Critical Mineral Competition: Energy Storage Drives Global Demand for Critical Minerals
By 2025, global energy storage capacity will double, boosting demand for lithium, phosphorus, and manganese.
By 2030, the battery energy storage system (BESS) industry may account for 20% of the battery market.
The shift to lithium iron phosphate (LFP) batteries has weakened the prospects of cobalt and nickel in the energy storage sector.
Due to the critical role of critical minerals in the energy transition, demand for them has surged in recent years. While the electric vehicle market remains one of the largest consumer markets, other areas such as energy storage are gradually taking a dominant position.
According to data from research firm Rho Motion, by 2024, the total global energy storage device capacity reached 200 gigawatt-hours, up 53% year-over-year. Given the rapid development of such systems against the backdrop of the global energy transition, this emerging market could have a significant impact on global demand for critical minerals.
During the energy transition period, battery energy storage systems (BESS) increasingly support the development of renewable energy. With dedicated batteries, these systems can store electricity for use during peak demand or low-output periods. These technologies rely on various types of batteries, each requiring different critical minerals.
For example, lithium-ion batteries require lithium, nickel, cobalt, and graphite, while lithium iron phosphate (LFP) batteries also use lithium, and sodium-ion batteries require manganese. According to data from the International Energy Agency, these minerals are the "basic tools" of energy storage systems.
It is expected that the market value will reach $114 billion by 2030.
Rho Motion predicts that the number of energy storage devices will surge again in 2025, with an estimated total installed capacity reaching 400 gigawatt-hours. Meanwhile, Mordor Intelligence forecasts a compound annual growth rate (CAGR) of 14.31% for this market, reaching $1.140 billion by 2030, up from $58 billion in 2025.
These dynamics are expected to drive strong demand for battery energy storage systems (BESS). According to Rho Motion, the industry may account for around one-fifth of the global battery market. This trend will greatly benefit several minerals in high demand in energy storage systems.
Lithium, in particular, has an advantage, with current global demand for energy storage technology accounting for 9%. The International Energy Agency (IEA) noted in its "Global Critical Mineral Outlook 2025" report that "energy storage will begin to drive a significant increase in lithium demand."
Similarly, it is expected that by 2035, total graphite demand will exceed 10 million tons, primarily driven by energy storage. However, despite the rise of battery energy storage systems being good news for many critical minerals, the trend is different for certain minerals.
Decline in Cobalt and Nickel Demand
Although minerals such as lithium, graphite, and manganese are expected to benefit from the growth of the energy storage market, cobalt and nickel appear to be lagging behind. This trend is attributed to manufacturers increasingly favoring lithium iron phosphate (LFP) batteries, which do not require cobalt or nickel. According to Rho Motion's data, by 2024, these batteries will account for 87% of energy storage installed capacity, up from 83% the previous year, which was already quite impressive.
"We have seen a really significant decline in the usage intensity of nickel and cobalt in battery demand," said Martin Jackson, raw materials consultant at London-based commodity advisory firm CRU.
However, this does not mean a comprehensive decline in cobalt and nickel demand. According to data from the International Energy Agency (IEA), energy storage still accounts for only a minority share of the global battery market, with 80% dominated by the electric vehicle (EV) sector. The EV industry remains an important export market for nickel- and cobalt-containing lithium-ion batteries, particularly NMC (nickel-manganese-cobalt) batteries.
Regardless, Africa, which holds about 30% of the world's critical mineral reserves, will benefit from these dynamics. According to IEA data, the African continent (mainly supplied by the Democratic Republic of Congo) is the main source of cobalt, accounting for 11% of global lithium production. Additionally, Africa is also a major contributor to the global graphite and manganese markets.
Source: ecofinagency
Original article: https://www.toutiao.com/article/1833952959806474/
Disclaimer: The article represents the views of the author alone.