This year’s economic forum in Davos speaks of a “perfect storm” for energy-transition commodities
Between January 15 and 19, 2,800 government representatives, CEOs of renowned companies, and delegates from international organizations from a total of 60 countries met in Davos for this year’s World Economic Forum. On the third day, the central topic was the energy transition. According to Benedikt Sobotka, CEO of Eurasian Resources Group, what is primarily lacking to secure the immense quantity of metals required for this transition is investment in mining.
Demand for critical minerals is expected to increase sixfold by 2050
According to Benedikt Sobotka, CEO of Eurasian Resources Group, the 1.5°C target will cause demand for critical minerals to increase sixfold by mid-century. In a survey of participants and viewers of one of the panel discussions, 70% agreed that supply shortages of such commodities are likely as early as 2030. To resolve the “bottleneck”—the supply constraint for rare earths—Benedikt Sobotka sees only one solution: prices for these commodities must rise.
More investment in mining needed
The past 10 years have been marked by insufficient investment in the mining sector. This must change if we are to achieve the energy transition. The motto of this year’s summit is “Rebuilding Trust”. This can also be applied to the mining sector. To attract more investment in this area, mining companies would need to provide more information about their work. Potential investors would then see that many of the often negative perceptions regarding labour and environmental protection in mining projects are not realistic.
Standards for transparent supply chains
Another issue discussed is the risk of supply disruptions for the metals needed for the energy transition. The relationship between China, the main producing country, and the West, which depends on it, has reached a low point. For this reason, Jason Bardoff, an American researcher and energy policy expert, advises expanding and diversifying supply chains regardless of political views, and ensuring transparency regarding the origin of critical metals. One example is the Battery Passport, which indicates on batteries the origin of the metals used. This could create standards that apply equally to all countries and ensure fair trade.
A perfect storm of rising demand and stagnant supply
For Sobotka, the combination of rising demand and an industrial supply that is not keeping pace is “the perfect storm”. Investors can take advantage of this by buying technology metals and rare earths as a physical investment, for example through Noble BC. Thanks to Finomet’s blockchain platform, which ensures transparency like the Battery Passport, its investors can benefit from fairly produced metals from Europe.