Analysts expect that in the near future, the global mineral market may experience a shortage of metals followed by a sharp increase in metal prices. The analysts explain that the shortage will be driven by the globally growing popularity of energy storage systems and electric cars as well as the increase in demand for clean sources of energy.
Estimates released by the International Energy Agency state that by 2040, the demand for lithium will have grown by more than 40 times, while that for nickel and cobalt would have increased by 20 times in the same time frame. Other precious metals are expected to see similar increases.
Rosneft is the biggest state-owned producer of oil in Russia. Rosneft CEO Igor Sechin states that the increase in demand for these metals may lead to a shortage in the global market, given that current investments in their exploration and development aren’t sufficient enough to make certain that the supply of these metals to the global market remains stable. Sechin adds that the production of nearly 80% of ores, which are utilized in the production of high-valued metals, are found in unstable regions or are monopolized.
For instance, the Democratic Republic of Congo, a major producer of cobalt, makes up roughly 70% of international cobalt production. This situation is further complicated by the concentration of processing facilities in a handful of countries, which creates conditions for monopolization.
Analysts also expect prices of various metals to hit record highs later this year, among them palladium, which is used in the production of catalysts as well as in automobile production. This particular metal may experience additional pressure as a result of unexpected production issues, which have been observed in some of its major producers. For instance, Norilsk Nickel, which is the biggest producer of palladium globally, recently flooded a duo of its larger mines because of production issues.
In addition to this, serious issues are expected in the Republic of South Africa, the biggest producer of platinum globally. Since 2017, the cost of producing platinum in South Africa has been growing constantly, and this has led to a drop in local production and a decline in the profitability of the local platinum mining industry.
The increased demand for metals such as copper, driven by the ever-growing climate change concerns, may also play a role in the shortage. Analysts note that an interrupted long-term trend for a decline in the price of solar modules may be one of the first signals of the coming metals shortage.
The anticipated shortage of metals gives sector players such as First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) yet another reason to press ahead with their mineral exploration and development programs in order to address the expected surge in demand.
NOTE TO INVESTORS: The latest news and updates relating to First Energy Metals Ltd. (CSE: FE) (OTCQB: FEMFF) are available in the company’s newsroom at https://ibn.fm/FEMFF
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