© Provided by City AM Governments around the world should consider strategically stockpiling metals critical for energy transition technologies to avoid the "looming mismatch" between their climate intentions and the availability of such materials.
A new report by the International Energy Agency (IEA) today said that countries should act now to shore up supplies of metals such as nickel, lithium, and cobalt, in order to prevent threats to their energy security.
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The report comes amid a raft of heightened climate pledges from nations planning to shift their economies away from fossil fuels.
This will require a massive uptake of battery technologies, which currently depend on scarce supplies of rare earth metals.
A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a similarly sized gas-fired power plant, the report says.
"Today, the data shows a looming mismatch between the world's strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions," said Fatih Birol, executive director of the Paris-based agency.
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"The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action. By acting now and acting together, they can significantly reduce the risks of price volatility and supply disruptions."
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In order to stave off the risks of a shortfall in supply of such minerals, 75 per cent of the production of which is controlled by three suppliers, Birol said that countries should build up reserve supplies.
"Voluntary strategic stockpiling can in some cases help countries weather short-term supply disruptions."
In recent months, the fragility of global supply chains has come under the spotlight due to the shortage in semiconductor chips - also vital for electric vehicles - and the blocking off the Suez Canal by an errant cargo ship.
Back in January Michael Woodward, Deloitte's head of automotive, told City A.M. that the semiconductor shortage could be just the first in a number of supply chain obstacles for the sector.
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"This could be the first of a number of supply constraints that could start impacting EV production. We saw in 2019 what happened when there was a shortage of lithium [a metal vital to EV batteries] - because the speed of uptake was quicker than expected, manufacturers got caught on the hop", he siad.
"We could see something similar this year with cobalt [another key battery component], which all comes from one small region in the Democratic Republic of Congo. It'll get sorted out when a new source of supply is identified, but in the short term it could well cause a production slowdown."
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