Modern Mining December 2023

COMMODITIES OUTLOOK: RARE EARTHS

Climate targets threatened by reduced funding for metal and mineral mining

New analysis released by management consulting firm, McKinsey & Company, indi cates the world could see significant shortages of rare earth metals and minerals critical to the energy transition by 2030 due to a lack of funding for new mining projects. Soaring demand is creating a major trading opportunity with McKinsey analysis revealing a more than 170% growth in commodity trading value pools for metals in just three years.

T he report, titled The Trading opportunity that could create resilience in materials reveals that surging interest rates and a reduction in available finance has seen mining companies cutting investment, with sector spending in aggre gate falling to around $40 billion in 2022 despite the recent uptick from 2020 lows, thus jeopardizing the energy transition. The report indicates imminent shortages of 20-50 percent across some rare-earth metals and minerals essential for renewables, power grids and EV batter ies by 2030, driving demand for huge investment in new reserves. Roland Rechtsteiner, Partner at McKinsey, said: “Our analysis shows commodity trading pools have nearly doubled year over year, reaching nearly $100 billion in 2022 and metals and minerals will make

up an increasing share of the value pool in the com ing years. Traders can capitalise on this opportunity by supporting increased liquidity and price discov ery in rapidly evolving metals and minerals markets, providing ESG blending solutions tailored to each market and boosting risk management capabilities Roland Rechtsteiner, Partner at McKinsey.

The world could see significant shortages of rare earth metals and minerals critical to the energy transition by 2030.

10  MODERN MINING  December 2023