Shortages of battery metals and other critical minerals are looking less likely to stymie the transition to a low-carbon economy, the International Energy Agency said in a new report tracking a surge of investment into the mining sector.

Investment in the industry has jumped 50% over the past two years, driven chiefly by increases in lithium projects, and a host of newly announced projects indicates that supply is catching up with an anticipated boom in demand through to the end of the decade, the agency said in the report published Tuesday.

Two years ago, the agency warned that booming demand for critical minerals during the energy transition risked creating huge shortages of critical raw materials like lithium, cobalt, copper and nickel. There have been similar warnings from banks, consultancies, trading houses and miners themselves, but the IEA now says that a spending splurge on new mining projects is helping close the long-term gap between supply and demand.

“We look at the situation after raising alarm bells, and we are of the view that governments and companies have responded to this rather challenging situation,” Fatih Birol, the head of the IEA, said in an interview. “We all know that mining projects often face delays — there are permitting issues and cost over-runs — but the picture from an investment point of view is rather encouraging.”

While it’s far from assured that all of the announced projects in the pipeline will come online, recent investments show capital markets are doing their job in helping to stimulate supply, Birol said. If they do all make it into production, it would be sufficient to satisfy nearly 75% of the supply needed to fulfill the world’s net-zero requirements in 2030, he said. That’s up from about 50% in its 2021 report.

Copper Shortages

While the report is good news for the climate and car-makers who faced soaring prices for battery metals last year, the IEA also said political efforts to diversify global supplies have so far been ineffective. In the case of refining and processing some raw materials, supply has become more concentrated geographically. For example, 90% of new nickel refining projects tracked by the IEA are located in Indonesia.

The investment in mining hasn’t been evenly distributed either, and copper could still face shortages unless spending picks up, he said. While copper is a much larger market than lithium, nickel and cobalt, its broad applications in the renewable energy and electric-vehicle sectors have prompted several similar warnings in recent months. Even so, Citigroup said the metal is emerging as investors’ preferred way to bet on the energy transition, a trend that will bolster fundraising opportunities for copper miners.

“We see there’s a growing need for copper coming because demand is growing very strongly,” Birol said. “In the medium term, the copper supply-and-demand balance may be rather challenging.”