalists have warned deep sea mining could be “catastrophic” for the vast and little understood habitat, which holds minerals needed for green technologies.
The UK has for the first time come out in support of a pause in highly controversial mining of the deep sea bed, having previously supported it, reports Sky News.
On Monday, the government added its name to a group of countries seeking a moratorium on new licences to exploit minerals such as lithium, copper and cobalt – vital for green energy – from the deep sea.
The environment department said the precautionary pause is designed to protect the world’s ocean from such projects, which involve heavy machinery scraping deposits from the world’s largest habitat, until more evidence on the impact is available.
It said it would establish a new UK-based network of experts to collect further scientific data.
Components of a subsea mining machine pictured in 2014
Environment Secretary Therese Coffey said the UK will use “our scientific expertise to fully understand the impact of deep sea mining on precious ecosystems; and in the meantime, we will not support or sponsor any exploitation licences”.
The announcement comes as negotiations at the United Nations regulator, the International Seabed Authority, start on Monday, and take place one month before the COP28 climate talks commence in Dubai in December.
Previously, Prime Minister Rishi Sunak’s government had been in favour of exploratory licences, a position criticised by Labour and dozens of scientists.
Other than from a few small tests, no commercial mining has happened at scale yet, and campaigners say it will be extremely destructive, with full environmental impacts hard to predict.
But deep sea mining is regarded as a potential solution to the expected global shortage of raw materials considered critical to a greener energy future, and used in things like batteries and renewable power.
It is also seen as a way to reduce dependence on the relatively few countries that hold deposits on land, including China, Australia, Russia, South Africa and Zimbabwe.
The U.S. Department of Energy’s (DOE) new designation of copper as a critical material follows the lead of the EU, China, Japan, and others in labeling the metal as critical – and shows copper is on the cusp of a generational shift from an everyday material to a geopolitically significant commodity.
This new strategic importance stems from copper’s criticality to a wide range of clean and renewable energy technologies, such as waste heat recovery and electric vehicles, which can reduce global GHG emissions by two-thirds. As a result, experts estimate copper demand is set to double between 2035 and 2050 as industries work to meet their climate goals.
It is no wonder, then, that some are referring to copper as “the new oil.”
[…]
The shift from a global economy built entirely on oil to a digitized and electrified future, with copper at its foundation, has already begun. If Washington wants the U.S. to lead this global shift, it must recognize copper as a critical material for the nation’s future economic and national security.
Andy Kireta, Jr., is the President and CEO of the Copper Development Association and the North American Regional Director of the International Copper Association. RealClearEnergy
The notion that we are transitioning from fossil fuels to an electrified future is nonsense. However, technological advances and government policies are increasing the demand for many mineral resources. This is having an effect on the mineral resource criticality matrix. Non-critical mineral resources are shifting towards becoming critical materials.
The Energy Act of 2020 defines a “critical material” as:
Any non-fuel mineral, element, substance, or material that the Secretary of Energy determines: (i) has a high risk of supply chain disruption; and (ii) serves an essential function in one or more energy technologies, including technologies that produce, transmit, store, and conserve energy; or
The Energy Act of 2020 defines a “critical mineral” as:
Any mineral, element, substance, or material designated as critical by the Secretary of the Interior, acting through the Director of the U.S. Geological Survey.
The US DOE’s 2023 critical materials report is an odd combination of wishful thinking and reality checks.
Wishful Thinking
Executive Summary
The global effort to curb carbon emissions is accelerating demand for clean energy technologies and the materials they rely on. Demand for these materials will only continue to grow, especially as some nations aim to achieve net-zero emissions by 2050. While some major materials like steel, copper, and aluminum are already powering the fossil fuel economy, others are more minor materials with potential supply risks. These risks could jeopardize the ability to reduce greenhouse gas emissions within the desirable timeframe to avoid significant climate change. In some cases, it may be necessary to take action to improve the resilience of these material supply chains and mitigate supply risks. Understanding the importance of individual materials to clean energy and the supply risks associated with them is necessary to identifying which materials may serve as potential roadblocks to a clean energy future.
Pretty well all of the assessed individual materials face roadblocks, irrespective of the government’s clean energy wishes.
Reality Checks
The report assesses the supply of critical materials under four scenarios:
Demand trajectories were developed for each material that passed the screening in Chapter 3. For each material, four trajectories were developed using high and low market penetration and material intensity assumptions for different energy technologies/applications, shown in Table 4.1. The goal of these trajectories is not to predict the future, but to outline various possibilities of material demand that can inform RD&D strategies.U.S. Department of Energy, Critical Materials Assessment 2023
DOE forecasts that the demand for copper for uses other than energy (gray curve) will exceed current production by 2035. They forecast that copper demand will exceed current production capacity by the end of this decade.
DOE forecasts that cobalt demand will exceed production capacity by 2025 in three of the four trajectories. Cobalt is a key ingredient in long-range electric vehicle batteries.
The demand for almost all of the assessed materials quickly exceeds production capacity in almost all of the scenarios.
You Can’t Get There From Here
Identified world terrestrial cobalt resources are about 25 million tons. The vast majority of these resources are in sediment-hosted stratiform copper deposits in Congo (Kinshasa) and Zambia; nickel-bearing laterite deposits in Australia and nearby island countries and Cuba; and magmatic nickel-copper sulfide deposits hosted in mafic and ultramafic rocks in Australia, Canada, Russia, and the United States. More than 120 million tons of cobalt resources have been identified in polymetallic nodules and crusts on the floor of the Atlantic, Indian, and Pacific Oceans.USGS
The USGS estimates the current global cobalt reserves to be 8,300,000 tonnes. Trajectory D would burn through the global cobalt reserves by the end of this decade. At the 2035 rate of 2,700,000 tonnes/year, Trajectory D would eat up the entire terrestrial resource in less than a decade.
Although the nodules appear in various places around the deep ocean, the primary target of potential mining is the Pacific’s Clarion-Clipperton Zone (CCZ), a 5,000-kilometer stretch of seafloor between Hawaii and California that extends 4,000–5,500 meters deep. The CCZ hosts trillions of mineral-rich nodules.
The Clarion-Clipperton Zone spans approximately 4,500,000 square kilometers. Credit: Horizon, CC BY 4.0
Reaching the nodules involves a three-stage process: First, a support ship lowers a remotely operated vehicle to the seafloor. Next, the vehicle—like a Roomba vacuum for seafloor mining—drives around through the soft sediments scooping up nodules. Last, a large pipe sucks the nodules to the ship above. Cobalt, copper, iron, manganese, and nickel can then be extracted from the nodules during onshore processing and refining.
A dozen European and Asian countries and several island nations have sponsored companies for exploration permits so far. The United States cannot apply for permitting through ISA because it has not ratified the treaty that presides over it, the U.N. Convention on the Law of the Sea. However, a subsidiary of the U.K. arm of the American company Lockheed Martin, UK Seabed Resources, has two permits for exploratory mining.
No need to worry about environmental issues… Wink, wink, nudge, nudge. I wonder how many opponents of offshore oil & gas drilling will be all for deep-sea mining?
Are You Psyched Up for Asteroid Mining?
Opportunities in Asteroid Mining
Generally, asteroid mining remains hypothetical, mostly because of its exorbitant cost. While specific estimates of the cost of commercial mining remain unclear, similarities can be drawn between such programs and NASA’s OSIRIS-REx mission, which seeks to obtain samples from a near-earth asteroid named Bennu. Despite only being projected to return between 400 grams and 1 kilogram of material, the mission is projected to take 7 years and cost over US$1 billion. Planetary Resources and Deep Space Industries were unable to finance themselves to meet such high development costs. Both companies were acquired by other businesses in 2018 and 2019, respectively.
Despite the high price tag, the development of asteroid mining technology may very well be a worthwhile endeavor due to the extremely valuable resources that asteroids have to offer. For example, Asterank, which measures the potential value of over 6,000 asteroids that NASA currently tracks, has determined that mining just the top 10 most cost-effective asteroids–that is, those that are both closest to Earth and greatest in value–would produce a profit of around US$1.5 trillion. There is also great potential for further expansion. One asteroid, 16 Psyche, has been reported to contain US$700 quintillion worth of gold, enough for every person on earth to receive about US$93 billion.Harvard International Review
Maybe the Psyche mission will save the day. Although, recent work indicates that the mineral treasure trove might be less than originally thought.
Better start rounding up the world’s best deep core drillers.
Texas has seen a host of oil and gas related records recently, the Texas Oil & Gas Association’s (TXOGA) latest monthly energy economic analysis, which is prepared by the organization’s Chief Economist Dean Foreman, pointed out.
In the analysis, TXOGA estimated that, for the month of September, Texas saw its highest crude oil production rate ever, at 5.9 million barrels per day, and its highest natural gas production gross withdrawal figure ever, at 34.6 billion cubic feet per day.
The world’s appetite for copper to build most electronic devices will exceed supply over the next decade and imperil climate targets unless dozens of new mines are built, executives and analysts said this week at a key industry conference.
By Ernest Scheyder, Fabian Cambero and Alexander Villegas
Escondida in Chile, the world’s largest copper mine. (Image courtesy of BHP.)
The world’s appetite for copper to build most electronic devices will exceed supply over the next decade and imperil climate targets unless dozens of new mines are built, executives and analysts said this week at a key industry conference.
The forecast lays bare the growing tension over where and how the world can procure metals for the green energy transition, including copper, one of the best electrical-conducting metals that is widely used in motors, batteries and wiring.
“If we don’t have enough copper, it could seriously short circuit the energy transition,” Jeremy Weir, CEO of metals trader Trafigura AG, said at the World Copper Conference, the industry’s largest gathering since 2019.
While global supply is expected to jump 26% to 38.5 million tonnes annually by 2035, it will likely fall 1.7% short of demand, even with increased recycling, according to data released this week by the International Copper Association (ICA), an industry trade group.
“There is no way for the world to meet the terms of the Paris climate agreement if we don’t have an increase in the supply of copper and other metals,” Joshua Meyer of mining equipment maker FLSmidth, referring to the climate accord that aims to limit greenhouse gas emissions by keeping the global temperature rise “well below” 2.0 degrees Celsius (3.6 Fahrenheit) this century.
Regulatory approval for new copper mines has fallen to the lowest in a decade, according to Goldman Sachs, an ominous harbinger as mines often take 10 to 20 years to permit and build. Goldman expects surging copper demand to push prices to $15,000 a tonne by 2025, 67% above current levels.
Much of the new demand is expected to come from electric vehicles, which are built with far more copper than internal combustion engines. But without enough copper, EV manufacturers could use less than expected or even turn to aluminum, analysts warned.
Aluminum is lighter and cheaper than copper but more corrosive and brittle and only about 60% as conductive. It could be an acceptable alternative in some applications, including wiring for offshore wind turbines and some EVs, the ICA said.
“Demand (for copper) is there. What I think potentially impacts it, is lack of supply,” said Rag Udd of BHP Group Ltd, which operates the world’s largest copper mine in the Atacama Desert in Chile. “In the absence of supply, we will see substitution.”
Charles Johnson, CEO of the Aluminum Association trade group, told Reuters the aluminum industry now “has a tremendous opportunity to grow in this market.”
Recycling
Copper executives acknowledged that mining has a poor reputation due in part to past safety failures, putting the onus on companies to work harder for acceptance.
“We have an industry that has to win the trust of society,” said André Sougarret, CEO of Codelco, the world’s largest copper producer.
And while copper recycling rates are rising, industry executives said a truly “circular economy” where it is almost entirely recycled is likely not imminent. Aurubis AG says nearly half of its copper cathodes are made with recycled material but that it will take decades to reach 100%.
“Recycling materials, even if everything could be collected, would be in no way sufficient for demand,” said Aurubis CEO Roland Harings. “We need more mining activity, because the demand for copper is just going up in the years to come.”
The energy industry lobbyists are out with their begging bowls demanding more subsidies to deliver more “investment” in renewables in general and offshore wind in particular.
The energy industry lobbyists are out with their begging bowls demanding more subsidies to deliver more “investment” in renewables in general and offshore wind in particular. It looks like the developers cannot deliver the wind farms they promised at “record low” strike prices of £37.35/MWh and claims of wind being nine times cheaper than gas were just so much hot air.
The Government’s predictions of decreasing costs of offshore wind were based on continued low commodity prices, the availability of cheap money and unrealistic assumptions about improved operational performance. It’s not looking likely that any of their operational improvement targets will be met.
In addition, the costs of raw materials and energy have gone up dramatically and interest rates have risen sharply pushing up the costs of capital. These factors have had a dramatic effect on the price of offshore wind.
Sensitivity of Offshore Wind Prices to Various Factors
Who would have guessed that a highly mineral intensive and capital intensive source of energy would be very susceptible to commodity and energy price inflation and rising interest rates?
The work of Professor Simon Michaux has shown that the prices of critical minerals are going to continue to rise as demand increases and ore grades for new discoveries fall leading to higher processing costs.
It is beginning to look like the offshore wind power bubble has burst and the fantasy of ever cheaper renewables has come to an end.
Introduction
This week, Energy UK and RenewableUK ran campaigns to lobby the Government for more subsidies for renewables in general and offshore wind in particular. Essentially, Energy UK admits that the bids of £37.35/MWh made during Allocation Round 4 (AR4) in mid-2022 were far too low and now the operators need more money to make their projects viable. This is a far cry from the claims made at the time by Carbon Brief and others that offshore wind power is nine times cheaper than gas.
The Government forecast a cost of £100/MWh for new offshore wind farms coming on stream in 2025, in their 2016 energy costs report . Their 2020 report showed the cost falling to £57/MWh for offshore wind farms coming on stream in 2025.
There are many cost drivers that govern the eventual price that needs to be charged for wind power. This article looks at initial capital costs for construction and infrastructure, cost of capital, build time, load factor the expected life of the asset. The actual performance of four wind farms from their published accounts is compared to the Government forecasts and industry publications.
We then take a look at the sensitivity of Government forecasts to changes in these cost factors to explain why Government forecasts and the AR4 bids were unrealistic.
Finally, we take a brief look a the work of Professor Simon Michaux who shows that the prices required to deliver increased supply of key minerals required to deliver wind farms are only going to get more expensive as new discoveries have lower ore grades and are thus more expensive to produce.
Demands from Energy UK and RenewableUK
The results of the Contracts for Difference Round 4 (AR4) auction were announced in July 2022. The winning bids for Offshore wind were set at a strike price of £37.35/MWh at 2012 prices. Now Energy UK says:
“The investment climate has changed dramatically since these contracts were awarded at record low prices. There are now serious concerns that many AR4 projects may not be deliverable at current strike prices.”
They also explain that supply chain and financing costs have risen, raising questions about the deliverability of projects. They also say that developers were relying on the windfall of high electricity prices to justify their projects, by delaying their commitment to Contract for Difference (CfD) prices:
“There are immediate concerns whether CfD Allocation Round 4 (AR4) projects will go ahead. Generators who secured AR4 contracts did so during a period of high prices. As such, many AR4 projects had low strike prices that took account of the ability of generators to factor in a period of merchant exposure before implementing the CfD.”
They also state that the expected prices for AR5 are too low, jeopardizing new projects coming forward. Their solutions are higher prices in the CfD auctions, and tax breaks so renewables providers escape much the Electricity Generation Levy (EGL). In other words, the begging bowl is out for even more subsidies.
RenewableUK used more flowery language to describe the problem and solutions, but also called for higher CfD prices, more tax incentives for renewables and less expensive grid charges. In other words, they demand that others pay for the very long copper cables through hostile terrain that are required to connect up new offshore wind farms. So again, the demand is for ever more subsidies for what is supposed to be a cheap source of energy.
Let’s look at why it has all gone wrong for the offshore wind industry.
Actual Costs of Offshore Wind Farm Electricity
First of all, offshore wind has been far from cheap so far. Modern wind farms receive a subsidy in the form of a CfD contract that guarantees index-linked prices for 15 years.
I have taken an in depth look at four offshore wind farms that provide sufficiently detailed information. Links to the relevant pages at Companies House are provided in the list below.
Figure 1 shows the revenue per MWh of electricity generated (£/MWh) for the most recent two financial years. For Beatrice this is the years up to 31 March 2021 and 2022. For the others it is for the two years ending 31 December 2020 and 2021. The horizontal dashed lines show the BEIS forecasts of the Levelised Cost of Energy for Offshore wind farms. The red line shows their estimate (£100/MWh) for new farms coming on stream in 2025, taken from the 2016 report. The 2016 estimate for new capacity in 2020 was £106/MWh. The green line shows the estimated cost for offshore wind farms coming on stream in 2025 (£57/MWh) taken from the 2020 report. In each case, the actual prices achieved are far higher than the estimates for new farms in 2020.
Figure 1 – Revenue per MWh generated by Year for Selected Offshore Windfarms
To some extent, this is to be expected because the Government is anticipating improvements in technology to bring costs down in the future. Sheringham Shoal came on stream in September 2012, Dudgeon in February 2017, Beatrice in July 2018 and East Anglia One in July 2020. Looking at Dudgeon, Beatrice and East Anglia One, it does look like there is a general trend downwards in the price of electricity sold for the more recent wind farms. However, East Anglia One that came into operation in 2020, received prices for its electricity 18.8% more expensive than the Government forecast in 2016 for new wind farms in 2020. Moreover, because the CfD contracts are index linked, the prices per MWh rise year on year.
Aficionados of the UK offshore wind sector may ask why Hornsea One and Hornsea Two have not been included in the analysis above. The answer is that these wind farms are operated by Ørsted and their published accounts do not disclose the amount of power generated, so it is not possible to determine their actual performance. Hornsea One was fully commissioned on 28 December 2019 and has a CfD for £140/MWh recorded in its favour, some 32% above the Government’s forecast for 2020. Hornsea 2 began operation at the end of August 2022 and had signed an CfD with a strike price of £57.50/MWh. Similarly, Triton Knoll and Moray East agreed CfDs with strike prices of £74.75/MWh and £57.50/MWh respectively at 2012 prices. However, it has been reported that these farms have not taken up their CfDs and are instead selling power at much higher prices. Of course, these CfDs are index-linked, so by the time they take them up, the strike prices will have risen.
Given that new windfarms coming on stream around 2020 are nowhere near meeting the Government’s forecast for 2020 and lobbyists are already bleating about AR4 agreed prices, it’s not looking good for the 2025 forecasts made in 2020. Let’s dig a bit deeper into the factors that make up the price of offshore wind energy.
Factors Governing Wind Farm Costs
There are a number of factors governing offshore wind farm costs. They include initial capital costs for construction and infrastructure, cost of capital, build time, load factor the expected life of the asset. Between the 2016 and 2020 reports, the Government has made some important changes to its assumptions for wind farms coming on stream in 2025. These are shown in Figure 2.
Figure 2 – Changes to Offshore Wind Cost Factors
The reference size has increased from 844MW to 1,000GW. This is probably justified given that windfarms that have come on stream recently have been larger than 1GW. The load factor has increased from 47.67% to 51%. The construction time has been reduced by 33% from three years to two years. The expected lifetime of the wind farm has increased 36% from 22 years to 30 years. Construction costs have fallen 28% from £2,100/kW of capacity to £1,500/kW. The fixed operation and maintenance costs have decreased 20% from £45,400/MW/yr to £36,300/MW/yr and very importantly, the hurdle rate cost of capital has fallen from 8.9% to 6.3%.
Let’s take a look at each of these factors and judge how realistic they are.
Capital Costs
The capital costs for the turbines, installation and infrastructure are a key driver of the price of wind power. Clearly, the higher the costs, the higher electricity prices have to be to recoup those costs. The 2020 Government report assumes that construction costs of wind farms deployed in 2025 will fall 28% compared to what they assumed in their 2016 report. Some of this reduction is driven by the increase in wind turbine size. The larger the turbine, fewer machines are required to deliver the same output. However, each turbine is larger and so contains more materials and requires even larger concrete foundations.
In essence, the construction costs represent the costs of the materials required to manufacture the turbines and secure them on the ocean floor, plus the costs of the energy and labour to transform the raw inputs into the finished article. Figure 3 shows how the prices of key commodities have changed over the past 10 years (all taken from Trading Economics).
Figure 3 – Changes in Energy and Commodity Prices
The Brent oil price has roughly doubled from ~$40/bbl in 2016 and 2020 to over $80/bbl today. Oil is the feedstock to make the fuel used to extract minerals from the ground and transport materials around. UK gas prices have gone up roughly six-fold from ~20p/therm in 2016 and 2020 to 128p/therm today. Looked at another way, gas prices are still 3 times higher than what might have been regarded as a long-term average of 40p/therm. Coal prices have increased 3-fold from $60-70/t in 2016 and 2020 to $209/t today. Gas and coal are used as fuel to generate the electricity to make steel and concrete and power factories. Iron ore prices have gone up from around $60/tonne in 2016 to over $127/tonne today. Coal and iron ore are the raw materials used to make steel for the turbine towers. Copper prices have roughly doubled from ~$2/lb in 2016 and 2020 to over $4/lb today. Copper is used in the rotors of the turbine generators and in the cables to connect them to the shore. Neodymium prices have more than doubled from ~CNY40K/t to over ~CNY93K/t. Neodymium is a rare earth metal used as a key ingredient in the permanent magnets used in the generators.
It seems unlikely that the massive increase in commodity costs will have been offset by the economies of scale derived from the larger turbines. This is borne out in the recent investor presentations from Vestas and Siemens Gamesa and of course by the reports from Energy UK and RenewableUK described above.
Vestas is loss-making and its overall order intake is shrinking. Offshore order intake has risen overall, but for Europe was very small at just 60MW, or four of their very large turbines. Figure 4 shows the average selling price of its offshore wind turbines increased 34% from Q4 2021 to Q4 2022.
Figure 4 – Vestas Order Intake and average selling price per MW
Siemens is also loss-making and its order intake is also shrinking. Siemens doesn’t disclose the selling price per MW of its offshore turbines, probably because it didn’t sell much in Q1 2023, but its onshore prices increased 25% from Q1 2022 to Q1 2023 and by over 50% since Q1 2020.
The costs of the raw commodities have risen substantially since the Government’s reports were put together, the two main turbine providers are losing money and need to increase prices further to become profitable. It looks highly unlikely that the costs of turbines and installation are going to fall by the predicted 28% between now and 2025 and instead will rise substantially.
Cost of Capital
The cost of capital, or discount rate is a crucial determinant of offshore wind farm costs. The cost of capital is used to discount future cash flows to current values. The higher the discount rate, the lower the current value of future cash flows. The Government changed its hurdle rate assumption for wind farms delivered in 2025 from 8.9% in its 2016 report to 6.3% in its 2020 report.
The hurdle or discount rate required is related to the “risk-free” rate represented by the yield on UK Government gilts. In 2016, the yield on the 10-year gilt was around 1.25% and about 0.35% in 2020. The 30-year gilt yielded around 1.85% and 0.85% respectively in the same two years. Averaging these yields, the 2016 report assumed a 7.35% premium to gilt yields and the 2020 report assumed a 5.7% premium, the average of those two premia is 6.53%.
10-year and 30-year gilts are currently yielding 3.5% and 3.9% respectively. Taking the average of those two figures and applying the 6.53% average premium gives a more realistic hurdle rate for 2025 of 10.23%.
We will look at the dramatic impact this has on the prices of wind electricity in the section on sensitivity.
Build Time
The build time is an important driver of the costs of offshore wind. If it takes longer to build out, the operator has to wait longer before it is generating revenue to repay the money borrowed to build the wind farm. The Government has reduced its assumed construction time by 50% from 3 years to 2 years between the 2016 report and the 2020 report.
The various different wind farms in the comparison shown in Figure 5 below have websites that describe the timeline for construction. The times shown are the time from construction start to full commissioning.
Figure 5 – Total Construction Time for Selected Offshore Wind Farms (Years)
In practice, the wind farms go into partial production part way through construction as some of the early turbines are brought onstream. Therefore, the build times are probably exaggerated a little, but probably not enough to make a significant difference to the overall picture. Most of the offshore windfarms took longer than 3 years to construct, none of them took two years and there’s no apparent downward trend in the overall build time.
It doesn’t look likely that total construction times are going to fall by a whole year by 2025, especially when one considers that windfarms are getting larger and being located further out to sea, complicating logistics.
Offshore Wind Farm Load Factors
Load factors (also known as capacity factors) measure how much electricity will be generated compared to the theoretical maximum if the wind blew at the correct speed all year. The higher the load factor, the more electricity is produced which should lead to lower costs per MWh as the capital expenditure is spread across more units of electricity.
Of course, there are times when the wind doesn’t blow fast enough, or even at all and the turbines produce nothing. There are also times when the wind blows too hard and the turbines have to be turned off to avoid damage and so they produce nothing then either. Figure 6 shows the performance of actual wind farms compared to the Government assumptions for 2020 and 2025.
Figure 6 – Load Factor by Year for Selected Offshore Windfarms
In 2016, the Government assumed a load factor of 47.67% for new wind farms commissioned in 2020 and 2025. The 2020 report assumes a load factor of 51% for turbines commissioned in 2025. These assumptions are averages for every year of the life of the wind farm, not a maximum. In its first full year of operation East Anglia One failed to hit the 2020 target by over three percentage points. Even the performance of Dudgeon in 2020 should be viewed as a one-off performance as it had much lower load factors in its other years of operation as shown in Figure 7.
Figure 7 – Dudgeon Wind Farm Load Factor by Year
The load factor of a wind farm is driven by a number of elements including the turbine technology, the layout of the turbines in the sea, the sophistication of the control system and the operation and maintenance regime. To help with its forecasts, the Government commissioned a report from DNV GL to examine the improvements in technology that might improve load factors in the future. The results are shown in Figure 8 below.
Their baseline estimate is for load factors for new wind farms of 49.7% in 2022, rising to 51% in 2025 and 52.9% in 2030. The improvements to 2030 are driven by moving to larger turbines (15MW compared to 7MW typical today), more advanced control systems and more optimal layouts. We might expect Hornsea One to have a similar performance to East Anglia One as they both use the same model of Siemens 7 MW turbines. Hornsea Two was built using 8MW turbines. Moray East and Triton Knoll, both fully commissioned in 2022, were built using Vestas 9.5MW turbines. However, we won’t know the actual performance of these sites for quite some time.
Vestas is now marketing a 15MW turbine with an implied load factor of over 60% in ideal conditions. Siemens is also marketing a 14MW turbine, but doesn’t make a specific claim for its capacity factor.
We shall have to wait and see how the newer wind farms perform before coming to a complete judgement on the accuracy of the load factor forecasts. However, the first year of operation of East Anglia One shows that hitting the 2020 target even once is challenging, let alone as an average over the life of the wind farm. In its 2020 report, the Government assumes load factors rising to 57% by 2030 (in line with DNV’s upper case) and 63% by 2040 (DNV had a maximum of 60% in 2035). It seems very optimistic to assume the upper case as an average over the whole life of the asset.
Asset Lifetime
The Government changed its assumption on the lifetime of offshore windfarms between its 2016 and 2020 reports. The 2016 report assumed a life of 22 years and the 2020 report increased the life by 36% to 30 years.
Figure 9 sets out the depreciation policies in the accounts of many wind farm companies. The expected life falls well short of 30 years and averages around 24 years.
Figure 9 – Expected Asset Life of Selected Offshore Wind Farms
In addition, the expected life of the new 14MW Siemens turbine is 25 years, although Vestas is claiming 30 years for its 15MW turbine. Putting all the data together, it seems very optimistic to assume a 30-year average lifetime for all new offshore wind farms.
Sensitivity of Offshore Wind Prices
A Discounted Cashflow model has been constructed using the parameters set out in the Government’s 2020 report. This gives a zero NPV using £56.94/MWh strike price so is giving results very close to the Government model; close enough to be a rounding error. Then the various cost drivers were varied to test the sensitivity of prices to the different parameters. The results are shown in Figure 10.
Figure 10 – Sensitivity of Offshore Wind Power Prices to Various Factors
The prices for offshore wind are most sensitive to increased costs of construction and infrastructure and the cost of finance. A 35% increase in the costs of construction (note some projects reporting a 50% increase according to Energy UK) results in an 18.8% increase in the price of electricity. A few percentage points increase in the cost of capital push the electricity prices up 26.5%. Shortfalls in the load factor, asset life and extending the build time have relatively little effect. If all of the changes in the cost drivers come to pass, then offshore wind farm prices rise by 74% to £99.10, almost back to the figures assumed by the Government back in 2016.
Who would have guessed that a highly mineral and capital-intensive source of energy would be very susceptible to commodity and energy price inflation and rising interest rates?
Implications
If scientists such as Professor Simon Michaux are correct, the era of cheap minerals is over. Technologies such as wind and solar power and associated battery storage will demand more and more critical minerals such as copper, nickel, cobalt and lithium. New discoveries of these minerals are required and new discoveries tend to have lower ore grades and so are more energy intensive and expensive to transform into useful metals. This means that these minerals are going to continue to get more expensive for some time to come. This will lead to structurally higher inflation which will mean higher interest rates, so the era of cheap credit is coming to an end.
Therefore, the most important cost drivers for wind power are going to get more expensive, pushing up the price of wind power, which itself will further increase inflation. More subsidies will not fix these problems. In fact, they will make them worse. It is starting to look like offshore wind bubble has popped.
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