Metals demand seen rising by 500%

Leading global institutions, from international organisations to think-tanks, academia and others, are spotlighting the critical role of minerals for the energy transition. According to the International Energy Agency (IEA), 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 gas-fired plant.

The World Economic Forum (WEF) 2023 pointed out that, “As the push for clean energy technologies continues, demand for certain critical minerals is forecasted to rise by up to 500%. Failure to meet demand will delay the energy transition and could cause rising geopolitical tensions.”

Export finance can play a key role in securing raw material supply, incentivise the sustainable underground mining practices crucial to the positive environmental impact of green technologies. It also enables Nordic companies to invest in the further deployment of transitional tech exports.

An EKN-led panel at the recent GTR Nordics event in Stockholm helped raise these issues by discussing the topic “How to support value chain investments in metals and minerals.”

Lena Bertilsson, Head of Business Areas Large Corporates at EKN, acted as moderator and was joined by Håkan Gabrielsson, CFO at mining company Boliden, Steven Cespedes, Debt Finance Manager at battery maker Northvolt and Meint Boschloo, Director Metals & Mining at ING Bank.

Bertilsson opened with a reminder of the key role that mining has to play in overcoming the challenges of our time: “Nickel, cobalt, zinc and copper are critical for the green transition, especially for the technical development in fossil-free energy and electrification.”

Increasing competition

The competition for critical metals is increasing, as is the geopolitical tensions surrounding them. “Financing is an important aspect in this context,” said Bertilsson and added, “which is why EKN has introduced a new credit guarantee to support the access of raw materials to Swedish importers by covering the risk of new investments for raw material producers and their creditors.”

Boliden is a large Swedish buyer of raw materials and operates mines and smelters in Sweden, Finland, Norway, and Ireland. Gabrielsson agreed that there is intense competition for critical raw materials across the world. “Copper is a capital-intensive commodity and Export Credit Agencies have an important role to secure funding.”

At battery maker Northvolt, one of the fastest growing greentech companies in Sweden, Cespedes testified that, “Our main challenge is sourcing and we build strategic relationships with our suppliers to secure the volumes we need.”

Mining is an industry that traditionally has suffered from negative perceptions of a poor track record in sustainability and public resistance to new projects in some locations. Boschloo from ING Bank, however, said the tide may be turning. “There is a growing appetite in financial markets to invest in metals and mining and the public narrative is changing as more and more people realise that metals are critical to the energy transition. Everybody who has an iPhone is able to relate to what’s needed to produce it.”

Boschloo welcomed the new EU Critical Raw Materials Act, which covers 34 strategic metals and minerals where Europe aims to become more self-sufficient and recycle more. “It’s good to see that EU has finally come around to this, but it comes a little late,” he says and recalls a visit to Africa last year when he witnessed US buyers “waving their check books”.

“International trade is therefore essential to supporting global production and ensuring diversification of supply,” Boschloo concluded.

EU calls for improved access to finance

In launching the Act, the European Commission stated that, “The EU must strengthen its raw materials value chain, from mining to refining to processing and recycling. This will require development of national exploration, more streamlined and predictable approach to permitting procedures, as well as improved access to finance.”

Gabrielsson greatly appreciates that the Act aims to speed up the process of permitting new mining operations. “We are sitting on what is probably Europe’s biggest copper asset, but the development has been stuck in a permitting process for almost 15 years.”

To conclude, the great paradox of energy transition – and one of the biggest risks to achieving net zero by 2050 – is the lack of metals needed to transform the world’s energy system, which can only come from a lot more mining.

Boliden is continuously developing methods for more sustainable processing with a strong focus on reducing carbon emissions through electrification of mines by using battery-driven trucks. Swedish suppliers of mining equipment are at the forefront of delivering automated, electric mining equipment, while EKN helps secure funding and a rigorous evaluation of new mining projects from a social and environmental point of view.