Peak demand for oil is coming sooner than you may think. Even the oil industry is bracing for what may be inevitable. On Nov. 2, Simon Henry, the chief financial officer of Royal Dutch Shell, announced that peak oil demand might arrive as soon as 2020. What’s informing his thinking? In Europe, for example, oil demand has already fallen 17 percent since 2005. The full-throttled arrival of the electric vehicle (EV) might be the global tipping point.
But the EV era may herald another tipping point: demand for minerals. Oil will remain irreplaceable in our energy mix for years to come, but the critically important batteries for EVs will likely create a new, surging market for the minerals needed to make them. If the 20th century was the age of oil, the 21st century could be the age of minerals.
Between 2010 and 2015, 1 million EVs were sold globally. More than 2 million EVs are expected to be sold in 2020 alone, according to a report from Bloomberg New Energy Finance. The same report projects that by 2022, EVs will cost the same as their internal combustion rivals and by 2040 capture 50 percent of the new car market.
Demand for the minerals that are the building blocks of these cars — from aluminum frames to lithium-ion batteries to copper wiring — is poised to soar. In fact, the world’s biggest miners, such as BHP Billiton, are betting on it.
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Each new EV requires about 180 pounds of copper. Lithium-ion batteries require 10 to 20 pounds of cobalt. Global demand for cobalt from the battery sector has tripled in the past five years and is expected to double again by 2020. Goldman Sachs has called lithium the new gasoline and projects the market for the mineral could grow 11-fold by 2025. Despite being home to an enormous mineral reserve worth $6.2 trillion, America, surprisingly, is poorly positioned to use its mineral wealth for this growing market. That’s because an inefficient and obstructive mine permitting process threatens our ability to meet manufacturers’ demands.
The United States remains 50 percent to 100 percent import-dependent on 43 key mineral commodities, per the U.S. Geological Survey’s 2016 Mineral Commodity Summary. Our permitting process is handicapping our economic potential. It can take seven to 10 years for a new mine to be approved in the U.S. In countries like Canada and Australia, where mines have comparable environmental safeguards, the permitting process takes just two to three years.
Demand for minerals of all kinds is on the rise from nearly every sector of our economy. Consider that the U.S. is poised to overtake China as the world’s largest manufacturer by 2020, according to a recent survey of global manufacturing executives. Our manufacturing output is double what it was in 1984, and can continue to grow provided it has the minerals and metals it needs to remain globally competitive. But while more and more manufacturers are investing in the U.S., uncertain access to raw materials — particularly minerals and metals — remains a worry. A choked supply chain or potential surges in the price for key materials can quickly erode competitiveness.
Fortunately, Congress has begun addressing the problem by proposing legislation in both chambers that would streamline the minerals mine permitting process and create greater accountability — and do so without compromising environmental protections. This is a step in the right direction toward becoming mineral-independent, but we must continue to pursue these beneficial public policies with the new Congress and administration.
While the U.S. has one of the world’s largest mineral resource bases, with reserves of more commodity minerals and metals than any other country, we are only seventh globally in terms of minerals and metals production. As our demand for minerals continues to grow — highlighted by the coming EV revolution — it’s past time for lawmakers in Washington, D.C., to reform our permitting process to better suit our 21st century needs.
Doc Hastings represented Washington’s 4th Congressional District in the U.S. House of Representatives from 1995 to 2015.