the research consultancy for energy technologies
The role of metals in the energy transition has become an unexpected focus in our research, with 3-30x demand growth for copper, lithium, silver, aluminium, nickel, and others. Hence you could even argue the ‘Super-Majors’ of the energy transition will include super-miners.
The key drivers are renewables and electrification. Solar panels use silver as their front contacts. Wind turbines contain Rare Earths. Lithium ion batteries contain lithium, cobalt, nickel, et al. All electrification requires conductors, such as copper within wiring, and aluminium within large overhead transmission lines.
At the same time, it is important to decarbonize the production of metals, which is itself energy- and CO2-intensive. Arounds 2 tons of CO2 are emitted per ton of steel, rising to an astronomical 9kT of CO2 per ton of gold. This has taken us down the rabbit hole of specific mining technologies and metal refining technologies, as we have explored the role of metals in the energy transition.
Could PGMs experience another up-cycle through 2030, on more muted EV sales growth in 2025-30, and rising catalyst loadings per ICE vehicle? This 16-page note explores global supply chains for platinum and palladium, the long-term demand drivers for PGMs in energy transition, and profiles leading PGM producers.
This data-file is a screen of leading PGM producers and recyclers. Eight companies control 90% of global production. Most are mid-caps. Four have primary listings in South Africa. Three are listed in Europe and the UK. Ore grades average 4 grams/ton, and recovery requires 60GWH/ton of energy, emitting 40kT/ton of CO2. But do recent company disclosures suggest that the gloom over PGMs is lifting?
This data-file is a screen of leading PGM producers, across mining, refining and recycling activities. We capture a dozen companies, whether they are public or private, their history, geography, number of employees, recent revenues, valuations, primary PGM production, secondary PGM production and interesting notes/disclosures.
PGM production is highly concentrated. 8 companies effectively control 90% of all global production. It is these leading PGM producers that are the focus in this data-file.
Further downstream, there is far more fragmentation. For example, auto catalysts are an $8bn pa market in the US alone, manufactured by 177 companies, none of which have market shares higher than 5%.
PGM production is complex. 55% of global mined output is from South Africa and 25% is from Russia. Implats’s Rustenburg mine is 870m underground. Ore grades average 4 grams/ton, hence huge quantities of rock must be excavated, crushed, concentrated, smelted at 1,500ºC in electric arc furnaces, then electro-refined.
Based on the disclosures from large PGM producers, we estimate that the energy intensity of PGM production is around 60GWH/ton and the CO2 intensity of PGM production is around 40,000 tons/ton. This is even more than gold production.
More encouragingly, Johnson Matthey highlights that PGM recycling from spent catalytic converters can have 80% lower production costs, 80% lower energy use and up to 98% lower carbon footprints than primary mined PGMs.
Even the PGM industry has recently been downbeat over PGMs, with many companies diversifying into battery metals, as electric vehicles are seen displacing the need for PGMs within ICE catalytic converters (65% of the global PGM market today). Yet in 2023-24, as EVs have slowed down, these battery metal businesses have been profit-warning.
The work should be viewed alongside our recent note into the outlook for PGMs, and our models into long-term PGM demand.
Core global PGM demand ran at 565 tons in 2023, which remains c6% lower than the all-time peak demand of 600Tpa in 2019. We model a recovery to 700 Tpa of demand for platinum, palladium and rhodium in 2030, then a long-run decline to 350Tpa if EVs ultimately reach 90% of vehicle sales by 2050. Numbers can be stress-tested in this model.
PGMs comprise six silver-white metals, which co-occur in nature and have remarkable catalytic properties: platinum, palladium, rhodium, ruthenium, iridium and osmium. They function as both oxidation and hydrogenation catalysts, conducting electricity, and adsorbing gases, such as oxygen and hydrogen.
Production is complex. 55% of global mined output is from South Africa and 25% is from Russia. Implats’s Rustenburg mine is 870m underground. Ore grades average 4 grams/ton, hence huge quantities of rock must be excavated, crushed, concentrated, smelted at 1,500ºC in electric arc furnaces, then electro-refined.
Therefore, the core global market for PGMs is defined by low volumes and very high prices, running at around $30bn pa, comprising 230Tpa of platinum at an average price of $30M/ton (aka $30/gram), 300Tpa of palladium at $45M/ton and 40kTpa of rhodium $230M/ton (see our commodity pricing database),
65% of the global market for PGMs is in catalytic converters, with another 10% used in jewelry, 8% in chemicals, 5% in electronics, 3% in glass, 3% in medical and about 1% in oil refining (especially catalytic reforming). These numbers are all broken down in the data-file.
Our outlook for PGM demand ramps back above 700Tpa by 2030, due to re-accelerating global vehicle sales, a slower acceleration of EVs in the mix due to affordability, and rising PGM loadings per vehicle.
The catalyst loading per vehicle will continue rising, due to tightening emissions standards to improve air quality (especially in the emerging world). There are mix effects in the vehicle fleet, as heavy trucks burning diesel, but containing 3x more PGMs than gasoline cars, are slower to electrify. And efficient vehicle types such as hybrids and turbocharged engines require greater PGM loadings.
Numbers can be viewed and stress tested in the PGM_Demand tab. Underlying inputs and notes from technical papers are in the backup tabs.
In particular, we have compiled data into the PGM use of different vehicles, which rises as a direct function of their engine power, while for the same engine power, diesels tend to contain 2x more catalyst than gasoline vehicles, and hydrogen vehicles contain 4x more than diesels.
Commodity price volatility tends to be lognormally distributed, based on the data from twelve commodities, over the past 50-years. Means are 20% higher than medians. Skew factors average +1.5x. Standard errors average 50%, while more volatile prices have more upside skew.
This data-file contains data plotting the statistical distributions of volatility for twelve major commodities, ranging across energy commodities such as oil, gas and coal; industrial metals such as iron ore, copper and aluminium; precious metals such as gold and silver; and agricultural commodities such as sugar, soybeans and palm oil.
Commodity price volatility tends to be lognormally distributed, based on starting with the charts shown below, then smoothing all of these statistical distributions together, for the title chart shown above. This statistical distribution is intuitive, as prices are effectively uncapped to the upside during commodity shocks, but they are effectively capped to the downside, as commodities cannot sustainedly trade below zero.
A fascinating finding is that when commodities are more volatile overall (e.g., as indexed by standard error) then this is 75% correlated with skew in the commodity, or in other words, the mean tends to run further above the median. In other words, this is another indicator that commodities illustrate more upside volatility than downside volatility.
If base case forecasts are thought of as the median price levels of commodities (e.g., $65/bbl for oil over the past 50-years, $8/mcf for global gas, etc), then the data imply that mean average prices will tend to run 1.1 – 1.5x above median expectations.
The final two tabs of the data-file model the lognormal volatility of commodities, illustrating how the value of commodity marketing and trading is likely to rise during the energy transition, as volatility grows on an absolute basis, but also inter-regional volatility is growing due to the ascent of renewables such as wind, solar and hydro.
Fantastic underlying data that helped to build this data-file came from the World Bank pink sheets, which we recommend to anyone looking for free monthly or annual commodity price data.
For more recent and more detailed pricing across a wider range of commodities, please see our commodity price database, for time series that go further back in time to the 1800s, please see our database of very long-term commodity prices, while we also have analysis into the performance of commodities during conflicts and performance of commodities during recessions.
Batteries, electrolysers and cleaner metals/materials value chains all hinge on electrochemistry. Hence this 19-page note explains the energy economics from first principles. The physics are constructive for lithium and next-gen electrowinning, but perhaps challenge green hydrogen aspirations?
The economic cost of copper production is built up from first principles in this model, from mine, to concentrator, to smelter to 99.99% pure copper cathodes. Our base case is $7.5/kg copper cathode, with 4 tons/ton CO2 intensity, after starting from an 0.57% ore grade. Numbers vary sharply and can be stress-tested in the data-file.
70-80% of all primary copper is produced by the smelting route and mainly starting with sulphide ores. First, ore is mined, moved, crushed and concentrated to around 20-40% purity. The ‘CopperOreMine’ tab of the model captures the costs, energy use and CO2.
Further downstream, the ores may be roasted to change their crystal structure before smelting, smelted in an environment of enriched oxygen to reject sulfur as sellable sulphuric acid, yielding matte with c50-70% purity.
Even further downstream, matte is upgraded to blister with c99% purity, which is melted and cast into anodes for electrochemical refining, yielding copper cathodes with 99.99% purity. Copper cathode is one of the most traded metals on Earth, underpinning the LME copper contract, as pure copper is purchased and processed into semis, wires and cables.
The economic cost of copper production is built up from first principles in this model, from mine, to concentrator, to smelter to 99.99% pure copper cathodes. Our base case is $7.5/kg copper cathode, with 4 tons/ton CO2 intensity. Capex intensity of copper is plotted below in $/Tpa.
But the costs of copper production depend heavily on ore grade and mining/refining technology. We estimate that a 0.1% reduction in future copper ore grading increases marginal cost by around 10% and CO2 intensity by around 10%, which matters as copper demand is set to treble in the energy transition.
Moreover, each $100/ton of CO2 prices would increase marginal cost by another 5%. It is not unimaginable that copper prices could reach $15,000/ton in an aggressive energy transition scenario, if you stress-test the model.
There is no silver bullet to decarbonize primary copper production, because of the large number of processing steps described above and in the data-file. Hence the best option to decarbonize copper production are to increase the reliance on secondary production (i.e., recycling, e.g., Aurubis).
The best option to decarbonize primary copper, based on stress testing our models, is to use clean electricity for processes such as crushing and flotation, which can save over 1 ton/ton of CO2. Using these processes flexibly can potentially even help to integrate renewables. Finally, we think that electrochemical production, e.g., via solvent extraction then electrowinning (the favored route for oxide ores that cannot be floated), can reduce total CO2 intensity by a further 1 tons/ton when using clean electricity.
Global steel supply-demand runs at 2GTpa in 2023, having doubled since 2003. Our best estimate is that steel demand rises another 80%, to 3.6GTpa by 2050, including due to the energy transition. Global steel production by country is now dominated by China, whose output exceeds 1GTpa, which is 8x the #2 producer, India, at 125MTpa.
Global steel demand is running at 2GTpa in 2023, having doubled since 2003. Our best estimate is that steel demand will rise by another 80%, to 3.6GTpa by 2050, including due to the energy transition.
Specifically, passenger vehicles currently use 200MTpa of steel, which doubles to over 400MTpa, as energy transition requires a rapid build-out of electric vehicles alongside increasing turnover of the vehicle fleet. These numbers are based on breaking down the mass of vehicles and our forecasts for passenger vehicle volumes.
Other energy uses of steel currently consume around 250MTpa of steel, which we think will double to 500MTpa, across wind turbines, expanding power grids, and CCS infrastructure. These numbers are dominated by the expansion of the global power grid. And by building out renewables, primarily wind.
Another major trend in our analysis is shifting towards lighter-weight materials, especially to reduce the weight of passenger vehicles, displacing steel with aluminium, glass fiber, carbon fiber, mass timber, advanced polymers. Indeed, steel demand could exceed 4GTpa by 2050, if we were not assuming 2x growth in global plastics to 1GTpa.
Some humility is warranted when analyzing global steel markets in aggregate, overlooking the differences between 500 different products/grades, made via three different pathways (blast furnace, DRI, EAF), and for which there are c80 different decarbonization options currently swirling. We use a regression to GDP to estimate ‘other demand’ in our model, which can be flexed in the model.
On the other hand, global steel supply reads like something out of a George Orwell novel. Back in 1950, when Nineteen Eighty-Four was first published, there really were three world super-powers — the US, the Soviet Union and Europe — producing over 90% of the world’s steel. Really the chart below shows the history of the world post World War II.
Since 1950, the US has declined from 40% of the world’s steel to 4%. Europe has declined from 35% to 7%. Meanwhile China now produces over 1GTpa of steel, more than half of the global total, an order of magnitude more than the world’s #2 producer (India, 125MTpa) and #3 producer (Japan, 90MTpa).
Geopolitics matters in the energy transition, and we cannot help feeling that the world is careening towards a strange dichotomy between carbon-abolitionist nations and carbon-emitting industrial titans, somehow strangely reminiscent of the United States in the 1840s and 1850s.
Global tin demand stands at 400kTpa in 2023 and rises by 2.5x to 1MTpa in 2050 as part of the energy transition. 50% of today’s tin market is for solder, which sees growing application in the rise of the internet, rise of EVs and rise of solar. Global tin supply and demand can be stress-tested in the model.
Global tin demand exceeds 400kTpa in 2023, in a market worth $10bn per year. 50% of the market is for solder, i.e., conductive material with a melting point around 180-200ºC, used to affix electrical connections onto circuit boards in semiconductors.
Global tin demand rises 2.5x as part of the energy transition, reaching 1MTpa by 2050. Mechanically, our model is linked to our model for solar additions, our model for global vehicle sales, our model for the rise of the internet and our model for global electricity demand.
Demand forecasts can be stress-tested in the data-file, varying with GDP (chart below), future growth of solar, EVs and digital devices, phasing out of lead acid batteries for other battery alternatives and intensity of use factors: e.g., how much tin is used in a solar cell (in g/kW) or in an electric vehicle (in kg/vehicle).
Our historical tin demand data is sourced from the International Tin Association and technical papers, while our historical supply demand is sourced from the USGS.
Primary global tin production is sourced almost entirely from emerging world countries, of which 30% is China, 25% is Indonesia, 15% is Myanmar and c10% is Peru (chart below). Hence primary production is dominated by emerging market firms.
Two listed European companies with exposure to tin are also noted in the data-file. One is a metals recycling company, Aurubis, and the other has the world’s leading technology for tin-smelting.
HJT solar modules are accelerating, as they are highly efficient, and easier to manufacture. But HJT could also be a kingmaker for Indium metal, which is used in transparent and conductive thin films (ITO). Our forecasts see primary Indium use rising 4x by 2050. Indium is 100x rarer than Rare Earth metals. It could be a bottleneck. This 16-page note expores the costs and benefits of using ITO in HJTs, and who benefits as solar cells evolve?
Power grid circuit kilometers need to rise 3-5x in the energy transition. This trend directly tightens global aluminium markets by over c20%, and global copper markets by c15%. Slow recent progress may lead to bottlenecks, then a boom? This 12-page note quantifies the rising demand for circuit kilometers, grid infrastructure, underlying metals and who benefits?